Contract
Exhibit 4.1
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
FOCUS
ENHANCEMENTS, INC.
COMMON
STOCK PURCHASE WARRANT
1. Issuance; Certain
Definitions. For good and valuable consideration, the receipt of which is
hereby acknowledged by FOCUS
ENHANCEMENTS, INC., a Delaware corporation (the “Company”), R. Xxxxx Xxxxxx, or registered
assigns (the “Holder”) is hereby granted the right to purchase at any time until
5:00 P.M., New York City time, on June 20, 2013 (the “Expiration
Date”), 37,500 (thirty-seven
thousand five hundred) fully paid and non-assessable shares of the
Company’s Common Stock, $0.01 par value per share (the “Common Stock”), at an
initial exercise price (the “Exercise Price”) of $0.50 (fifty cents) per share, subject to
further adjustment as set forth herein. These shares are exercisable
immediately.
2. Exercise of
Warrants.
(a) This
Warrant is exercisable in whole or in part at any time and from time to
time. Such exercise shall be effectuated by submitting to the Company
(either by delivery to the Company or by facsimile transmission as provided in
Section 8 hereof) a completed and duly executed Notice of Exercise
(substantially in the form attached to this Warrant) as provided in this
paragraph. The date such Notice of Exercise is faxed to the Company
shall be the “Exercise Date,” provided that the Holder of this Warrant tenders
this Warrant Certificate to the Company within five (5) business days thereafter
and at the time of such Notice of Exercise the Company has received payment for
the shares being purchased. The Notice of Exercise shall be executed
by the Holder of this Warrant and shall indicate the number of shares then being
purchased pursuant to such exercise. Upon surrender of this Warrant
Certificate, together with appropriate payment of the Exercise Price for the
shares of Common Stock purchased, the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so
purchased.
The
Exercise Price per share of Common Stock for the shares then being exercised
shall be payable in cash by wire, certified or official bank
check. ) Alternatively,
at any time after issuance of the Warrant, the Warrant may also be exercised by
means of a “cashless exercise” in which the Holder shall be entitled to receive
a certificate for the number of shares of Common Stock equal to the
quotient obtained by dividing [(A-B) multiplied by (X)] by (A),
where:
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(A) =
the Market Price (as defined below) of one share of Common Stock on the
date that the Holder delivers a complete Notice of Exercise Form to
the Company as provided herein
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(B) =
the Exercise Price of this Warrant, as adjusted;
and
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(X) =
the number of Common Stock issuable upon exercise of this Warrant in
accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise.
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(b)
The term “Market Price” as of a particular date (the “Valuation Date”) shall
mean the following: (a) if the Common Stock is then listed or quoted on a
national securities exchange or Nasdaq (each, a “trading market”),
the closing sale price of one share of Common Stock on such exchange on the last
trading day prior to the Valuation Date or, if no such closing sale price is
available, the average of the high bid and the low asked price quoted thereon on
the last trading day prior to the Valuation Date; (b) if the Common Stock
is not then listed or quoted on a trading market and if prices for the Common
Stock are then quoted on the OTC Bulletin Board or such similar exchange or
association, the closing sale price of one share of Common Stock on the OTC
Bulletin Board or such other exchange or association on the last trading day
prior to the Valuation Date or, if no such closing sale price is available, the
average of the high bid and the low asked price quoted thereon on the last
trading day prior to the Valuation Date; or (c) if the Common Stock is not
then listed or quoted on a trading market or quoted on the OTC Bulletin Board or
such other exchange or association, the fair market value of one share of Common
Stock as of the Valuation Date shall be determined in good faith by the Board of
Directors of the Company and the Holder. If the Common Stock is not then
listed or quoted on a trading market or quoted on the OTC Bulletin Board or such
other exchange or association, the Board of Directors of the Company shall
respond promptly, in writing, to an inquiry by the Holder prior to the exercise
hereunder as to the fair market value of a share of Common Stock as determined
by the Board of Directors of the Company. In the event that the Board of
Directors of the Company and the Holder are unable to agree upon the fair market
value in respect of subpart (c) hereof, the Company and the Holder shall
jointly select an appraiser, who is experienced in such matters. The
decision of such appraiser shall be final and conclusive, and the cost of such
appraiser shall be borne equally by the Company and the Holder. Such
adjustment shall be made successively whenever such a payment date is
fixed.
(c) In no
event shall Holder exercise this Warrant for less than one thousand (1,000)
Warrant Shares unless the Holder has a Warrant for less than one thousand
(1,000) Warrant Shares, in which case Holder shall be required to exercise the
Warrant for all remaining Warrant Shares on the Exercise Date.
(d) The
Holder shall be deemed to be the holder of the shares issuable to it in
accordance with the provisions of this Section 2 only on and after the Exercise
Date.
3. Reservation of
Shares. At all times during the term of this Warrant the
Company shall reserve for issuance upon exercise of this
Warrant such number of shares of its Common Stock as shall be required for
issuance upon exercise of this Warrant (the “Warrant Shares”).
4. Mutilation or Loss of
Warrant. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) receipt of reasonably satisfactory
indemnification, and (in the case of mutilation) upon surrender and cancellation
of this Warrant, the Company will execute and deliver a new Warrant of like
tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall
thereupon become void.
5. Rights of the
Holder. Until the Warrant is exercised in whole or in part,
the Holder shall not, by virtue hereof, be entitled to any rights of a
stockholder in the Company, either at law or equity, and the rights of the
Holder shall be limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth
herein.
6. Adjustments.
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6.1
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Adjustment
Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to
purchase such number of shares of Common Stock as will cause (i) the total
number of shares of Common Stock Holder is entitled to purchase pursuant
to this Warrant, multiplied by (ii) the adjusted Exercise Price per share,
to equal (iii) the dollar amount of the total number of shares of Common
Stock Holder is entitled to purchase before adjustment multiplied by the
total Exercise Price immediately before
adjustment.
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6.2
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Capital
Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment
affecting the Common Stock of the Company prior to the exercise of this
Warrant or its applicable portion, the provisions of this Section 6 shall
be applied as if such capital adjustment event had occurred immediately
prior to the exercise date of this Warrant and the original Exercise Price
had been fairly allocated to the stock resulting from such capital
adjustment; and in other respects the provisions of this Section shall be
applied in a fair, equitable and reasonable manner, as determined by the
Company’s Board of Directors in its absolute discretion, so as
to give effect, as nearly as may be practicable, to the purposes
hereof.
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6.3
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Spin
Off. If, for any reason, prior to the exercise of this
Warrant in full, the Company spins off or otherwise divests itself of a
part of its business or operations or disposes all or of a part of its
assets in a transaction (the “Spin Off”) in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity to be issued to Common Stock security holders
of the Company, then the Company shall notify the Holder at
least twenty (20) days prior to the record date with respect to such
Spin-Off.
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7. Transfer to Comply with the
Securities Act; Restriction on Sales; Registration Rights.
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7.1
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Transfer. This
Warrant has not been registered under the Securities Act of 1933, as
amended, (the “Act”) and has been issued to the Holder for investment and
not with a view to the distribution of either the Warrant or the Warrant
Shares. Neither this Warrant nor any of the Warrant Shares or
any other security issued or issuable upon exercise of this Warrant may be
sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an
opinion of counsel satisfactory to the Company that registration is not
required under the Act. Each certificate for the Warrant, the
Warrant Shares and any other security issued or issuable upon exercise of
this Warrant shall contain a legend on the face thereof, in form and
substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this
Section.
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7.2
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Registration Rights.
As set forth in Exhibit 1, Holder shall have piggy-back
registration rights with respect to the Warrant Shares then held by the
Holder or then subject to issuance upon exercise of this Warrant
(collectively, the “Remaining Warrant
Shares”).
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8. Notices. Any
notice or other communication required or permitted hereunder shall be in
writing and shall be delivered personally (including by recognized courier),
sent by facsimile transmission, or sent by certified, registered or express
mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, or sent by facsimile transmission, or, if mailed, four (4)
days after the date of prepaid deposit in the United States mail, certified,
registered or overnight delivery as follows:
if to the
Company, to:
FOCUS
ENHANCEMENTS, INC.
0000 Xxxx
Xxxxxx
Xxxxxxxx,
Xxxxxxxxxx 00000
ATTN:
Xxxx Xxxxxxxx, Chief Financial Officer
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
with a
copy to:
Manatt,
Xxxxxx & Xxxxxxxx, LLP
0000 Xxxx
Xxxx Xxxx, Xxxx. 0
Xxxx
Xxxx, Xxxxxxxxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxxxxx, Esq.
Telephone
No.: (000) 000-0000
Telecopier
No.: (000) 000-0000
(ii) if
to the Holder, to:
__________________________
__________________________
__________________________
__________________________
Fax
No.:
__________________________
Any party may give notice to the other
parties designated in accordance with this Section to change its respective
address or addressee for notices.
9. Supplements and Amendments;
Whole Agreement. This Warrant may be amended or supplemented
only by an instrument in writing signed by the parties hereto. This
Warrant contains the full understanding of the parties with respect to
its subject matter, and there are no representations, warranties,
agreements or understandings other than expressly contained herein and
therein.
10. Governing
Law. This Warrant shall be deemed to be a contract made under
the laws of the State of Delaware for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the State of California,
Santa Xxxxx County in connection with any dispute arising under this Warrant and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum
non conveniens, to the bringing of any such proceeding in such
jurisdictions.
11. Jury Trial
Waiver. The Company and the Holder hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other in respect of any matter arising out or in connection
with this Warrant.
12. Counterparts. This
Warrant may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
13. Descriptive
Headings. Descriptive headings of the several Sections of this
Warrant are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
IN
WITNESS WHEREOF, the parties hereto have executed this Warrant as of the 20th
day of June, 2008.
FOCUS ENHANCEMENTS,
INC.
By: /s/ Xxxx
Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
EVP of Finance & CFO
NOTICE OF
EXERCISE OF WARRANT
The
undersigned hereby irrevocably elects to exercise the right, represented by the
Warrant Certificate dated as of , , to purchase
shares
of the Common Stock, $0.01 par value, of FOCUS ENHANCEMENTS, INC., and
tenders herewith payment in accordance with Section 1 of said Common Stock
Purchase Warrant.
CASH:$ =
(Exercise Price x Exercise Shares)
Payment
is being made by:
_______ enclosed
check
_______ wire
transfer
_______ other
Please
deliver the stock certificate to:
Dated:
[Name of
Holder]
By:
