EXHIBIT 4.3
THIS WARRANT AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.
NEITHER THIS WARRANT NOR THE STOCK ISSUABLE ON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
NEITHER THIS WARRANT NOR SUCH STOCK MAY BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS A REGISTRATION STATEMENT RELATED THERETO IS
IN EFFECT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
APPLICABLE.
Void after May 19, 2002
LOGICVISION, INC.
CLASS 2 WARRANT
TO PURCHASE SHARES OF
SERIES F CONVERTIBLE PREFERRED STOCK
THIS CERTIFIES THAT, for value received,
("Holder") is entitled at the times specified in Section 1 of this Warrant to
subscribe for and purchase ( ) shares (as adjusted pursuant to Paragraph
4 hereof) of the fully paid and nonassessable Series F Convertible Preferred
Stock (the "Shares") of LogicVision, Inc., a California corporation (the
"Company"), at the price of $4.25 per share (such price as adjusted from time to
time pursuant to the terms hereof is herein referred to as the "Warrant Price"),
subject to the provisions and upon the terms and conditions hereinafter set
forth. As used herein, the term "Series F Preferred Stock" shall mean the
Company's presently authorized Series F Convertible Preferred Stock, any
securities of the Company into or for which such Series F Convertible Preferred
Stock may hereafter be changed, converted or exchanged, and, where appropriate,
the other securities or property (including cash) acquirable upon exercise of
this Warrant following the happening of certain events as provided herein or in
the Amended and Restated Articles of Incorporation of the Company as amended and
in effect as of the Date of Grant ("Restated Articles"), and the term "Date of
Grant" shall mean May 19, 1997.
1. Term.
(a) Period of Exercise. This Warrant shall become exercisable upon
the earlier of (i) May 19, 2000, (ii) the closing date of an Initial Public
Offering, (iii) a Sale of the Company, as defined in the Restated Articles, or
(iv) a Liquidation, as defined in the Restated Articles (the "Exercisability
Date"). The term "Initial Public Offering" shall mean a firm commitment
underwriting by an investment banking firm of nationally recognized standing
pursuant to an effective registration statement under the Securities Act of
1933, as amended,
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covering the offering and sale of Common Stock. Subject to earlier termination
under Subparagraph 1(b) or (c), this Warrant shall be exercisable, in whole or
in part, at any time and from time to time from the Exercisability Date through
May 19, 2002 (the "Expiration Date"). The Holder understands and agrees that, as
a result of the foregoing provisions, this Warrant shall never be exercisable in
the event of, on or before May 19, 2000, (i) an Initial Public Offering in which
the aggregate gross offering proceeds equal or exceed fifteen million dollars
($15,000,000), the per share price of the Initial Public Offering equals or
exceeds $10.00 (as appropriately adjusted for any stock dividend, stock split,
reverse stock split, recapitalization or combination of shares, hereinafter an
"Adjustment Event") and, immediately subsequent to such closing, there are at
least three hundred fifty (350) record or beneficial holders of Common Stock or
(ii) a Sale of the Company pursuant to which the consideration received by the
Company, or a Liquidation in which the amount payable to the Company's
shareholders equals or exceeds $10.00 per share (as appropriately adjusted for
an Adjustment Event) based on all outstanding shares (including vested options
and exercisable warrants, and any unvested options and unexercisable warrants
that become vested or exercisable, respectively, upon such event) immediately
prior to such Sale of the Company or Liquidation and treating all outstanding
shares of convertible Preferred Stock as converted to Common Stock at the
Conversion Price (as defined in the Restated Articles) in effect immediately
prior to such event.
(b) Company Acquisition. In the event the Company or the Majority
Holders (as defined below) should enter into any written agreement providing for
a Sale of the Company, the Company shall give written notice to the Holder of
such Sale of the Company not less than thirty (30) days prior to the closing
date thereof. This Warrant shall automatically be exercised pursuant to
Paragraph 2(e) hereof five (5) business days preceding the closing date of such
Sale of the Company (the "Exercise Date"), if not previously exercised, unless
the Holder shall notify the Company prior to the Exercise Date that this Warrant
is not to be so exercised; provided that nothing in this Paragraph 1(b) shall
cause this Warrant to become exercisable before the Exercisability Date nor
extend the term of the Warrant beyond the Expiration Date. The term "Majority
Holders" shall mean holders of a majority of the Company's then-outstanding
Common Stock and Series C, D, E and F Convertible Preferred Stock, measured as
if all such Preferred Stock had been converted to Common Stock.
(c) Initial Public Offering. In the event the Company files a
registration statement to effect an Initial Public Offering of its Common Stock,
the Company shall give written notice to the Holder of such Initial Public
Offering within ten (10) days after the filing of such registration statement.
If not previously exercised, this Warrant shall thereafter expire and terminate
on the -closing date of such Initial Public Offering, in which the aggregate
gross offering proceeds equal or exceed fifteen million dollars ($15,000,000),
the per share price of such Initial Public Offering equals or exceeds $7.00 and,
immediately subsequent to such closing, there are at least three hundred fifty
(350) record or beneficial holders of Common Stock; provided that nothing in
this sentence shall extend the term of the Warrant beyond the Expiration Date.
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2. Exercise.
(a) Method of Exercise; Payment; Issuance of New Warrant. Subject to
Paragraph 1 hereof, the purchase right represented by this Warrant may be
exercised by the Holder, in whole or in part, by the surrender of this Warrant
(with the notice of exercise form attached hereto as Exhibit A duly executed
and, if exercise is to be contingent, as contemplated by Section 2(b), with
appropriate instruction as to the contingent nature of the exercise included
therein) at the principal office of the Company and by the payment to the
Company, by check or wire transfer, of an amount equal to the then applicable
Warrant Price per share multiplied by the number of Shares then being purchased.
In the event of any exercise of the rights represented by this Warrant,
certificates for the Shares so purchased shall be delivered to the Holder within
thirty days of receipt of such notice and, unless this Warrant has been fully
exercised or has expired, a new Warrant representing the portion of the Shares,
if any, with respect to which this Warrant shall not then have been exercised
shall also be issued to the Holder within such thirty-day period. Upon receipt
by the Company of this Warrant and such notice of exercise form, together with
the applicable Warrant Price, or if such exercise is contingent as permitted by
Section 2(b) upon the occurrence of the event or date specified therein, the
Holder shall be deemed for all purposes to be the Holder of record of the
Shares, notwithstanding that Certificates representing the Shares shall not then
be actually delivered to such Holder or that such Shares are not then set forth
on the stock transfer books of the Company. In the event of any exercise of
this Warrant that is made contingent upon the consummation of the matters
referred to in Section 2(b) hereof, the Warrant Price shall be paid into escrow
pursuant to terms mutually agreed to by the Company and the Holder pending the
effectiveness of any such exercise. In the event any such contingency does not
occur, this Warrant shall remain outstanding and exercisable in accordance with
its terms and all escrow funds, together with any proceeds thereof, shall be
returned to Holder.
(b) Contingent Exercise. In the event that Holder shall be exercising
the Warrant as of the closing of a Company Sale or Initial Public Offering, the
Holder may, in such Holder's sole discretion and by written instruction
delivered with the notice of exercise in accordance with Section 2(a), make such
exercise, in whole or in part, contingent upon the occurrence of such closing
and effective immediately prior thereto.
(c) Other Property. In case cash, property or securities other than
Common Stock shall be payable, deliverable or issuable by the Company upon
exercise of this Warrant, then references to Series F Preferred Stock in this
Warrant shall be deemed to apply, so far as appropriate and as nearly as may be,
to such cash, property or other securities.
(d) Compliance. Prior to the delivery of any securities which the
Company shall be obligated to deliver upon exercise of this Warrant, the Company
will use its best efforts to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority or applicable exemptions from such requirements; provided that the
foregoing shall not be construed to require the Company to effect the
registration of such securities under federal or state securities laws for
purposes of resale by the Holder.
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(e) Net Exercise. In lieu of exercising this Warrant in the manner
provided above in Section 2(a), the Holder may elect to receive shares equal to
the value of this Warrant (or the portion thereof being canceled) by surrender
of this Warrant at the principal office of the Company together with notice of
such election, in which event the Company shall issue to the Holder a number of
shares computed using the following formula:
X = Y(A-B)
------
A
X = The number of shares of Series F Preferred Stock to be
issued to Holder.
Y = The number of shares of Series F Preferred Stock
purchasable under this Warrant (at the date of
exercise), or, if this Warrant is exercised in part, the
number of shares for which this Warrant is then being
exercised.
A = The fair market value of one share of Series F Preferred
Stock (at the date of exercise).
B = The Warrant Price (in effect on the date of exercise).
For purposes of this Section 2(e), fair market value of one share of the Series
F Preferred Stock shall be determined in good faith by the Company's Board of
Directors; provided, however, (i) if the exercise is done in connection with or
contingent upon the Company's Initial Public Offering, the fair market value
per share shall be the product of (a) the price to public as set forth in the
final prospectus relating to such Initial Public Offering and (b) the number of
shares of Common Stock into which each share of Series F Preferred Stock is
convertible at the time of exercise, or (ii) after a public offering of the
Company's securities, if the class of the Company's stock for which this Warrant
is then exercisable is traded on a national exchange or over-the-counter market,
the fair market value per share shall be the product of (a) the price per share
at which trading of the Company's stock closed on the exchange on which such
stock is listed, on the last trading day prior to the date of exercise and (b)
the number of shares of Common Stock into which each share of Series F Preferred
Stock is convertible at the time of exercise.
3. Fractional Shares.
No fractional shares of Series F Preferred Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Warrant
Price then in effect.
4. Adjustment of Warrant Price and Number of Shares.
The number and kind of securities purchasable under the exercise of
this Warrant and the Warrant Price shall be subject to adjustment from time to
time upon the occurrence of certain events, as follows:
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(a) Stock Dividends, Subdivisions or Combinations. In case the
Company shall (i) pay a dividend or make a distribution on its outstanding
shares of Series F Preferred Stock in shares of its Series F Preferred Stock,
(ii) subdivide the then outstanding shares of its Series F Preferred Stock into
a greater number of shares of Series F Preferred Stock, (iii) combine the then
outstanding shares of its Series F Preferred Stock into a smaller number of
shares of Series F Preferred Stock, or (iv) issue by reclassification of its
shares of Series F Preferred Stock any shares of capital stock of the Company
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then (A) in the case
of clauses (i) and (ii) the Warrant Price in effect immediately prior to the
opening of business on the record date for such dividend or distribution or the
effective date of such subdivision shall be proportionately decreased, (B) in
the case of clause (iii) the Warrant Price in effect immediately prior to the
opening of business on the effective date of such combination shall be
proportionately increased, and (C) in the case of clause (iv) the Company shall
execute and deliver to the Holder a new Warrant providing that the holder of
this Warrant shall upon exercise of such new Warrant be entitled to receive the
number and kind of shares of capital stock of the Company which it would have
owned or been entitled to receive immediately following such action had this
Warrant been exercised in full immediately prior to such time. The aggregate
exercise price of such new Warrant shall be equal to the aggregate Warrant Price
of this Warrant at the time of such exchange; and effective provision shall be
made in such new Warrant so that the provisions set forth herein of the
protection of the exercise rights of the Holder of this Warrant (including,
without limitation, this Section 4) shall thereafter be made applicable as
nearly as reasonably may be, to such new Warrant. An adjustment made pursuant
to this Section 4(a) for a dividend or distribution shall become effective
immediately after the record date for the dividend or distribution and an
adjustment made pursuant to this Section 4(a) for a subdivision, combination or
reclassification shall become effective immediately after the effective date of
the subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any action listed above shall be taken. In any case in
which this Section 4(a) shall require that an adjustment shall become effective
immediately after a record date for an event, the adjustment shall be subject to
the occurrence of such event.
(b) Adjustment for Reclassifications, Consolidation or Merger. In the
case of any reclassification or change of outstanding Series F Preferred Stock
(other than those referred to in Section 4(a) other than a change in par value),
or in case of any consolidation of the Company with any other corporation or any
merger of the Company into another corporation or of another corporation into
the Company (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change (other than a change in par value, or as a result of a subdivision or
combination to which Section 4(a) hereof is applicable) in, the outstanding
Series F Preferred Stock), or in case of any sale or transfer to another company
or entity (other than by mortgage or pledge) of all or substantially all of the
properties and assets of the Company, the Company (or its successor in such
consolidation or merger) or the purchaser of such properties and assets shall
made appropriate provision so that the holder of this Warrant shall have the
right thereafter to exercise this Warrant for the kind and amount of shares of
stock and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or
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transfer by a holder of the number of shares of Series F Preferred Stock for
which this Warrant might have been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or transfer, and the
holder of this Warrant shall have no other exercise rights under these
provisions; provided, that effective provision shall be made, in a new Warrant
to be issued to the Holder of this Warrant (the aggregate exercise price. of
which shall be equal to the aggregate Warrant Price of this Warrant), so that
the provisions set forth herein for the protection of the exercise rights of the
Holder of this Warrant (including, without limitation, this Section 4) shall
thereafter be made applicable, as nearly as reasonably may be, to any other
shares of stock and other securities and property deliverable upon exercise of
such new Warrant; and provided, further, that any such resulting or surviving
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corporation or purchaser shall expressly assume the obligation to deliver, upon
the exercise of the new Warrant, such shares, securities or property as the
holders of the Series F Preferred Stock shall be entitled to receive in
connection with such transaction, and to make provisions for the protection of
the exercise rights as above provided.
(c) Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price pursuant to paragraph 4(a) or (b), the number of Shares
purchasable hereunder shall be adjusted, to the nearest whole share (with one-
half share rounded up to the next whole share), to the product obtained by
multiplying the number of Shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter.
(d) Conversion of Series F Preferred Stock. Should all of the
Company's Series F Preferred Stock be, or if outstanding would be, at any time
prior to the expiration of this Warrant-or any-portion thereof, converted into
shares of the Company's Common Stock in accordance with the Company's Restated
Articles, then this Warrant shall immediately become exercisable for that number
of shares of the Company's Common Stock equal to the number of shares of the
Common Stock that would have been received if this Warrant had been exercised in
full and the Series F Preferred Stock received thereupon had been simultaneously
converted immediately prior to such event, and the Warrant Price shall be
immediately adjusted to equal the quotient obtained by dividing (x) the
aggregate Warrant Price of the maximum number of Shares of Series F Preferred
Stock for which this Warrant was exercisable immediately prior to such
conversion, by (y) the number of shares of Common Stock for which this Warrant
is exercisable immediately after such conversion.
(e) Special Adjustment of Warrant Price Upon an Initial Public
Offering, Sale of the Company or Liquidation. The Warrant Price shall be
adjusted as follows in connection with and upon the closing of an Initial Public
Offering, a Sale of the Company or a Liquidation (a "Liquidity Event"). If the
per share price of the Liquidity Event is greater than or equal to $8.50, the
Warrant Price shall not be adjusted pursuant to this paragraph. If the per
share price of the Liquidity Event is greater than or equal to $7.00 but less
than $8.50, the Warrant Price shall be adjusted to equal $2.125. If the per
share price of the Liquidity Event is less than $7.00, the Warrant Price shall
be adjusted to equal $0.00. In all provisions of this Warrant, the per share
price (i) with respect to an Initial Public Offering refers to the "price to
public" of the Initial Public Offering, as shown on the cover page of the final
prospectus relating thereto, or (ii) with respect to a Sale of the Company, the
per share price shall be determined by
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dividing the aggregate consideration received by the Company by the number of
outstanding shares (including vested options and exercisable warrants, and any
unvested options and unexercisable warrants that become vested or exercisable,
respectively, upon such event) immediately prior to such Sale of the Company and
treating ail outstanding shares of convertible Preferred Stock as converted to
Common Stock at the Conversion Price in effect immediately prior to the closing
of such Sale of the Company and (iii) with respect to a Liquidation, the per
share price shall be determined by dividing the aggregate consideration payable
by the Company by the number of outstanding shares (including vested options and
exercisable warrants, and any unvested options and unexercisable warrants that
become vested or exercisable, respectively, upon such event) immediately prior
to such Liquidation and treating all outstanding shares of convertible Preferred
Stock as converted to Common Stock at the Conversion Price in effect immediately
prior to such Liquidation. All per share amounts stated in this Paragraph 4(e)
shall be appropriately adjusted for any Adjustment Event.
(f) Notice of Other Events. The Company shall provide written notice
to the Holder of any dividend or distribution that (i) is not otherwise provided
for in this Section 4, and (ii) would result in the Holder's receipt of cash,
property or securities of the Company pursuant to the Restated Articles if the
Holder were, at the record date for such dividend or distribution, a holder of
shares of Series F Preferred Stock. Such notice shall be provided to Holder at
least twenty (20) days prior to the record date for such dividend or
distribution.
5. Notices of Adjustments.
Whenever there shall be any adjustment in the Warrant Price
and/or the number of shares, or securities or property, issuable upon exercise
of this Warrant pursuant to Section 4 hereof, the Company shall execute and
deliver a certificate signed by its Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Warrant
Price or Prices and the resulting number of shares of Series F Preferred Stock
or other securities or property issuable upon exercise of this Warrant after
giving effect to such adjustment, and shall cause copies of such certificate to
be mailed (by first-class mail, postage prepaid) to the holder of this Warrant.
6. Governing Law.
The terms and conditions of this Warrant shall be governed by and
construed in accordance with California law.
7. Rights of Shareholders.
Except as provided in this Section 7 or in Section 4(f), no
holder of the Warrant or Warrants shall be entitled to vote or receive dividends
or be deemed the holder of Series F Preferred Stock or any other securities of
the Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
holder of this Warrant, as such, any of the rights of a shareholder of the
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Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant or Warrants shall have been exercised and the Shares purchasable upon
the exercise hereof shall have become deliverable, as provided herein. In the
event that the Company shall pay a dividend or make any other distribution with
respect to the Series F Preferred Stock (excluding any distribution specifically
provided for in Section 4) at any time after any Holder shall have delivered a
notice of exercise of this Warrant to the Company and prior to the effectiveness
of such notice of exercise pursuant to Section 2(b) hereof, the Company shall
pay such dividends or distributions, with respect to the number of Shares
specified in the notice of exercise, into escrow pursuant to terms mutually
agreed to by the Company and any such Holder pending the effectiveness of such
exercise. Such dividends or distributions shall be distributed to such Holder
on the date that the condition set forth in Section 2(b) is satisfied or
returned to the Company at such time as Holder shall give written notice to the
Company withdrawing its notice of exercise prior to the effectiveness thereof.
8. Miscellaneous.
The headings in this Warrant are for purposes of convenience and
reference only, and shall not be deemed to constitute a part hereof. Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by the Company and
the registered holder hereof. All notices and other communications from the
Company to the holder of this Warrant shall be mailed by first-class registered
or certified mail, postage prepaid, to the address furnished to the Company in
writing by the last holder of this Warrant who shall have furnished an address
to the Company in writing.
May 19, 1997
LOGICVISION, INC.
By:__________________________________
Xxxxx Xxxxxxx, President
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