THIS WARRANT AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS WARRANT MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF THIS WARRANT, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY.
Warrant Number: WC-1
Void after
------------
WARRANT TO PURCHASE COMMON STOCK OF
FAROUDJA RESEARCH ENTERPRISES, INC.
This certifies that, for value received, Xxxx Sie is entitled, subject to
the terms set forth below, to purchase from Faroudja Research Enterprises, Inc.
(the "Company"), a California corporation, up to 58,950 shares (the "Shares") of
fully paid and non-assessable shares of Common Stock of the Company at the price
of $.50 per share (the "Exercise Price") at the times and subject to the
conditions hereafter stated, such price and number of Shares being subject to
adjustment as herein provided in this Warrant.
1. DEFINITIONS.
As used in this Warrant, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "COMPANY" includes any corporation which shall succeed to or
assume the obligations of the Company under this Warrant.
(b) "COMMON STOCK", when used with reference to stock of the Company,
means all shares, now or hereafter authorized, of the class of the Common Stock
of the Company presently authorized and stock of any other class into which
those shares may hereafter be changed.
(c) "WARRANTHOLDER", "holder of Warrant", "holder", or similar terms
when the context refers to the original holder of this Warrant.
2. EXERCISE CONDITIONS.
(a) EXERCISABILITY. This Warrant shall be vested and exercisable,
cumulatively, during its term only in accordance with the terms and conditions
herein, as to one-forty-eighth (1/48th) of the Shares for each full calendar
month after the Vesting Commencement Date set forth on the signature page of
this Warrant.
(b) TERMINATION OF STATUS. This Warrant is exercisable only for the
number of shares which become exercisable during the period Warrantholder
continues to provide services as requested by the Company and as determined in
the Company's discretion.
(c) NO CONSULTING AGREEMENT. This Warrant, and the issuance thereof
shall not be construed and is not an agreement to retain Warrantholder as a
consultant to the Company.
(d) ACCELERATION OF EXERCISABILITY. During the period this Warrant
is exercisable, in the event that (i) the Company shall consolidate with or
merge into any other corporation, or sell all or substantially all of its assets
to another corporation (unless after the completion of such transaction the
shareholders of the Company immediately prior to the transaction own at least
fifty percent (50%) of the surviving corporation), or (ii) the Company registers
its securities on a Form S-1 registration statement and such registration
statement is declared effective by the Securities and Exchange Commission (an
"IPO"), this Warrant shall accelerate and become fully exercisable as to all
Shares, notwithstanding the provisions of Section 2.
3. EXERCISE PROVISIONS.
(a) EXERCISE OF WARRANT. The holder of this Warrant may exercise it
in whole or in part to the extent then exercisable by surrender of this Warrant,
with the form of subscription at the end of this Warrant duly executed by the
holder, to the Company at its principal office, accompanied by payment in the
amount obtained by multiplying the Exercise Price by the number of shares of
Common Stock designated in the subscription at the end of this Warrant.
(b) PAYMENT OF EXERCISE PRICE. Payment shall be made by cash or by
check payable to the order of the Company.
(c) PARTIAL EXERCISE. On partial exercise, the Company shall
promptly issue and deliver to the holder of this Warrant a new Warrant or
Warrants of like tenor in the name of the holder providing for the right to
purchase the number of shares of Common Stock as to which this Warrant has not
been exercised.
2
(d) RESTRICTIONS ON EXERCISE. This Warrant may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Warrant, the Company may require the
Warrantholder to make any representation and warranty to the Company as may be
required by any applicable law or regulation.
4. STOCK ISSUANCE.
(a) DELIVERY OF STOCK CERTIFICATES. As soon as possible after full
or partial exercise of this Warrant, the Company at its expense will cause to be
issued in the name of and delivered to the holder of this Warrant, a certificate
or certificates for the number of fully paid and nonassessable shares of Common
Stock to which that holder shall be entitled upon such exercise, together with
any other securities and property to which that holder is entitled upon such
exercise under the terms of this Warrant. No fractional shares will be issued
upon exercise of rights to purchase under this Warrant. If upon any exercise of
this Warrant a fraction of a share results, the Company will pay the cash value
of that fractional share, calculated on the basis of the market price as of the
date of exercise as determined by the Company's Board of Directors.
(b) STOCK FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all Shares will, upon issuance and payment in accordance
herewith, be fully paid, validly issued and nonassessable. The Company further
covenants and agrees that the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of this Warrant, at least
the maximum number of Shares as are issuable upon the exercise of this Warrant.
(c) NO RIGHTS AS SHAREHOLDER. Warrantholder, as such, shall not be
entitled to vote or receive dividends or be considered a shareholder of the
Company for any purpose, nor shall anything in this Warrant be construed to
confer on Warrantholder, as such, any rights of a shareholder of the Company or
any right to vote, give or withhold consent to any corporate action, to receive
notice of meetings of shareholders, to receive dividends or subscription rights
or otherwise.
5. ADJUSTMENT PROVISIONS.
The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
(a) RECLASSIFICATION. If the Company at any time while this Warrant
remains outstanding shall reclassify or in any manner change the securities then
purchasable upon the exercise of this Warrant (a "Reorganization"), then lawful
and adequate provision shall be made whereby this Warrant shall thereafter
evidence the
3
right to purchase such number and kind of securities and other property as would
have been issuable or distributable on account of such reorganization upon or
with respect to the securities which were purchasable or would have become
purchasable under this Warrant immediately prior to such Reorganization.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Common Stock, the Exercise Price shall be adjusted to that price determined
by multiplying the Exercise Price in effect immediately prior to such
subdivision or combination by a fraction (i) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
subdivision or combination and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such subdivision
or combination.
(c) CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the Company at any time
while this Warrant is outstanding and unexpired shall take a record of the
holders of its Common Stock for the purpose of:
(i) STOCK DIVIDENDS. Entitling them to receive a dividend
payable in, or other distribution without consideration of, Common Stock, then
the Exercise Price shall be adjusted to that price determined by multiplying the
Exercise Price in effect immediately prior to each dividend or distribution by a
fraction (A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution and
(B) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; or
(ii) DISTRIBUTION OF ASSETS; SECURITIES; ETC. Making any
distribution without consideration with respect to its Common Stock (other than
a cash dividend) payable otherwise than in its Common Stock, the Warrantholder
shall, upon the exercise thereof, be entitled to receive, in addition to the
number of Shares receivable thereupon, and without payment of any additional
consideration therefor, such assets or securities as would have been payable to
him as owner of that number of Shares receivable by exercise of this Warrant had
Warrantholder been the holder of record of such Shares on the record date for
such distribution; and an appropriate provision therefor shall be made a part of
any such distribution.
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Exercise Price pursuant to Section 5(b) or (c)(i), the number of Shares
purchasable hereunder shall be adjusted to that number determined by multiplying
the number of Shares purchasable upon the exercise of this Warrant immediately
prior to such adjustment by a fraction, the numerator of which shall be the
Exercise Price immediately prior to such adjustment and the denominator of which
shall be the Exercise Price immediately following such adjustment.
4
(e) NOTICE OF ADJUSTMENTS. The Company shall give notice of each
adjustment or readjustment of the Exercise Price or the number of shares of
Common Stock or other securities issuable upon Exercise of this Warrant to the
registered holder of this Warrant at that holder's address as shown on the
Company's books.
(f) NO CHANGE NECESSARY. The form of this Warrant need not be
changed because of any adjustment in the Exercise Price or in the number of
shares of Common Stock purchasable upon its exercise. A Warrant issued after
any adjustment upon any partial exercise or in replacement may continue to
express the same Exercise Price and the same number of shares of Common Stock
(appropriately reduced in the case of partial exercise) as are stated on the
face of this Warrant as initially issued, and that Exercise Price and that
number of shares shall be considered to have been so changed at the close of
business on the date of adjustment.
6. SECURITIES LAW RESTRICTIONS.
(a) INVESTMENT REPRESENTATIONS. In connection with the acquisition
of this Warrant, the Warrantholder represents and warrants that the
Warrantholder is acquiring this Warrant, and upon exercise of this Warrant the
Warrantholder will be acquiring the Shares, for investment for Warrantholder's
own account, not as a nominee or agent, and not with a view to, or for resale in
connection with, any distribution thereof. The Warrantholder, by reason of
Warrantholder's business or financial experience, has the capacity to evaluate
the merits and risks of purchasing Common Stock of the Company and to make an
informed investment decision with respect thereto and to protect Warrantholder's
interests in connection with the acquisition of this Warrant and the Shares.
Warrantholder will execute any investment representation statement requested by
the Company.
(b) LEGENDS. Any certificate representing any Shares issued
hereunder shall have endorsed thereon legends in substantially the following
form (in addition to any legends required by any state securities laws):
THIS WARRANT AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS WARRANT MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE
5
TERMS OF THIS WARRANT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
7. NONTRANSFERABILITY OF WARRANT.
This Warrant may not be sold, pledged, assigned, hypothecated, gifted,
transferred or disposed of in any manner either voluntarily or involuntarily by
operation of law, other than by will or by the laws of descent or distribution,
and may be exercised during the lifetime of the Warrantholder only by such
Warrantholder. Subject to the foregoing, the terms of this Warrant shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Warrantholder.
8. LIMITATIONS ON TRANSFER OF SHARES.
In addition to any other limitation on the transfer of the Shares
created by applicable securities laws, Warrantholder shall not assign, encumber
or dispose of any interest in such Shares except as provided in this Section 8:
(a) RIGHT OF FIRST REFUSAL. If Warrantholder desires (or is
required) to sell or transfer in any manner the Shares, Warrantholder shall
first offer such Shares for sale to the Company at the same price, and upon the
same terms (or terms as similar as reasonably possible) as those upon which he
is dispose of such Shares ("Right of First Refusal"). If the transfer does not
involve a bona fide price freely set by Warrantholder, the price shall be
determined as set forth in Section 8(c) below. The Company (or its assignee)
shall notify Warrantholder as to whether the Company wishes to purchase the
Shares pursuant to the Right of First Refusal within forty-five (45) days
following the setting of a price under Section 8(c) (when the price is
determined under Section 8(c). If the Company (or its assignee) elects to
purchase such Shares hereunder, it shall set a date for the closing of the
transaction at a place specified by the Company not later than 30 days from the
date of such notice. At such closing, the Company (or its assignee) shall
tender payment for the Shares and the certificates representing the Shares so
purchased shall be cancelled. Warrantholder hereby authorizes and directs the
Secretary or Transfer Agent of the Company to transfer the Shares as to which
the Right of First Refusal has been exercised from optionee to the Company. The
Warrantholder further authorizes the Company to refuse or to cause its Transfer
Agent to refuse, to transfer or record any Shares to be transferred in violation
of this Agreement. In the event the Shares are not disposed of by the
Warrantholder within forty-five (45) days following lapse of the period of the
Right of First Refusal provided to the Company, the Shares shall once again be
subject to the Right of First Refusal herein provided.
(b) INVOLUNTARY TRANSFER. In the event of any transfer by operation
of law or other involuntary transfer, of all, or a portion, of the Shares, the
Company shall have an option to purchase all of the Shares transferred (the
"Involuntary Transfer Option"). Upon such transfer, the person acquiring the
Shares shall promptly notify the Secretary of the Company of such transfer. The
Company (or its assignee) shall notify
6
Warrantholder and the person acquiring the Shares as to whether the Company
wishes to purchase the Shares pursuant to the Involuntary Transfer Option within
forty-five (45) days following the setting of a price under Section 8(c) of this
Agreement. If the Company (or its assignee) elects to purchase such Shares
hereunder, it shall set a date for the closing of the transaction at a place
specified by the Company not later than 30 days from the date of such notice.
At such closing, the Company (or its assignee) shall tender payment for the
Shares and the certificates representing the Shares so purchased shall be
cancelled. Warrantholder hereby authorizes and directs the Secretary or
Transfer Agent of the Company to transfer the Shares as to which the Involuntary
Transfer Option has been exercised from the Warrantholder to the Company.
Warrantholder further authorizes the Company to refuse or to cause its Transfer
Agent to refuse, to transfer or record any Shares to be transferred in violation
of this Agreement.
(c) DETERMINATION OF PRICE. With respect to the Shares to be
transferred pursuant to the Right of First Refusal where the price is not a bona
fide price set by the Warrantholder under Section 8(a) or the Involuntary
Transfer Option, the price per share shall be a price set by the Board of
Directors of the Company that will reflect the current value of the Shares. The
Company shall notify Warrantholder, his representative or the person acquiring
the Shares under Section 8(b) of the price so determined within forty-five (45)
days after receipt by it of written notice of the transfer or proposed transfer
of the Shares.
(d) ASSIGNMENT BY COMPANY. The Company's Right of First Refusal and
Involuntary Transfer Option may be assigned in whole or in part to any
shareholder or shareholders of the Company.
(e) OBLIGATIONS BINDING UPON TRANSFEREES. All transferees of Shares
or any interest therein will receive and hold such Shares or interests subject
to the provisions of this Warrant, including the Company's Right of First
Refusal and Involuntary Transfer Option. Any sale or transfer of the Shares
shall be void unless the provisions of this Option are met.
(f) TERMINATION OF RIGHTS. The Right of First Refusal and the
Involuntary Transfer Option granted the Company by this Section 8 shall
terminate at such time as a public market exists for the Company's Common Stock
(or any other stock issued to Warrantholder in exchange for the Shares acquired
upon exercise pursuant to this Warrant). For the purpose of this Agreement, a
"public market" shall be deemed to exist if the Common Stock is listed on a
national securities exchange (as that term is used in the Securities Exchange
Act of 1934), or the Common Stock is traded on the over-the-counter market and
prices are published on business days in a recognized financial journal.
(g) EXCLUDED TRANSFERS. The restrictions on transfer if this Section
8 shall not apply to an inter-vivos transfer to Warrantholder's ancestors or
descendants or spouse or to a Trustee for their benefit, provided that such
transferee shall take such
7
Shares subject to all of the terms of this Warrant, including restrictions on
further transfer.
9. TERMINATION.
The right to exercise this Warrant shall expire upon the earlier of
the following: (i) the close of business on the date set forth on the first
page of this Warrant, (ii) the effective date of a firm commitment underwritten
public offering pursuant to a registration statement filed under the Securities
Act of 1933, as amended, covering the offer and sale of the Company's Common
Stock or (iii) upon the consolidation or merger of the Company into any other
corporation or the sale of all or substantially all of its assets to another
corporation, unless after the completion of the transaction the shareholders of
the Company immediately prior to the transaction own at least fifty percent
(50%) of the shares of the surviving corporation.
10. GENERAL.
(a) ENTIRE AGREEMENT. The Company and the holder agree that this
Warrant amends and supersedes any prior agreement or understanding of the holder
with the Company, Sunsteam, Ltd., or any officers, directors, partners or agents
of the foregoing relating to the acquisition of securities in the Company and
supersedes any financial obligations of the Company to the holder.
(b) AMENDMENT. The holder of this Warrant agrees that any provision
of this Warrant may be amended, waived or modified upon the written approval of
the Company and the holder of this Warrant.
(c) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of loss, theft, or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company at its expense will execute and deliver, in lieu of this Warrant, a new
Warrant of like tenor.
(d) NOTICES. Any notices to Warrantholder shall be delivered
personally or sent by first class mail, postage prepaid, to Warrantholder's
address on the records of the Company and shall be effective upon deposit in the
mail.
8
(e) GOVERNING LAW. This Warrant shall be governed by and construed
and enforced in accordance with the laws if the State of California.
Dated: July 16, 1993 FAROUDJA RESEARCH ENTERPRISES, INC.
By: /s/ Yves Faroudja
--------------------------------------------
Yves Faroudja
President
ACCEPTED:
HOLDER:
Xxxx Sie
------------------------------
Name
/s/ Xxxx Sie
------------------------------
Signature
Date:
---------------------------
9
SUBSCRIPTION FORM
(To be signed only upon exercise of Warrant)
TO: Faroudja Research Enterprises, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
The undersigned, the holder of the attached Warrant, hereby irrevocably
elects to exercise the purchase right represented by that Warrant for, and to
purchase under that Warrant, __________* shares of Common Stock of Faroudja
Research Enterprises, Inc. and herewith makes payment of $__________ for those
shares, and requests that the certificates for those shares be issued in the
name of, and delivered to, ____________________, whose address is
______________________________.
Dated: __________, 19__
(Signature must conform in all respects to name of
holder as specified on the face of the attached
Warrant.)
-----------------------------------
Signature
-----------------------------------
Address
-----------------------------------
----------------
* Insert here the number of Shares called for on the face of the Warrant (or,
in the case of partial exercise, the portion as to which the Warrant is being
exercised), without making any adjustment for additional Shares or any other
securities or property which, under the adjustment provisions of the Warrant,
may be deliverable upon exercise.
10
THIS WARRANT AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS WARRANT MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF THIS WARRANT, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY.
Warrant Number: WC-2
Void after
------------
WARRANT TO PURCHASE COMMON STOCK OF
FAROUDJA RESEARCH ENTERPRISES, INC.
This certifies that, for value received, Xxxx Sie is entitled, subject to
the terms set forth below, to purchase from Faroudja Research Enterprises, Inc.
(the "Company"), a California corporation, up to 19,648 shares (the "Shares") of
fully paid and non-assessable shares of Common Stock of the Company at the price
of $.50 per share (the "Exercise Price") at the times and subject to the
conditions hereafter stated, such price and number of Shares being subject to
adjustment as herein provided in this Warrant.
1. DEFINITIONS.
As used in this Warrant, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "COMPANY" includes any corporation which shall succeed to or
assume the obligations of the Company under this Warrant.
(b) "COMMON STOCK", when used with reference to stock of the Company,
means all shares, now or hereafter authorized, of the class of the Common Stock
of the Company presently authorized and stock of any other class into which
those shares may hereafter be changed.
(c) "WARRANTHOLDER", "holder of Warrant", "holder", or similar terms
when the context refers to the original holder of this Warrant.
2. EXERCISE CONDITIONS.
(a) EXERCISABILITY. This Warrant shall be vested and exercisable,
cumulatively, during its term only in accordance with the terms and conditions
herein, as to one-forty-eighth (1/48th) of the Shares for each full calendar
month after the Vesting Commencement Date set forth on the signature page of
this Warrant.
(b) TERMINATION OF STATUS. This Warrant is exercisable only for the
number of shares which become exercisable during the period Warrantholder
continues to provide services as requested by the Company and as determined in
the Company's discretion.
(c) NO CONSULTING AGREEMENT. This Warrant, and the issuance thereof
shall not be construed and is not an agreement to retain Warrantholder as a
consultant to the Company.
(d) ACCELERATION OF EXERCISABILITY. During the period this Warrant
is exercisable, in the event that (i) the Company shall consolidate with or
merge into any other corporation, or sell all or substantially all of its assets
to another corporation (unless after the completion of such transaction the
shareholders of the Company immediately prior to the transaction own at least
fifty percent (50%) of the surviving corporation), or (ii) the Company registers
its securities on a Form S-1 registration statement and such registration
statement is declared effective by the Securities and Exchange Commission (an
"IPO"), this Warrant shall accelerate and become fully exercisable as to all
Shares, notwithstanding the provisions of Section 2.
3. EXERCISE PROVISIONS.
(a) EXERCISE OF WARRANT. The holder of this Warrant may exercise it
in whole or in part to the extent then exercisable by surrender of this Warrant,
with the form of subscription at the end of this Warrant duly executed by the
holder, to the Company at its principal office, accompanied by payment in the
amount obtained by multiplying the Exercise Price by the number of shares of
Common Stock designated in the subscription at the end of this Warrant.
(b) PAYMENT OF EXERCISE PRICE. Payment shall be made by cash or by
check payable to the order of the Company.
(c) PARTIAL EXERCISE. On partial exercise, the Company shall
promptly issue and deliver to the holder of this Warrant a new Warrant or
Warrants of like tenor in the name of the holder providing for the right to
purchase the number of shares of Common Stock as to which this Warrant has not
been exercised.
2
(d) RESTRICTIONS ON EXERCISE. This Warrant may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Warrant, the Company may require the
Warrantholder to make any representation and warranty to the Company as may be
required by any applicable law or regulation.
4. STOCK ISSUANCE.
(a) DELIVERY OF STOCK CERTIFICATES. As soon as possible after full
or partial exercise of this Warrant, the Company at its expense will cause to be
issued in the name of and delivered to the holder of this Warrant, a certificate
or certificates for the number of fully paid and nonassessable shares of Common
Stock to which that holder shall be entitled upon such exercise, together with
any other securities and property to which that holder is entitled upon such
exercise under the terms of this Warrant. No fractional shares will be issued
upon exercise of rights to purchase under this Warrant. If upon any exercise of
this Warrant a fraction of a share results, the Company will pay the cash value
of that fractional share, calculated on the basis of the market price as of the
date of exercise as determined by the Company's Board of Directors.
(b) STOCK FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all Shares will, upon issuance and payment in accordance
herewith, be fully paid, validly issued and nonassessable. The Company further
covenants and agrees that the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of this Warrant, at least
the maximum number of Shares as are issuable upon the exercise of this Warrant.
(c) NO RIGHTS AS SHAREHOLDER. Warrantholder, as such, shall not be
entitled to vote or receive dividends or be considered a shareholder of the
Company for any purpose, nor shall anything in this Warrant be construed to
confer on Warrantholder, as such, any rights of a shareholder of the Company or
any right to vote, give or withhold consent to any corporate action, to receive
notice of meetings of shareholders, to receive dividends or subscription rights
or otherwise.
5. ADJUSTMENT PROVISIONS.
The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
(a) RECLASSIFICATION. If the Company at any time while this Warrant
remains outstanding shall reclassify or in any manner change the securities then
purchasable upon the exercise of this Warrant (a "Reorganization"), then lawful
and adequate provision shall be made whereby this Warrant shall thereafter
evidence the
3
right to purchase such number and kind of securities and other property as would
have been issuable or distributable on account of such reorganization upon or
with respect to the securities which were purchasable or would have become
purchasable under this Warrant immediately prior to such Reorganization.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Common Stock, the Exercise Price shall be adjusted to that price determined
by multiplying the Exercise Price in effect immediately prior to such
subdivision or combination by a fraction (i) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
subdivision or combination and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such subdivision
or combination.
(c) CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the Company at any time
while this Warrant is outstanding and unexpired shall take a record of the
holders of its Common Stock for the purpose of:
(i) STOCK DIVIDENDS. Entitling them to receive a dividend
payable in, or other distribution without consideration of, Common Stock, then
the Exercise Price shall be adjusted to that price determined by multiplying the
Exercise Price in effect immediately prior to each dividend or distribution by a
fraction (A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution and
(B) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; or
(ii) DISTRIBUTION OF ASSETS; SECURITIES; ETC. Making any
distribution without consideration with respect to its Common Stock (other than
a cash dividend) payable otherwise than in its Common Stock, the Warrantholder
shall, upon the exercise thereof, be entitled to receive, in addition to the
number of Shares receivable thereupon, and without payment of any additional
consideration therefor, such assets or securities as would have been payable to
him as owner of that number of Shares receivable by exercise of this Warrant had
Warrantholder been the holder of record of such Shares on the record date for
such distribution; and an appropriate provision therefor shall be made a part of
any such distribution.
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Exercise Price pursuant to Section 5(b) or (c)(i), the number of Shares
purchasable hereunder shall be adjusted to that number determined by multiplying
the number of Shares purchasable upon the exercise of this Warrant immediately
prior to such adjustment by a fraction, the numerator of which shall be the
Exercise Price immediately prior to such adjustment and the denominator of which
shall be the Exercise Price immediately following such adjustment.
4
(e) NOTICE OF ADJUSTMENTS. The Company shall give notice of each
adjustment or readjustment of the Exercise Price or the number of shares of
Common Stock or other securities issuable upon Exercise of this Warrant to the
registered holder of this Warrant at that holder's address as shown on the
Company's books.
(f) NO CHANGE NECESSARY. The form of this Warrant need not be
changed because of any adjustment in the Exercise Price or in the number of
shares of Common Stock purchasable upon its exercise. A Warrant issued after
any adjustment upon any partial exercise or in replacement may continue to
express the same Exercise Price and the same number of shares of Common Stock
(appropriately reduced in the case of partial exercise) as are stated on the
face of this Warrant as initially issued, and that Exercise Price and that
number of shares shall be considered to have been so changed at the close of
business on the date of adjustment.
6. SECURITIES LAW RESTRICTIONS.
(a) INVESTMENT REPRESENTATIONS. In connection with the acquisition
of this Warrant, the Warrantholder represents and warrants that the
Warrantholder is acquiring this Warrant, and upon exercise of this Warrant the
Warrantholder will be acquiring the Shares, for investment for Warrantholder's
own account, not as a nominee or agent, and not with a view to, or for resale in
connection with, any distribution thereof. The Warrantholder, by reason of
Warrantholder's business or financial experience, has the capacity to evaluate
the merits and risks of purchasing Common Stock of the Company and to make an
informed investment decision with respect thereto and to protect Warrantholder's
interests in connection with the acquisition of this Warrant and the Shares.
Warrantholder will execute any investment representation statement requested by
the Company.
(b) LEGENDS. Any certificate representing any Shares issued
hereunder shall have endorsed thereon legends in substantially the following
form (in addition to any legends required by any state securities laws):
THIS WARRANT AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS WARRANT MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE
5
TERMS OF THIS WARRANT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
7. NONTRANSFERABILITY OF WARRANT.
This Warrant may not be sold, pledged, assigned, hypothecated, gifted,
transferred or disposed of in any manner either voluntarily or involuntarily by
operation of law, other than by will or by the laws of descent or distribution,
and may be exercised during the lifetime of the Warrantholder only by such
Warrantholder. Subject to the foregoing, the terms of this Warrant shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Warrantholder.
8. LIMITATIONS ON TRANSFER OF SHARES.
In addition to any other limitation on the transfer of the Shares
created by applicable securities laws, Warrantholder shall not assign, encumber
or dispose of any interest in such Shares except as provided in this Section 8:
(a) RIGHT OF FIRST REFUSAL. If Warrantholder desires (or is
required) to sell or transfer in any manner the Shares, Warrantholder shall
first offer such Shares for sale to the Company at the same price, and upon the
same terms (or terms as similar as reasonably possible) as those upon which he
is dispose of such Shares ("Right of First Refusal"). If the transfer does not
involve a bona fide price freely set by Warrantholder, the price shall be
determined as set forth in Section 8(c) below. The Company (or its assignee)
shall notify Warrantholder as to whether the Company wishes to purchase the
Shares pursuant to the Right of First Refusal within forty-five (45) days
following the setting of a price under Section 8(c) (when the price is
determined under Section 8(c). If the Company (or its assignee) elects to
purchase such Shares hereunder, it shall set a date for the closing of the
transaction at a place specified by the Company not later than 30 days from the
date of such notice. At such closing, the Company (or its assignee) shall
tender payment for the Shares and the certificates representing the Shares so
purchased shall be cancelled. Warrantholder hereby authorizes and directs the
Secretary or Transfer Agent of the Company to transfer the Shares as to which
the Right of First Refusal has been exercised from optionee to the Company. The
Warrantholder further authorizes the Company to refuse or to cause its Transfer
Agent to refuse, to transfer or record any Shares to be transferred in violation
of this Agreement. In the event the Shares are not disposed of by the
Warrantholder within forty-five (45) days following lapse of the period of the
Right of First Refusal provided to the Company, the Shares shall once again be
subject to the Right of First Refusal herein provided.
(b) INVOLUNTARY TRANSFER. In the event of any transfer by operation
of law or other involuntary transfer, of all, or a portion, of the Shares, the
Company shall have an option to purchase all of the Shares transferred (the
"Involuntary Transfer Option"). Upon such transfer, the person acquiring the
Shares shall promptly notify the Secretary of the Company of such transfer. The
Company (or its assignee) shall notify
6
Warrantholder and the person acquiring the Shares as to whether the Company
wishes to purchase the Shares pursuant to the Involuntary Transfer Option within
forty-five (45) days following the setting of a price under Section 8(c) of this
Agreement. If the Company (or its assignee) elects to purchase such Shares
hereunder, it shall set a date for the closing of the transaction at a place
specified by the Company not later than 30 days from the date of such notice.
At such closing, the Company (or its assignee) shall tender payment for the
Shares and the certificates representing the Shares so purchased shall be
cancelled. Warrantholder hereby authorizes and directs the Secretary or
Transfer Agent of the Company to transfer the Shares as to which the Involuntary
Transfer Option has been exercised from the Warrantholder to the Company.
Warrantholder further authorizes the Company to refuse or to cause its Transfer
Agent to refuse, to transfer or record any Shares to be transferred in violation
of this Agreement.
(c) DETERMINATION OF PRICE. With respect to the Shares to be
transferred pursuant to the Right of First Refusal where the price is not a bona
fide price set by the Warrantholder under Section 8(a) or the Involuntary
Transfer Option, the price per share shall be a price set by the Board of
Directors of the Company that will reflect the current value of the Shares. The
Company shall notify Warrantholder, his representative or the person acquiring
the Shares under Section 8(b) of the price so determined within forty-five (45)
days after receipt by it of written notice of the transfer or proposed transfer
of the Shares.
(d) ASSIGNMENT BY COMPANY. The Company's Right of First Refusal and
Involuntary Transfer Option may be assigned in whole or in part to any
shareholder or shareholders of the Company.
(e) OBLIGATIONS BINDING UPON TRANSFEREES. All transferees of Shares
or any interest therein will receive and hold such Shares or interests subject
to the provisions of this Warrant, including the Company's Right of First
Refusal and Involuntary Transfer Option. Any sale or transfer of the Shares
shall be void unless the provisions of this Option are met.
(f) TERMINATION OF RIGHTS. The Right of First Refusal and the
Involuntary Transfer Option granted the Company by this Section 8 shall
terminate at such time as a public market exists for the Company's Common Stock
(or any other stock issued to Warrantholder in exchange for the Shares acquired
upon exercise pursuant to this Warrant). For the purpose of this Agreement, a
"public market" shall be deemed to exist if the Common Stock is listed on a
national securities exchange (as that term is used in the Securities Exchange
Act of 1934), or the Common Stock is traded on the over-the-counter market and
prices are published on business days in a recognized financial journal.
(g) EXCLUDED TRANSFERS. The restrictions on transfer if this Section
8 shall not apply to an inter-vivos transfer to Warrantholder's ancestors or
descendants or spouse or to a Trustee for their benefit, provided that such
transferee shall take such
7
Shares subject to all of the terms of this Warrant, including restrictions on
further transfer.
9. TERMINATION.
The right to exercise this Warrant shall expire upon the earlier of
the following: (i) the close of business on the date set forth on the first
page of this Warrant, (ii) the effective date of a firm commitment underwritten
public offering pursuant to a registration statement filed under the Securities
Act of 1933, as amended, covering the offer and sale of the Company's Common
Stock or (iii) upon the consolidation or merger of the Company into any other
corporation or the sale of all or substantially all of its assets to another
corporation, unless after the completion of the transaction the shareholders of
the Company immediately prior to the transaction own at least fifty percent
(50%) of the shares of the surviving corporation.
10. GENERAL.
(a) ENTIRE AGREEMENT. The Company and the holder agree that this
Warrant amends and supersedes any prior agreement or understanding of the holder
with the Company, Sunsteam, Ltd., or any officers, directors, partners or agents
of the foregoing relating to the acquisition of securities in the Company and
supersedes any financial obligations of the Company to the holder.
(b) AMENDMENT. The holder of this Warrant agrees that any provision
of this Warrant may be amended, waived or modified upon the written approval of
the Company and the holder of this Warrant.
(c) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of loss, theft, or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company at its expense will execute and deliver, in lieu of this Warrant, a new
Warrant of like tenor.
(d) NOTICES. Any notices to Warrantholder shall be delivered
personally or sent by first class mail, postage prepaid, to Warrantholder's
address on the records of the Company and shall be effective upon deposit in the
mail.
8
(e) GOVERNING LAW. This Warrant shall be governed by
and construed and enforced in accordance with the laws if the
State of California.
Dated: July 16, 1993 FAROUDJA RESEARCH ENTERPRISES,
INC.
By: /s/ Yves Faroudja
--------------------------------
Yves Faroudja
President
ACCEPTED:
HOLDER:
Xxxx Sie
--------------------------
Name
/s/ Xxxx Sie
--------------------------
Signature
Date:
---------------------
9
SUBSCRIPTION FORM
(To be signed only upon exercise of Warrant)
TO: Faroudja Research Enterprises, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
The undersigned, the holder of the attached Warrant, hereby irrevocably
elects to exercise the purchase right represented by that Warrant for, and to
purchase under that Warrant, __________* shares of Common Stock of Faroudja
Research Enterprises, Inc. and herewith makes payment of $__________ for
those shares, and requests that the certificates for those shares be issued
in the name of, and delivered to, ____________________, whose address is
______________________________.
Dated: __________, 19__
(Signature must conform in all respects to name
of holder as specified on the face of the
attached Warrant.)
-----------------------------------------------
Signature
-----------------------------------------------
Address
-----------------------------------------------
----------------
* Insert here the number of Shares called for on the face of the Warrant
(or, in the case of partial exercise, the portion as to which the Warrant is
being exercised), without making any adjustment for additional Shares or any
other securities or property which, under the adjustment provisions of the
Warrant, may be deliverable upon exercise.
10
THIS WARRANT AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS WARRANT MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF THIS WARRANT, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
Warrant Number: WC-3
Void after
----------------
WARRANT TO PURCHASE COMMON STOCK OF
FAROUDJA RESEARCH ENTERPRISES, INC.
This certifies that, for value received, Xxxx Sie is entitled, subject to
the terms set forth below, to purchase from Faroudja Research Enterprises, Inc.
(the "Company"), a California corporation, up to 19,648 shares (the "Shares") of
fully paid and non-assessable shares of Common Stock of the Company at the price
of $.50 per share (the "Exercise Price") at the times and subject to the
conditions hereafter stated, such price and number of Shares being subject to
adjustment as herein provided in this Warrant.
1. DEFINITIONS.
As used in this Warrant, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "COMPANY" includes any corporation which shall succeed to or
assume the obligations of the Company under this Warrant.
(b) "COMMON STOCK", when used with reference to stock of the Company,
means all shares, now or hereafter authorized, of the class of the Common Stock
of the Company presently authorized and stock of any other class into which
those shares may hereafter be changed.
(c) "WARRANTHOLDER", "holder of Warrant", "holder", or similar terms
when the context refers to the original holder of this Warrant.
2. EXERCISE CONDITIONS.
(a) EXERCISABILITY. This Warrant shall be vested and exercisable,
cumulatively, during its term only in accordance with the terms and conditions
herein, as to one-forty-eighth (1/48th) of the Shares for each full calendar
month after the Vesting Commencement Date set forth on the signature page of
this Warrant.
(b) TERMINATION OF STATUS. This Warrant is exercisable only for the
number of shares which become exercisable during the period Warrantholder
continues to provide services as requested by the Company and as determined in
the Company's discretion.
(c) NO CONSULTING AGREEMENT. This Warrant, and the issuance thereof
shall not be construed and is not an agreement to retain Warrantholder as a
consultant to the Company.
(d) ACCELERATION OF EXERCISABILITY. During the period this Warrant
is exercisable, in the event that (i) the Company shall consolidate with or
merge into any other corporation, or sell all or substantially all of its
assets to another corporation (unless after the completion of such
transaction the shareholders of the Company immediately prior to the
transaction own at least fifty percent (50%) of the surviving corporation),
or (ii) the Company registers its securities on a Form S-1 registration
statement and such registration statement is declared effective by the
Securities and Exchange Commission (an "IPO"), this Warrant shall accelerate
and become fully exercisable as to all Shares, notwithstanding the provisions
of Section 2.
3. EXERCISE PROVISIONS.
(a) EXERCISE OF WARRANT. The holder of this Warrant may exercise
it in whole or in part to the extent then exercisable by surrender of this
Warrant, with the form of subscription at the end of this Warrant duly
executed by the holder, to the Company at its principal office, accompanied
by payment in the amount obtained by multiplying the Exercise Price by the
number of shares of Common Stock designated in the subscription at the end of
this Warrant.
(b) PAYMENT OF EXERCISE PRICE. Payment shall be made by cash or by
check payable to the order of the Company.
(c) PARTIAL EXERCISE. On partial exercise, the Company shall
promptly issue and deliver to the holder of this Warrant a new Warrant or
Warrants of like tenor in the name of the holder providing for the right to
purchase the number of shares of Common Stock as to which this Warrant has
not been exercised.
2
(d) RESTRICTIONS ON EXERCISE. This Warrant may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Warrant, the Company may require the
Warrantholder to make any representation and warranty to the Company as may be
required by any applicable law or regulation.
4. STOCK ISSUANCE.
(a) DELIVERY OF STOCK CERTIFICATES. As soon as possible after full
or partial exercise of this Warrant, the Company at its expense will cause to
be issued in the name of and delivered to the holder of this Warrant, a
certificate or certificates for the number of fully paid and nonassessable
shares of Common Stock to which that holder shall be entitled upon such
exercise, together with any other securities and property to which that
holder is entitled upon such exercise under the terms of this Warrant. No
fractional shares will be issued upon exercise of rights to purchase under
this Warrant. If upon any exercise of this Warrant a fraction of a share
results, the Company will pay the cash value of that fractional share,
calculated on the basis of the market price as of the date of exercise as
determined by the Company's Board of Directors.
(b) STOCK FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all Shares will, upon issuance and payment in accordance
herewith, be fully paid, validly issued and nonassessable. The Company
further covenants and agrees that the Company will at all times have
authorized, and reserved for the purpose of the issue upon exercise of this
Warrant, at least the maximum number of Shares as are issuable upon the
exercise of this Warrant.
(c) NO RIGHTS AS SHAREHOLDER. Warrantholder, as such, shall not be
entitled to vote or receive dividends or be considered a shareholder of the
Company for any purpose, nor shall anything in this Warrant be construed to
confer on Warrantholder, as such, any rights of a shareholder of the Company
or any right to vote, give or withhold consent to any corporate action, to
receive notice of meetings of shareholders, to receive dividends or
subscription rights or otherwise.
5. ADJUSTMENT PROVISIONS.
The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time
to time upon the happening of certain events, as follows:
(a) RECLASSIFICATION. If the Company at any time while this Warrant
remains outstanding shall reclassify or in any manner change the securities then
purchasable upon the exercise of this Warrant (a "Reorganization"), then lawful
and adequate provision shall be made whereby this Warrant shall thereafter
evidence the
3
right to purchase such number and kind of securities and other property as
would have been issuable or distributable on account of such reorganization
upon or with respect to the securities which were purchasable or would have
become purchasable under this Warrant immediately prior to such
Reorganization.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Common Stock, the Exercise Price shall be adjusted to that price determined
by multiplying the Exercise Price in effect immediately prior to such
subdivision or combination by a fraction (i) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
subdivision or combination and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such subdivision
or combination.
(c) CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the Company at any time
while this Warrant is outstanding and unexpired shall take a record of the
holders of its Common Stock for the purpose of:
(i) STOCK DIVIDENDS. Entitling them to receive a
dividend payable in, or other distribution without consideration of, Common
Stock, then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to each dividend
or distribution by a fraction (A) the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to such
dividend or distribution and (B) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend
or distribution; or
(ii) DISTRIBUTION OF ASSETS; SECURITIES; ETC. Making any
distribution without consideration with respect to its Common Stock (other
than a cash dividend) payable otherwise than in its Common Stock, the
Warrantholder shall, upon the exercise thereof, be entitled to receive, in
addition to the number of Shares receivable thereupon, and without payment of
any additional consideration therefor, such assets or securities as would
have been payable to him as owner of that number of Shares receivable by
exercise of this Warrant had Warrantholder been the holder of record of such
Shares on the record date for such distribution; and an appropriate provision
therefor shall be made a part of any such distribution.
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Exercise Price pursuant to Section 5(b) or (c)(i), the number of Shares
purchasable hereunder shall be adjusted to that number determined by
multiplying the number of Shares purchasable upon the exercise of this
Warrant immediately prior to such adjustment by a fraction, the numerator of
which shall be the Exercise Price immediately prior to such adjustment and
the denominator of which shall be the Exercise Price immediately following
such adjustment.
4
(e) NOTICE OF ADJUSTMENTS. The Company shall give notice of each
adjustment or readjustment of the Exercise Price or the number of shares of
Common Stock or other securities issuable upon Exercise of this Warrant to the
registered holder of this Warrant at that holder's address as shown on the
Company's books.
(f) NO CHANGE NECESSARY. The form of this Warrant need not be
changed because of any adjustment in the Exercise Price or in the number of
shares of Common Stock purchasable upon its exercise. A Warrant issued after
any adjustment upon any partial exercise or in replacement may continue to
express the same Exercise Price and the same number of shares of Common Stock
(appropriately reduced in the case of partial exercise) as are stated on the
face of this Warrant as initially issued, and that Exercise Price and that
number of shares shall be considered to have been so changed at the close of
business on the date of adjustment.
6. SECURITIES LAW RESTRICTIONS.
(a) INVESTMENT REPRESENTATIONS. In connection with the acquisition
of this Warrant, the Warrantholder represents and warrants that the
Warrantholder is acquiring this Warrant, and upon exercise of this Warrant the
Warrantholder will be acquiring the Shares, for investment for Warrantholder's
own account, not as a nominee or agent, and not with a view to, or for resale in
connection with, any distribution thereof. The Warrantholder, by reason of
Warrantholder's business or financial experience, has the capacity to evaluate
the merits and risks of purchasing Common Stock of the Company and to make an
informed investment decision with respect thereto and to protect Warrantholder's
interests in connection with the acquisition of this Warrant and the Shares.
Warrantholder will execute any investment representation statement requested by
the Company.
(b) LEGENDS. Any certificate representing any Shares issued
hereunder shall have endorsed thereon legends in substantially the following
form (in addition to any legends required by any state securities laws):
THIS WARRANT AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS WARRANT MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE
5
TERMS OF THIS WARRANT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
7. NONTRANSFERABILITY OF WARRANT.
This Warrant may not be sold, pledged, assigned, hypothecated, gifted,
transferred or disposed of in any manner either voluntarily or involuntarily by
operation of law, other than by will or by the laws of descent or distribution,
and may be exercised during the lifetime of the Warrantholder only by such
Warrantholder. Subject to the foregoing, the terms of this Warrant shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Warrantholder.
8. LIMITATIONS ON TRANSFER OF SHARES.
In addition to any other limitation on the transfer of the Shares
created by applicable securities laws, Warrantholder shall not assign, encumber
or dispose of any interest in such Shares except as provided in this Section 8:
(a) RIGHT OF FIRST REFUSAL. If Warrantholder desires (or is
required) to sell or transfer in any manner the Shares, Warrantholder shall
first offer such Shares for sale to the Company at the same price, and upon
the same terms (or terms as similar as reasonably possible) as those upon
which he is dispose of such Shares ("Right of First Refusal"). If the
transfer does not involve a bona fide price freely set by Warrantholder, the
price shall be determined as set forth in Section 8(c) below. The Company
(or its assignee) shall notify Warrantholder as to whether the Company wishes
to purchase the Shares pursuant to the Right of First Refusal within
forty-five (45) days following the setting of a price under Section 8(c)
(when the price is determined under Section 8(c). If the Company (or its
assignee) elects to purchase such Shares hereunder, it shall set a date for
the closing of the transaction at a place specified by the Company not later
than 30 days from the date of such notice. At such closing, the Company (or
its assignee) shall tender payment for the Shares and the certificates
representing the Shares so purchased shall be cancelled. Warrantholder
hereby authorizes and directs the Secretary or Transfer Agent of the Company
to transfer the Shares as to which the Right of First Refusal has been
exercised from optionee to the Company. The Warrantholder further authorizes
the Company to refuse or to cause its Transfer Agent to refuse, to transfer
or record any Shares to be transferred in violation of this Agreement. In
the event the Shares are not disposed of by the Warrantholder within
forty-five (45) days following lapse of the period of the Right of First
Refusal provided to the Company, the Shares shall once again be subject to
the Right of First Refusal herein provided.
(b) INVOLUNTARY TRANSFER. In the event of any transfer by
operation of law or other involuntary transfer, of all, or a portion, of the
Shares, the Company shall have an option to purchase all of the Shares
transferred (the "Involuntary Transfer Option"). Upon such transfer, the
person acquiring the Shares shall promptly notify the Secretary of the
Company of such transfer. The Company (or its assignee) shall notify
6
Warrantholder and the person acquiring the Shares as to whether the Company
wishes to purchase the Shares pursuant to the Involuntary Transfer Option
within forty-five (45) days following the setting of a price under Section
8(c) of this Agreement. If the Company (or its assignee) elects to purchase
such Shares hereunder, it shall set a date for the closing of the transaction
at a place specified by the Company not later than 30 days from the date of
such notice. At such closing, the Company (or its assignee) shall tender
payment for the Shares and the certificates representing the Shares so
purchased shall be cancelled. Warrantholder hereby authorizes and directs
the Secretary or Transfer Agent of the Company to transfer the Shares as to
which the Involuntary Transfer Option has been exercised from the
Warrantholder to the Company. Warrantholder further authorizes the Company
to refuse or to cause its Transfer Agent to refuse, to transfer or record any
Shares to be transferred in violation of this Agreement.
(c) DETERMINATION OF PRICE. With respect to the Shares to be
transferred pursuant to the Right of First Refusal where the price is not a
bona fide price set by the Warrantholder under Section 8(a) or the
Involuntary Transfer Option, the price per share shall be a price set by the
Board of Directors of the Company that will reflect the current value of the
Shares. The Company shall notify Warrantholder, his representative or the
person acquiring the Shares under Section 8(b) of the price so determined
within forty-five (45) days after receipt by it of written notice of the
transfer or proposed transfer of the Shares.
(d) ASSIGNMENT BY COMPANY. The Company's Right of First Refusal
and Involuntary Transfer Option may be assigned in whole or in part to any
shareholder or shareholders of the Company.
(e) OBLIGATIONS BINDING UPON TRANSFEREES. All transferees of
Shares or any interest therein will receive and hold such Shares or interests
subject to the provisions of this Warrant, including the Company's Right of
First Refusal and Involuntary Transfer Option. Any sale or transfer of the
Shares shall be void unless the provisions of this Option are met.
(f) TERMINATION OF RIGHTS. The Right of First Refusal and the
Involuntary Transfer Option granted the Company by this Section 8 shall
terminate at such time as a public market exists for the Company's Common
Stock (or any other stock issued to Warrantholder in exchange for the Shares
acquired upon exercise pursuant to this Warrant). For the purpose of this
Agreement, a "public market" shall be deemed to exist if the Common Stock is
listed on a national securities exchange (as that term is used in the
Securities Exchange Act of 1934), or the Common Stock is traded on the
over-the-counter market and prices are published on business days in a
recognized financial journal.
(g) EXCLUDED TRANSFERS. The restrictions on transfer if this
Section 8 shall not apply to an inter-vivos transfer to Warrantholder's
ancestors or descendants or spouse or to a Trustee for their benefit,
provided that such transferee shall take such
7
Shares subject to all of the terms of this Warrant, including restrictions on
further transfer.
9. TERMINATION.
The right to exercise this Warrant shall expire upon the earlier of
the following: (i) the close of business on the date set forth on the first
page of this Warrant, (ii) the effective date of a firm commitment
underwritten public offering pursuant to a registration statement filed under
the Securities Act of 1933, as amended, covering the offer and sale of the
Company's Common Stock or (iii) upon the consolidation or merger of the
Company into any other corporation or the sale of all or substantially all of
its assets to another corporation, unless after the completion of the
transaction the shareholders of the Company immediately prior to the
transaction own at least fifty percent (50%) of the shares of the surviving
corporation.
10. GENERAL.
(a) ENTIRE AGREEMENT. The Company and the holder agree that this
Warrant amends and supersedes any prior agreement or understanding of the
holder with the Company, Sunsteam, Ltd., or any officers, directors, partners
or agents of the foregoing relating to the acquisition of securities in the
Company and supersedes any financial obligations of the Company to the holder.
(b) AMENDMENT. The holder of this Warrant agrees that any
provision of this Warrant may be amended, waived or modified upon the written
approval of the Company and the holder of this Warrant.
(c) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant
and, in the case of loss, theft, or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense will execute and deliver, in lieu of this Warrant,
a new Warrant of like tenor.
(d) NOTICES. Any notices to Warrantholder shall be delivered
personally or sent by first class mail, postage prepaid, to Warrantholder's
address on the records of the Company and shall be effective upon deposit in
the mail.
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(e) GOVERNING LAW. This Warrant shall be governed by and construed
and enforced in accordance with the laws if the State of California.
Dated: July 16, 1993 FAROUDJA RESEARCH ENTERPRISES, INC.
By: /s/ Yves Faroudja
---------------------------------
Yves Faroudja
President
ACCEPTED:
HOLDER:
Xxxx Sie
--------------------------------
Name
/s/ Xxxx Sie
--------------------------------
Signature
Date:
---------------------------
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SUBSCRIPTION FORM
(To be signed only upon exercise of Warrant)
TO: Faroudja Research Enterprises, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
The undersigned, the holder of the attached Warrant, hereby irrevocably
elects to exercise the purchase right represented by that Warrant for, and to
purchase under that Warrant, __________* shares of Common Stock of Faroudja
Research Enterprises, Inc. and herewith makes payment of $__________ for
those shares, and requests that the certificates for those shares be issued
in the name of, and delivered to, ____________________, whose address is
______________________________.
Dated:___________, 19__
(Signature must conform in all respects to name of
holder as specified on the face of the attached
Warrant.)
-----------------------------------
Signature
-----------------------------------
Address
-----------------------------------
----------------
* Insert here the number of Shares called for on the face of the Warrant (or,
in the case of partial exercise, the portion as to which the Warrant is being
exercised), without making any adjustment for additional Shares or any other
securities or property which, under the adjustment provisions of the Warrant,
may be deliverable upon exercise.
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