EXHIBIT 4.2
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 1 WARRANT
TO PURCHASE SHARES OF
SERIES F CONVERTIBLE PREFERRED STOCK
THIS CERTIFIES THAT, for value received, ("Holder") is entitled at any
time prior to expiration 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. Subject to earlier termination under
Subparagraph I (b) or (c), this Warrant shall be exercisable, in whole or in
part, at any time and from time to time from the Date of Grant through May 19,
2002 (the "Expiration Date").
(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 (as defined below), the Company shall give written notice
to the Holder of such Sale
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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 sentence shall extend the term of the
Warrant beyond the Expiration Date. The term "Sale of the Company" shall have
the meaning set forth in the Company's Restated Articles. 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 (as defined below)
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. This Warrant shall thereafter expire and terminate on
the closing date of such Initial Public Offering, if not previously exercised;
provided that nothing in this sentence shall extend the term of the Warrant
beyond the Expiration 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, covering the offering and sale of Common
Stock in which the aggregate gross offering proceeds equal or exceed Fifteen
Million Dollars ($15,000,000), the public offering price per share equals or
exceeds $7.00 (as appropriately adjusted for any stock dividend, stock split,
reverse stock split, recapitalization or combination of shares) and, immediately
subsequent to such closing, there are at least three hundred fifty (350) record
or beneficial holders of Common Stock.
2. Exercise.
(a) Method of Exercise; Payment; Issuance of New Warrant.
Subject to Paragraph I 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 Wan-
ant, 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
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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.
(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).
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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:
(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
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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 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
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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
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, that any such resulting or surviving 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.
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(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 each adjustment to
the Series F Conversion Price (as defined in the Restated Articles) pursuant to
Article III.B.5.(f)(vi) or (viii) of the Restated Articles in the event the
Company issues any Additional Stock (as defined in the Restated Articles) or
upon a Sale of the Company, respectively, the Warrant Price in effect
immediately prior to such adjustment shall, in the case of an adjustment under
Article III.B.5.(f)(vi) of the Restated Articles, be decreased by the same
percentage that the Series F Conversion Price was decreased as a result of such
event, and in the case of an adjustment under Article III.B.5.(f)(viii) of the
Restated Articles, be adjusted to equal the adjusted Series F Conversion Price
in effect immediately after such adjustment.
(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.
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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 Warrant s 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 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 Warrant s 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
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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
finished 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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