Exhibit 4.1
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (the "Agreement") has
been executed by the undersigned in connection with the sale in a private
placement pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), of certain shares of Series C
Convertible Preferred Stock (the "Preferred Stock"), convertible into
shares of common stock (the "Common Stock"), and of certain warrants
(the "Warrants," and each individually, a "Warrant") convertible into
shares of Common Stock (the "Warrant Shares" and, together with the
Common Stock issuable upon conversion of the Preferred Stock, the
"Shares") of Sigma Designs, Inc. ("Sigma Designs"), 00000 Xxxxxxx
Xxxxxxx, Xxxxxxx, XX 00000, a corporation organized under the laws of
California, to the persons and entities listed on the Schedule of Buyers
attached as Exhibit A hereto (the "Buyers" and, individually, each a
"Buyer"). Sigma Designs and Buyers (collectively, the "parties") each
hereby represents, warrants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(i) Sigma Designs and Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D ("Regulation D")
as promulgated by the United States Securities and Exchange Commission
("SEC") under the Securities Act; and
(ii) Each Buyer hereby subscribes for the number of shares
of Preferred Stock, convertible into Common Stock in accordance with the
terms set forth in the Certificate of Determination attached as Exhibit B
to this Agreement, specified opposite each Buyer's name in Column B on
the Schedule of Buyers at a cash purchase price of $1,000.00 per share
payable in United States Dollars at the Closing, as defined in
Paragraph 5 hereof.
(iii) Each Buyer shall pay the purchase price by
delivering same day funds in United States Dollars to an escrow agent or
as otherwise agreed between the parties, to be delivered to the order of
Sigma Designs upon delivery of the Preferred Stock.
(iv) Each Buyer shall each receive from Sigma Designs at the
Closing, for no additional consideration, a Warrant to purchase the
number of shares of Common Stock set forth opposite its name in Column C
on the Schedule of Buyers. The Warrant shall be exercisable under the
terms set forth in the Form of Warrant attached as Exhibit C to this
Agreement.
2. BUYER'S REPRESENTATIONS AND AGREEMENTS. Each Buyer
represents, warrants and agrees as follows:
(i) Each Buyer understands that the Preferred Stock, the
Warrant and the Shares have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), or any other applicable
securities law, and, accordingly, none of the Preferred Stock, the
Warrant nor the Shares may be offered, sold, transferred, pledged,
hypothecated or otherwise disposed of unless registered pursuant to, or
in a transaction exempt from registration under, the Securities Act and
any other applicable securities law;
(ii) Each Buyer is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3), or (7) of Regulation D (an
"Accredited Investor") and is acquiring the Preferred Stock and the
Warrant either for its own account or as a fiduciary or agent for one or
more institutional accounts, each of which is an Accredited Investor.
Each Buyer has such knowledge and experience in financial and business
matters is capable of evaluating the merits and risks of an investment in
the Preferred Stock and the Warrant. Each Buyer has had a reasonable
opportunity to ask questions of and receive answers from Sigma Designs
concerning Sigma Designs and the offering of the Preferred Stock and the
Warrant. Buyer is not subscribing for the Preferred Stock and the
Warrant as a result of or pursuant to any advertisement, article, notice,
or other communication published in any newspaper, magazine, or similar
media or broadcast over television or radio. Buyer is aware that it (or
such institutional account) may be required to bear the economic risk of
an investment in the Preferred Stock and the Warrant for an indefinite
period, and it (or such institutional account ) is able to bear such risk
for an indefinite period;
(iii) Buyer is acquiring the Preferred Stock and the
Warrant for its own account or for one or more institutional accounts as
described in Paragraph 2(ii) hereof, in each case for investment purposes
and not with a view to, or for offer or sale in connection with, any
distribution thereof (subject to any requirement of law that the
disposition of its property or the property of such institutional account
or accounts remain within its control). Buyer agrees on its own behalf
and on behalf of any such institutional account for which it is acquiring
the Preferred Stock and the Warrant to offer, sell or otherwise transfer
any Preferred Stock, Warrant or Shares only to Accredited Investors
(subject to any requirement of law that the disposition of its property
or the property of such institutional account or accounts remain within
its control) in conformity with the Securities Act and any other
applicable securities law and with the restrictions on transfer set forth
on the certificate(s) evidencing the Preferred Stock, the Warrant and the
Shares.
(iv) Each Buyer acknowledges that Sigma Designs or any
transfer agent of Sigma Designs shall register the transfer or exchange
of any of the Preferred Stock, the Warrant or Shares only upon receipt of
the certificate(s) evidencing such Preferred Stock, Warrant or Shares
with the transfer notice set forth thereon appropriately completed and
upon receipt in writing from the transferee or the recipient of such
Preferred Stock, Warrant or Shares in such transfer or exchange (as the
case may be) of a certificate setting forth the representations in
Paragraph 2 hereof;
(v) Each Buyer acknowledges that Sigma Designs and others
will rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and further agrees that if, prior to the
closing, any of such acknowledgments, representations and agreements made
by Buyer are no longer accurate, Buyer will promptly notify Sigma
Designs;
(vi) Each Buyer has received all information from Sigma
Designs, including but not limited to Sigma Designs' latest Form 10-K,
all Forms 10-Q and 8-K filed thereafter, and the Proxy Statement for its
latest fiscal year (collectively, the "Public Documents") and Buyer
acknowledges this information is sufficient to make an informed business
decision;
(vii) This Agreement and the matters contemplated
herein have been duly authorized, and this Agreement has been validly
executed, and delivered on behalf of Buyer and is a valid and binding
agreement enforceable in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(viii) Each Buyer has no existing short or other hedged
position with respect to the Common Stock of Sigma Designs and agrees
that it shall not without the written consent of Sigma Designs enter into
any short sales, pledge, contract to sell, option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or other hedging transactions (or any
similar transaction designed to transfer the economic risk of loss) with
respect to the Preferred Stock or Common Stock of Sigma Designs at any
time after the execution of this Agreement by Buyer. Each Buyer agrees
that within five (5) days of receipt of a written request by Sigma
Designs for such certificate, such Buyer will deliver, in writing, an
executed certificate of such Buyer to Sigma Designs certifying that such
Buyer has at no time breached the provisions of this Section 2(viii);
(ix) Each Buyer agrees not to effectuate or cause a third
party to effectuate a sale of, offer for sale, or solicit a purchase or
offer to purchase Sigma Designs' Common Stock with the intention of
causing a reduction in the Conversion Price (as defined in the
Certificate of Determination of Preferences of Series C Preferred Stock
of Sigma Designs, Inc. (the "Certificate of Determination")); and
(x) Each Buyer further agrees that, at all times after the
execution of this Agreement by Buyer and prior to the date on which the
Preferred Stock becomes convertible, they will each keep their purchase
of the Preferred Stock, Warrant or the Shares confidential, except as
required by law and except as necessary in the ordinary course of
business of each Buyer.
3. SIGMA DESIGNS' REPRESENTATIONS AND AGREEMENTS. Sigma Designs
represents, warrants and agrees as follows:
(i) Sigma Designs and its subsidiaries are corporations
duly organized and validly existing in good standing under the laws of
the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as
now being conducted. Each of Sigma Designs and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure
to be so qualified or be in good standing would not have a material
adverse effect on Sigma Designs and its subsidiaries taken as a whole (a
"Material Adverse Effect").
(ii) As set forth in the Second Restated Articles of
Incorporation of Sigma Designs, as amended (the "Articles of
Incorporation"), the authorized capital stock of Sigma Designs consists
of 20,000,000 shares of Common Stock, of which 15,167,068 shares were
issued and outstanding at December 31, 1998, 2,000,000 shares of
Preferred Stock, 50,000 of which were designated Series A Preferred
Stock, none of which were issued and outstanding, 5,000 of which were
designated Series B Preferred Stock, 1,600 of which were issued and
outstanding at January 18, 1999, and 3,000 of which were designated
Series C Preferred Stock, none of which were issued and outstanding prior
to the date hereof. All of such outstanding shares have been validly
issued and are fully paid and nonassessable. No shares of Common Stock
or Preferred Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by Sigma
Designs. Sigma Designs has furnished or made available to the Buyers
true and correct copies of Sigma Designs' Articles of Incorporation and
Bylaws as in effect on the date hereof, and the terms of all outstanding
securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.
(iii) Neither Sigma Designs, nor any of its affiliates,
nor any person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy
any security, under circumstances that would require registration of the
Preferred Stock, the Warrant or the Shares under the Securities Act or
cause this offering of Preferred Stock, the Warrant or the Shares to be
integrated with prior offerings by Sigma Designs for purposes of the
Securities Act or any applicable stockholder approval provisions.
(iv) Neither Sigma Designs nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of Sigma Designs or
any of its subsidiaries, is any such dispute threatened. None of Sigma
Designs' or its subsidiaries' employees is a member of a union and Sigma
Designs and its subsidiaries believe that their relations with their
employees are good.
(v) Except as disclosed in the Public Documents, Sigma
Designs and its subsidiaries have sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals and governmental
authorizations to conduct their businesses as described in the Public
Documents; the expiration of any trademarks, trade names, patent rights,
copyrights, licenses, approvals or governmental authorizations would not
have a Material Adverse Effect; and Sigma Designs has no knowledge of any
material infringement by it or its subsidiaries of trademark, trade name
rights, patent rights, copyrights, licenses, trade secret or other
similar rights of others, and there is no claim being made against Sigma
Designs or its subsidiaries regarding trademark, trade name, patent,
copyright, license, trade secret or other infringement which would
reasonably be expected to have a Material Adverse Effect.
(vi) Sigma Designs and its subsidiaries are (i) in
compliance, in all material respects, with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance, in all material
respects, with all terms and conditions of any such permit, license or
approval.
(vii) Any real property and facilities held under lease
by Sigma Designs and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made of such
property and buildings by Sigma Designs and its subsidiaries.
(viii) Each of Sigma Designs and its subsidiaries
maintains insurance of the types and in the amounts generally deemed
adequate for its business all of which insurance is in full force and
effect.
(ix) Sigma Designs and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses with such exceptions that would not have a
Material Adverse Effect, and neither Sigma Designs nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit, with such exceptions that would not have a Material Adverse
Effect.
(x) Sigma Designs and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specified authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability, (iii) access to assets is permitted only in accor-
dance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(xi) Neither Sigma Designs nor any of its subsidiaries is
subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of
Sigma Designs' executive officers has a Material Adverse Effect. Neither
Sigma Designs nor any of its subsidiaries is a party to any contract or
agreement which in the judgment of Sigma Designs' executive officers has
a Material Adverse Effect.
(xii) Sigma Designs has filed all material federal,
state, local and foreign income tax returns which have been required to
be filed and have paid all material taxes indicated by said returns and
all assessments received by them or any of them to the extent that such
taxes have become due and are not being contested in good faith. All tax
liabilities have been adequately provided for in the financial statements
of Sigma Designs.
(xiii) Sigma Designs has not conducted any general
solicitation or general advertising (as defined in Regulation D) with
respect to any of its securities that are not the subject of a
registration statement;
(xiv) The Preferred Stock, the Warrant and Shares when
issued and delivered will be duly and validly authorized and issued,
fully-paid and nonassessable, free and clear of any taxes, liens, encum-
brances, charges, or adverse claims of any nature whatsoever, and will
not subject the holders thereof to personal liability by reason of being
such holders;
(xv) This Agreement, the Registration Rights Agreement, the
Warrants, and any related agreements, have been duly authorized, validly
executed and delivered on behalf of Sigma Designs and are valid and
binding agreements in accordance with their respective terms, subject to
general principles of equity and to bankruptcy or other laws affecting
the enforcement of creditors' rights generally;
(xvi) The execution and delivery of this Agreement, the
Registration Rights Agreement, the Warrants and any related agreements
and the consummation of the issuance of the Preferred Stock, the Warrants
and the Shares and the transactions contemplated by such agreements do
not and will not conflict with or result in a breach by Sigma Designs of
any of the terms or provisions of, or constitute a default under, the
Articles of Incorporation or Bylaws of Sigma Designs, or to the knowledge
of the executive officers of Sigma Designs, any indenture, mortgage, deed
of trust, or any statute, rule or regulation applicable to Sigma Designs
or its subsidiaries or other material agreement or instrument to which
Sigma Designs is a party or by which it or any of its properties or
assets are bound, or any existing applicable decree, judgment or order of
any court, federal or state regulatory body, administrative agency or
other governmental body having jurisdiction over Sigma Designs or any of
its properties or assets, or to the knowledge of the Sigma Designs any
statute, rule or regulation applicable to Sigma Designs or its
subsidiaries, except for such conflict, breach or default as would not
result in a Material Adverse Effect;
(xvii) No authorization, approval or consent of or
filing with any federal, state or local governmental body of the United
States is legally required for the issuance and sale of the Preferred
Stock, the Warrant and the Shares as contemplated by this Agreement or
any related agreements;
(xviii) None of the Public Documents, as of their
respective dates, contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are
made, not misleading. Since October 31, 1998, there has been no Material
Adverse Effect on Sigma Designs.
(xix) Sigma Designs will issue one or more certificates
representing the Preferred Stock and the Warrant in the name of each
Buyer in such denominations to be specified by each Buyer prior to
Closing. The Preferred Stock, Warrants and Shares will bear the
restrictive legend specified in Paragraph 4 of this Agreement. Sigma
Designs further warrants that no instructions other than these
instructions and stop transfer instructions to give effect to
Paragraph 2(i) hereof will be given at any time to the transfer agent and
also warrants that the Preferred Stock, Warrants and Shares shall
otherwise be transferable on the books and records of Sigma Designs as
and to the extent provided in this Agreement, subject to compliance with
federal and state securities laws. As soon as commercially practicable
after the date hereof, Sigma Designs agrees to furnish new instructions
to the transfer agent instructing them to issue the Shares without a
restrictive legend, but only if and when a registration statement
registering the resale of such Shares has been declared effective by the
SEC. Nothing in this Paragraph shall affect in any way each Buyer's
obligations and agreement to comply with all applicable securities laws
upon resale of the Shares. Sigma Designs shall promptly notify the
Transfer Agent of the effectiveness or suspension of a registration
statement registering the Shares for resale.
(xx) There is no action, suit, notice of violation,
proceeding or investigation pending or, to the best knowledge of Sigma
Designs, threatened against or affecting Sigma Designs or any of its
subsidiaries of any of their respective properties before or by any
court, governmental or administrative agency or regulatory authority
which relates to the validity of enforceability of any documents related
to the transaction contemplated hereby, the Preferred Stock, the Warrant,
or the Shares which may reasonably likely result in a Material Adverse
Effect.
(xxi) Sigma Designs is, and at the Closing Date will
be, eligible to register securities for resale with the SEC under Form S-
3 or any successor form thereto.
(xxii) Neither Sigma Designs nor any of its subsidiaries
is currently in default under or in violation of (i) any indenture, loan,
credit agreement, or any other agreement or instrument by which it is
bound (except as further described in the last sentence of this
paragraph), (ii) any order of any court, arbitrator or governmental body
or (iii) any statute, rule or regulation of any governmental authority,
except in the case of both (i) and (ii) as does not have a Material
Adverse Effect. Sigma Designs' bank loans are subject to certain
covenants relating to profitability and financial ratios. Sigma Designs
did not meet the profitability covenant for the fiscal quarter ended
October 31, 1998; however, Sigma Designs has obtained a waiver from the
bank for the fiscal quarter ended October 31, 1998 releasing Sigma
Designs from meeting the profitability covenant. There is no assurance
that such waiver will be granted for future fiscal quarters in the event
that Sigma Designs reports net losses.
4. LEGENDS.
Each certificate evidencing the Preferred Stock, the Warrants and
the Shares shall bear a legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT" OR THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND SUCH OTHER SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO
A TRANSACTION WHICH, IN AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO SIGMA DESIGNS, IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION."
Upon conversion of the Preferred Stock and the exercise of
the Warrants, Sigma Designs shall issue a Common Stock certificate
without such legend to the holder of such shares if and to the extent
that (a) the SEC has declared a registration statement effective under
which such Common Stock is sold or (b) such holder has provided Sigma
Designs with an opinion of counsel reasonably acceptable to Sigma Designs
to the effect that a public sale or a transfer of such security may be
made without registration under the Securities Act, or (c) such holder
has provided Sigma Designs with reasonable assurances that such security
can be sold free of any volume limitations pursuant to Rule 144 under the
Securities Act (or a successor thereto).
The certificates representing the Warrants, the shares of
Preferred Stock and underlying Common Stock shall also bear any other
legends required by applicable federal or state securities laws, which
legends shall be removed when not required in accordance with this
Section 4.
5. COVENANTS.
(i) Each party shall use its reasonable best efforts
timely to satisfy each of the conditions to be satisfied by it as provided in
this Agreement.
(ii) Sigma Designs agrees to file a Form D with respect
to the Preferred Stock, the Warrants and the Shares as required under
Regulation D. Sigma Designs shall, on or before the Closing Date, take
such action as Sigma Designs shall reasonably determine is necessary to
qualify the Preferred Stock, the Warrants, and the Shares or obtain
exemption for the Preferred Stock, the Warrants, and the Shares, for sale
to the Buyers at the Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States.
(iii) Until the earlier of (i) the date as of which the
Buyers may sell all of the Shares without restriction pursuant to
Rule 144(k) promulgated under the Securities Act (or successor thereto),
or (ii) the date on which (A) the Buyers shall have sold all the Shares
and (B) none of the Preferred Stock or Warrants is outstanding (the
"Registration Period"), Sigma Designs shall file all reports required
to be filed with the SEC pursuant to the Exchange Act of 1934, as amended
(the "Exchange Act"), and Sigma Designs shall not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would otherwise
permit such termination.
(iv) Sigma Designs shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less
than 150% of the number of shares of Common Stock needed to provide for
the issuance of the Shares.
(v) Sigma Designs shall promptly secure the listing of
the Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all
Shares from time to time issuable upon conversion of the Preferred Stock
and exercise of the Warrants. Sigma Designs shall maintain the Common
Stock's authorization for quotation in the over-the counter market.
Sigma Designs shall promptly provide to each Buyer copies of any notices
it receives regarding the continued eligibility of the Common Stock for
trading in the over-the-counter market.
(vi) Unless Sigma Designs otherwise consents in writing,
each Buyer shall take such action as may be required so that all of the
Preferred Stock owned by such Buyer is voted in accordance with the
recommendation of the Board of Directors of Sigma Designs on all matters
to be voted on by holders of Sigma Designs' outstanding Preferred Stock
(including any matters requiring a class vote of the outstanding
Preferred Stock) in not less than the same proportion as the votes cast
by holders of Sigma Designs' outstanding Common Stock with respect to
such matters. Each Buyer, as a holder of shares of Sigma Designs'
Preferred Stock shall be present, in person or by proxy, at all meetings
of shareholders of Sigma Designs, so that all shares of Sigma Designs'
outstanding Preferred Stock beneficially owned by the Buyer may be
counted for the purposes of determining the presence of a quorum at such
meetings.
6. TRANSFER AGENT INSTRUCTIONS. Sigma Designs shall issue
irrevocable instructions to its transfer agent to issue certificates,
registered in the name of each Buyer, for the Shares in such amounts as
specified from time to time by the Buyers to Sigma Designs upon
conversion of the Preferred Stock or exercise of the Warrants (the
"Irrevocable Transfer Agent Instructions"). Prior to registration of
the Shares under the Securities Act, all such certificates shall bear the
restrictive legend specified in Section 4 of this Agreement. Sigma
Designs warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 6, and stop transfer
instructions to give effect to Section 4 hereof (in the case of the
Shares, prior to registration of such shares under the Securities Act)
will be given by Sigma Designs to its transfer agent and that the
Preferred Stock, the Warrants, and the Shares shall otherwise be freely
transferable on the books and records of Sigma Designs as and to the
extent provided in this Agreement, the Registration Rights Agreement, the
Warrants and applicable laws, including securities laws. Nothing in this
Section 6 shall affect in any way the Buyers' obligations and agreement
to comply with all applicable securities laws upon resale of the
Preferred Stock, the Warrants, or the Shares. If either (a) a Buyer
provides Sigma Designs with an opinion of counsel, reasonably
satisfactory in form and substance to Sigma Designs, that registration of
a resale by such Buyer of any of the Preferred Stock, the Warrant, or
Shares is not required under the Securities Act or (b) the Shares held by
such Buyer are registered under the Securities Act, Sigma Designs shall
permit the transfer, and, in the case of the Shares, promptly instruct
its transfer agent to issue one or more certificates in such name and in
such denominations as specified by such Buyer.
7. CLOSING. Share certificates shall be delivered to Buyers and
the funds therefor shall be delivered to Sigma Designs on January 22,
1999 (the "Closing") or such later date as each of the conditions set
forth in Paragraph 8 and 9 shall have been satisfied or waived, or at
such time to be mutually agreed.
8. CONDITIONS TO CLOSING OF BUYERS. The Buyers' obligations to
purchase the Preferred Stock and the Warrants at the Closing are, at the
option of each Buyer, subject to the fulfillment on or prior to the
Closing Date of each of the following conditions, each of which may be
waived by each Buyer in its sole discretion:
(i) Delivery of certificate(s) representing the
Preferred Stock as described in Paragraph 1(ii) hereto and a Warrant as
described in Paragraph 1(iv) hereto,
(ii) Delivery of an opinion of counsel to Sigma Designs
in substantially the form attached hereto as Exhibit D; and
(iii) Sigma Designs and Buyers shall have entered into
a Registration Rights Agreement substantially in the form of Exhibit E
hereto.
9. CONDITIONS TO CLOSING OF SIGMA DESIGNS. The obligation of
Sigma Designs to sell and issue the Preferred Stock and the Warrants at
the Closing is, at the option of Sigma Designs, subject to the
fulfillment of the following conditions, each of which may be waived by
Sigma Designs in its sole discretion:
(i) Delivery into escrow or otherwise as agreed between
Buyers and Sigma Designs by Buyers of the amount set forth in Paragraph 1
hereof.
(ii) Sigma Designs and Buyers shall have entered into a
Registration Rights Agreement substantially in the form of Exhibit E
hereto.
(iii) The Certificate of Determination shall have been
filed with the Secretary of State of the State of California.
(iv) All of the outstanding shares of Sigma Designs'
Series B Preferred Stock shall have been repurchased or converted into Common
Stock.
10. EXPENSES. Sigma Designs and the Buyers shall each bear their
own expenses and legal fees with respect to this Agreement and the
transactions contemplated hereby.
11. GOVERNING LAW; INTERPRETATION. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California without giving effect to the provisions governing the conflict
of laws. The parties jointly consent to personal jurisdiction in any
state or federal court located in the State of California, waive any
objection as to jurisdiction or venue, and agree not to assert any
defense based on lack of jurisdiction or venue. Facsimile signatures of
this agreement shall be binding on all parties hereto.
12. CONVERSION. (a) Sigma Designs shall use its reasonable best
efforts to issue and deliver to each Buyer a certificate or certificates
for the number of Common Stock to which such Buyer shall be entitled
within five (5) business days after such Buyer has fulfilled all
conditions required for conversion as set forth in this Agreement and in
the Certificate of Determination (the "Deadline").
(b) Sigma Designs agrees that, in addition to any other
remedies which may be available to a Buyer requesting conversion of its
Preferred Stock, in the event Sigma Designs fails for any reason to
effect delivery to such Buyer of certificates representing Common Stock
within five (5) business days following receipt by Sigma Designs of a
notice of conversion, such Buyer may, at its sole election, revoke the
notice of conversion by delivering a notice of such effect to Sigma
Designs, whereupon Sigma Designs and such Buyer shall each be restored to
their respective positions immediately prior to delivery of such notice
of conversion.
13. NOTICE. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively
given upon delivery to the party to be notified in person or upon
delivery by courier service or upon delivery after deposit with the
United States mail, by registered or certified mail, postage prepaid, or
upon receipt by the party of a facsimile copy, addressed (a) if to a
Buyer, at such Buyer's address set forth in Exhibit A, or at such other
address as such Buyer shall have furnished to Sigma Designs in writing,
or (b) if to any other holder of any Shares, at such address as such
holder shall have furnished Sigma Designs in writing, or, until any such
holder so furnishes an address to Sigma Designs, then to and at the
address of the last holder of such Shares who has so furnished an address
to Sigma Designs, or (c) if to Sigma Designs, one copy should be sent to
at 00000 Xxxxxxx Xxxxxxx, Xxxxxxx, XX 00000, and addressed to the
attention of the Corporate Secretary, or at such other address as Sigma
Designs shall have furnished to the Buyers.
14. ARBITRATION; REMEDIES. Any dispute that arises between the
parties to this Agreement shall first be submitted for resolution to
arbitration under the rules of the American Arbitration Association of
Santa Xxxxx County, California. In the event of a breach or a threatened
breach by any party to this Agreement of its obligations under this
Agreement, any party injured or to be injured by such breach will be
entitled to specific performance of its rights under this Agreement or to
injunctive relief, in addition to being entitled to exercise all rights
provided in this Agreement and granted by law. The parties agree that
the provisions of this Agreement shall be specifically enforceable, it
being agreed by the parties that the remedy at law, including monetary
damages, for breach of any such provision will be inadequate compensation
for any loss and that any defense or objection in any action for specific
performance or injunctive relief that a remedy at law would be adequate
is waived.
15. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which may be executed by less than all of the
Buyers, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute
one instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by the undersigned, thereunto duly authorized, as of the
date first set forth above.
SIGMA DESIGNS, INC.
By:
Xxxxx X. Xxxx
Chairman and Chief Executive Officer
PREFERRED HARDWARE DISTRIBUTORS, INC.
By:
Xxxxxx Xxxxx
President
JFIC Inc.
By:
Xxxxxx Xxxx
President
MULTIVENTURE TECHNOLOGIES, INC.
By:
Xxxxx Xxx
Chief Executive Officer
[SUBSCRIPTION AGREEMENT SIGNATURE PAGE]
S-1
Exhibit A
Schedule of Buyers
A B C
---------- ---------- ----------
Number of
Aggregate Shares of Number of
Purchase Preferred Warrant
Name of Purchaser Price Stock Shares
----------------------------------------- ---------- ---------- ----------
1. Preferred Hardware Distributors, Inc. $500,000 500 25,000
2. JFIC, Inc. $500,000 500 25,000
3. Multiventure Technologies, Inc. $100,000 100 5,000
4. Xxxxx Xxxx $100,000 100 5,000
Address of Purchasers
-----------------------------------------
Preferred Hardware Distributors, Inc.
Mailing Address: c/o Mitsuba Southeast, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx, President
Fax Number: 000-000-0000
JFIC Inc.
Mailing Address: c/o Utobia Corp
000 X. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx, President
Fax Number: 000-000-0000
Multiventure Technologies, Inc.
Mailing Address: c/o Multiventure International, Inc.
00000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxx, CEO
Fax Number: 000-000-0000
Xxxxx Xxxx
Mailing Address: 00000 Xxxxxxxxx Xxxx
Xxxxx Xxxxxx, XX 00000
Fax Number:000-000-0000
Exhibit B
(Certificate of Determination - See Exhibit 3.1)
Exhibit C
(Form of Warrant See Exhibit 4.3)
Exhibit D
January 22, 1999
To the Purchasers Listed in Exhibit A
to the Sigma Designs, Inc.
Series C Preferred Stock Subscription
Agreement Dated as of January 22, 1999
Ladies and Gentlemen:
Reference is made to that certain Private Securities Subscription
Agreement, dated as of January 22, 1999 (the "Subscription Agreement")
by and among Sigma Designs, Inc., a California corporation (the
"Company"), and the purchasers listed in Exhibit A to the Subscription
Agreement (the "Investors"), which provides for the issuance by the
Company to the Investors of up to 3,000 shares of Series C Preferred
Stock of the Company, without par value (the "Series C Preferred
Stock"). This opinion is rendered to you pursuant to Section 8(ii) of
the Subscription Agreement, and all terms used herein have the meanings
defined for them in the Subscription Agreement unless otherwise defined
herein.
We have acted as counsel for the Company in connection with the
negotiation of the Subscription Agreement and the issuance of the Series
C Preferred Stock. As such counsel, we have made such legal and factual
examinations and inquiries as we have deemed advisable or necessary for
the purpose of rendering this opinion. In addition, we have examined
originals or copies of documents, corporate records and other writings
which we consider relevant for the purposes of this opinion. In such
examination we have assumed the genuineness of all signatures on original
documents, the conformity to original documents of all copies submitted
to us and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
As used in this opinion, the expression "to our knowledge,"
"known to us" or similar language with reference to matters of fact
means that, after an examination of documents made available to us by the
Company, and after inquiries of officers of the Company, but without any
further independent factual investigation, we find no reason to believe
that the opinions expressed herein are factually incorrect. Further, the
expression "to our knowledge", "known to us" or similar language with
reference to matters of fact refers to the current actual knowledge of
the attorneys of this firm who have worked on matters for the Company
solely in connection with the Subscription Agreement and the transactions
contemplated thereby. Except to the extent expressly set forth herein or
as we otherwise believe to be necessary to our opinion, we have not
undertaken any independent investigation to determine the existence or
absence of any fact, and no inference as to our knowledge of the
existence or absence of any fact should be drawn from our representation
of the Company or the rendering of the opinion set forth below.
For purposes of this opinion, we are assuming that you have all
requisite power and authority, and have taken any and all necessary
corporate or partnership action, to execute and deliver the Subscription
Agreement, and we are assuming that the representations and warranties
made by the Investors in the Subscription Agreement and pursuant thereto
are true and correct. We are also assuming that the Investors have
purchased the Series C Preferred Stock for value, in good faith and
without notice of any adverse claims within the meaning of the California
Uniform Commercial Code.
The opinions hereinafter expressed are subject to the following
qualifications:
(a) We express no opinion as to the effect of applicable
bankruptcy and other similar laws affecting the rights of creditors
generally;
(b) We express no opinion as to the effect of rules of law
governing specific performance, liquidated damages, injunctive relief or
other equitable remedies;
(c) We express no opinion as to compliance with applicable anti-
fraud provisions of federal or state securities laws;
(d) We express no opinion as to the enforceability of the voting
provisions of Section 5(vi) of the Subscription Agreement; and
(e) We are members of the Bar of the State of California and we
are not expressing any opinion as to any matter relating to the laws of
any jurisdiction other than the laws of the United States of America and
the laws of the State of California.
Based upon and subject to the foregoing, we are of the opinion
that:
1. The Series C Preferred Stock issued under the Subscription
Agreement are validly issued, fully paid and nonassessable, free and
clear of any liens, encumbrances, and preemptive rights or similar rights
contained in the Company's Second Restated Articles of Incorporation or
Bylaws;
2. The Subscription Agreement has been duly authorized, and
validly executed and delivered by the Company;
3. The execution and delivery of the Subscription Agreement and
the consummation of the issuance of the Series C Preferred Stock do not
violate any provision of the Second Restated Articles of Incorporation or
Bylaws of the Company, or, to our knowledge, any material indenture,
mortgage, deed of trust or other material agreement or instrument listed
as an Exhibit in the Company's most recent Form 10-K filed under the
Securities Exchange Act of 1934, as amended, or, to our knowledge, any
existing applicable decree, judgment or order of any court, federal or
state regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or any of its properties or assets;
4. No authorization, approval or consent of or filing with any
federal, state or local governmental body of the United States is legally
required for the issuance and sale of the Series C Preferred Stock as
contemplated by the Subscription Agreement.
This opinion is furnished to the Investors solely for their benefit
in connection with the purchase of the Shares, and may not be relied upon
by any other person without our prior written consent.
Very truly yours,
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Professional Corporation
Exhibit E
(Form of Registration Rights Agreement - See Exhibit 4.2)
