Exhibit 10.29
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WARRANT AGREEMENT
Dated as of June 30, 2000
among
LEXAR MEDIA, INC.
and
THE INITIAL WARRANT HOLDERS
LISTED ON SCHEDULE I HERETO
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS............................................................... 1
1.1 Definitions................................................................... 1
1.2 Accounting Terms and Determinations........................................... 7
ARTICLE II AUTHORIZATION AND ISSUANCE OF WARRANTS; RESERVATION OF WARRANT SHARES.... 7
2.1 Authorization and Issuance of Warrants........................................ 7
2.2 Reservation of Warrant Shares................................................. 7
ARTICLE III FORM; REGISTER; CONVERSION FOR WARRANTS; TRANSFER....................... 8
3.1 Form of Warrant; Register...................................................... 8
3.2 Conversion of Warrants for Warrants............................................ 8
3.3 Transfer of Warrant............................................................ 9
3.4 Transfer; Legends.............................................................. 9
ARTICLE IV EXERCISE OF WARRANT; CONVERSION FOR WARRANT SHARES....................... 9
4.1 Exercise of Warrants........................................................... 9
4.2 Conversion for Warrant Shares.................................................. 10
4.3 Issuance of Common Stock....................................................... 11
ARTICLE V ADJUSTMENT OF EXERCISE PRICE AND SHARES................................... 13
5.1 General........................................................................ 13
5.2 Stock Dividends, Subdivisions and Combinations.................................. 13
5.3 Issuance of Common Stock....................................................... 13
5.4 Distribution of Equity Securities.............................................. 17
5.5 Capital Reorganization, Capital Reclassifications, Merger, Etc................. 17
5.6 Other Actions Affecting Common Stock........................................... 17
5.7 Miscellaneous.................................................................. 18
ARTICLE VI COVENANTS OF THE COMPANY................................................. 20
6.1 Notices of Certain Actions..................................................... 20
6.2 Merger or Consolidation of the Company......................................... 21
ARTICLE VII MISCELLANEOUS........................................................... 21
7.1 Notices........................................................................ 21
7.2 No Voting Rights; Limitations of Liability..................................... 22
7.3 Amendments and Waivers......................................................... 22
7.4 Remedies....................................................................... 23
7.5 Binding Effect................................................................. 23
7.6 Counterparts................................................................... 23
7.7 GOVERNING LAW.................................................................. 23
7.8 Benefits of this Agreement..................................................... 23
7.9 Headings....................................................................... 24
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SCHEDULE I - Initial Warrant Holders
SCHEDULE II - Outstanding Call, Options and Other Claims
EXHIBIT A - Registration Rights
EXHIBIT B - Form of Warrant
WARRANT AGREEMENT dated as of June
30, 2000, among LEXAR MEDIA, INC., a
California corporation (the "Company"),
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ACCESS TECHNOLOGY PARTNERS, L.P.
("Access") and CHASE SECURITIES INC.
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("Chase"; together with Access, the
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"Initial Holders")
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Preamble
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The Company is entering into (a) a certain credit agreement dated as
of June 30, 2000 (the "Senior Credit Agreement") with The Chase Manhattan Bank,
as Administrative Agent and the several Lenders (as defined in the Senior Credit
Agreement) from time to time parties thereto, pursuant to which the Lenders have
agreed, subject to the terms and conditions set forth therein, to lend up to
$20,000,000 in aggregate principal amount to the Company (the "Senior Secured
Facility") and (b) a certain credit agreement, dated as of the same date, with
Access, pursuant to which Access has agreed, subject to the terms and conditions
set forth therein, to lend up to $10,000,000 in aggregate principal amount to
the Company (the "Junior Secured Facility"). In order to induce Chase to serve
as lead arranger, syndicator and book manager of the Senior Secured Facility and
to induce Access to provide the Junior Secured Facility, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Company
is willing, and has agreed, to issue and sell the Warrants to the Initial
Holders. This Agreement sets forth terms and conditions applicable to the
Warrants.
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
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As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any specified Person, any other
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Person that directly or indirectly through one or more intermediaries Controls,
is Controlled by or is under common Control with such Person.
"Allocable Number" has the meaning given to such term in Section 4.2.
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"Amendment" means the amendment, dated as of June 22, 2000, to the
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Investors Rights Agreement, dated as of September 28, 1999, between the Company
and certain investors listed therein (the "Investor Rights Agreement").
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"Applicable Law" means all provisions of laws, statutes, ordinances,
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rules, regulations, permits, certificates or orders of any Governmental
Authority applicable to the Person in question or any of its assets or property,
and all judgments, injunctions, orders and decrees of all courts and arbitrators
in proceedings or actions in which the Person in question is a party or by which
any of its assets or properties are bound.
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"Assignment Form" means the assignment form attached as Annex C to a
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Warrant.
"Board" means the board of directors of the Company.
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"Business Day" means any day other than a Saturday, Sunday or a day on
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which banks are authorized or required to be closed in New York, New York,
provided, however, that any determination of a Business Day relating to a
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securities conversion or other securities market means a Business Day on which
such conversion or market is open for trading.
"Closing Date" has the meaning given to such term in the Senior Credit
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Agreement.
"Commission" means the Securities and Exchange Commission (or a
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successor thereto).
"Common Stock" means (i) the Common Stock, $.0001 par value, of the
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Company, and (ii) any other class of capital stock of the Company hereafter
authorized that is not limited to a fixed sum or percentage of par or stated or
liquidation value with respect to the rights of the holders thereof to
participate in dividends or in the distribution of assets upon any liquidation,
dissolution or winding up of the Company.
"Company" has the meaning given to such term in the Preamble.
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"Control" means, with respect to any Person, the possession, directly
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or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Conversion Form" means the conversion form attached as Annex B to a
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Warrant.
"Convertible Securities" has the meaning given to such term in Section
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5.3(b)(i).
"Delivery Date" has the meaning given to such term in Section 4.3(a).
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"Exercise Form" means the exercise form attached as Annex A to a
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Warrant.
"Exercise Price" means $8.00 per Warrant Share, subject to adjustment
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from time to time in the manner provided in Article V.
"Expiration Date" means June 30, 2007, or, in the case of the Initial
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Holders, such later date as may be established pursuant to Section 4.3(h).
"Expiration Time" means 5:00 p.m., Pacific time, on June 30, 2007, or,
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in the case of the Initial Holders, on such later date as may be established
pursuant to Section 4.3(h).
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"Fully Diluted Basis" means, with respect to the Common Stock at any
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time of determination, the number of shares of Common Stock that would be issued
and outstanding at such time, assuming full conversion, exercise and exchange of
all issued and outstanding Convertible Securities and Options that shall be (or
may become) convertible for, or exercisable or convertible into, Common Stock,
including the Warrants, except that the number of shares of Common Stock
outstanding on a Fully Diluted Basis shall not include the number of shares of
Common Stock issuable upon exercise, conversion or exchange of Options or
Convertible Securities that, at the time of determination, are Out of the Money.
"GAAP" means generally accepted accounting principles in the United
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States of America as in effect from time to time.
"Governmental Authority" means any federal, state, municipal or other
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government, governmental department, or governmental or regulatory authority,
commission, board, bureau, agency or instrumentality, or any court, in each case
whether of the United States of America or any political subdivision thereof, or
of any other country.
"Holder" means with respect to any Warrant, the holder of such Warrant
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as set forth in the Warrant Register.
"Market Price" means, for any security as of any date of
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determination:
(a) if such security is Publicly Traded as of the date of determination,
the applicable price set forth below:
(i) the highest average of its closing sale prices for any
period of ten (10) consecutive Business Days during the 90 days immediately
preceding the date of determination, provided, however, that with respect
to each Business Day on which there was no actual closing sale price
reported, then the closing sale price for such Business Day shall be
conclusively deemed to be the average for such Business Day of the lowest
asked and highest bid prices of such security quoted on all exchanges on
which such security is listed, as published in the Pacific Edition of the
Wall Street Journal, or
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(ii) if there have been no sales on any such exchange during such
period, the highest average for any period of ten (10) consecutive Business
Days during such 90 days of the average of the highest bid and lowest asked
prices quoted on any exchanges on which such security is listed as
published in the Pacific Edition of the Wall Street Journal at the end of
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each of such ten (10) Business Days if such exchanges are the primary
securities markets for such security, provided that:
(A) if such security is not so listed during any Business
Day during such 90 day period, the average for such day shall be the
closing sales price on such Business Day quoted on the Nasdaq National
Market or the Nasdaq Small-Cap Market, as applicable, or if there have
been no sales on the Nasdaq National Market or the Nasdaq Small-Cap
Market, as the case may be, on such Business Day, the average of the
highest bid and lowest asked prices quoted on the Nasdaq National
Market or the Nasdaq Small-Cap Market, as the case may be, and
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(B) if on any Business Day during such period such security
is neither listed on an exchange nor quoted in the Nasdaq National
Market or Nasdaq Small-Cap Market, the average of the highest bid and
lowest asked prices on such Business Day in the domestic over-the-
counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization;
provided, that (1) for the purposes of any determination of the "Market Price"
of any share of a security on any day after the "ex" date or any similar date
for any dividend or distribution paid or to be paid with respect to such
security, any price of such security on a day prior to such "ex" date or similar
date shall be reduced by the fair market value of the per share amount of such
dividend or distribution as determined in good faith by the Board of Directors
of the Company, and (2) for the purposes of any determination of the "Market
Price" of any security on any day after (i) the effective day of any subdivision
(by stock split or otherwise) or combination (by reverse stock split or
otherwise) of outstanding securities or (ii) the "ex" date or any similar date
for any dividend or distribution with respect to such securities in shares of
that security, any price of such security on a day prior to such effective date
or "ex" date or similar date shall be appropriately adjusted to reflect such
subdivision, combination, dividend or distribution, and (3) for the purposes of
determining any adjustment to be made pursuant to Section 5.3 of this Agreement,
"Market Price" shall mean
(A) if such security is Publicly Traded and is then listed on a
national securities exchange, the average of its closing prices on the
ten (10) days prior to the date of determination on the principal
national securities exchange on which the security is listed or
admitted to trading as reported in the Pacific Edition of The Wall
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Street Journal;
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(B) if such security is then quoted on the Nasdaq National
Market, the average of its closing prices on the Nasdaq National
Market for the ten (10) days prior to the date of determination as
reported in the Pacific Edition of The Wall Street Journal;
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(C) if such security is Publicly Traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices
on the ten (10) days prior to the date of determination as reported in
the Pacific Edition of The Wall Street Journal;
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(b) if such security is not Publicly Traded as of the date of
determination, (i) in the case of the Common Stock, the Market Value Per Share,
determined in accordance with the Valuation Procedure, and (ii) in the case of
any other security, the fair market value of one share or other applicable unit
of such security, determined in accordance with the Valuation Procedure, except
that if the Market Price of the Common Stock is being determined for purposes of
Section 4.3(c), such determination shall be made in good faith by the Board
exercising reasonable business judgment, provided, however, that if the Holder
disputes in writing the Market Value as so determined within thirty (30) days of
being informed of such Market Value, the Market Value shall be determined by an
independent appraiser, appointed in good faith by the Board; and
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(c) notwithstanding anything herein to the contrary, if the consideration
received by the Company on a per share basis for the shares requiring such
adjustment is less than the Exercise Price of the Warrants at the time such
shares are issued or deemed to be issued, "Market Price" shall mean the Exercise
Price as of the date of determination.
"Market Value" means the highest price that would be paid for the
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entire common equity interest in the Company on a going-concern basis in a
single arm's-length transaction between a willing buyer and a willing seller
(neither acting under compulsion), using valuation techniques then prevailing in
the securities industry and assuming full disclosure of all relevant information
and a reasonable period of time for effectuating such sale. For the purposes of
determining the Market Value, (i) the exercise price of Options to acquire
Common Stock that are not Out of the Money shall be deemed to have been received
by the Company and (ii) the liquidation preference or indebtedness, as the case
may be, represented by Convertible Securities that are not Out of the Money
shall be deemed to have been eliminated or cancelled.
"Market Value Per Share" means the price per share of Common Stock
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obtained by dividing (A) the Market Value by (B) the number of shares of Common
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Stock outstanding (on a Fully Diluted Basis) at the time of determination.
"Options" has the meaning given to such term in Section 5.3(b)(i).
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"Other Securities" means common stock equivalents determined in
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accordance with GAAP.
"Out of the Money" means, at any date of determination (a) in the case
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of an Option, that the aggregate fair market value as of such date of the shares
of Common Stock issuable upon the exercise of such Option is less than the
aggregate exercise price payable upon such exercise and (b) in the case of a
Convertible Security, that the quotient resulting from dividing the fair market
value as of such date of such Convertible Security by the number of shares
issuable as of such date upon conversion or exchange of such Convertible
Security is greater than the fair market value of a share of Common Stock.
"Person" shall be construed as broadly as possible and shall include
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an individual or natural person, a partnership (including a limited liability
partnership), a corporation, an association, joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a Governmental Authority.
"Publicly Traded" means, with respect to any security, that such
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security is (a) listed on a domestic securities exchange, (b) quoted on the
Nasdaq National Market or the Nasdaq Small-Cap Market or (c) traded in the
domestic over-the-counter market, which trades are reported by the National
Quotation Bureau, Incorporated.
"Registration Rights" means the registration rights described on
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Exhibit A hereto.
"Requisite Holders" means, as of any date of determination, Holders
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holding Warrants or Warrant Shares representing at least a majority of the
Warrant Shares (a) previously issued or (b) issuable upon exercise of Warrants
then outstanding.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Subsidiary" means, with respect to any Person, any other Person of
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which more than fifty percent (50%) of the shares of stock or other interests
entitled to vote in the election of directors or comparable Persons performing
similar functions (excluding shares or other interests entitled to vote only
upon the failure to pay dividends thereon or other contingencies) are at the
time owned or controlled, directly or indirectly through one or more
Subsidiaries, by such Person.
"Transfer" or "transfer" means any sale, transfer, assignment, or
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other disposition of any interest in, with or without consideration, any
security, including any disposition of any security or of any interest therein
which would constitute a sale thereof within the meaning of the Securities Act.
"Valuation Procedure" means, with respect to the determination of any
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amount or value required to be determined in accordance with such procedure (the
"valuation amount"), a determination (which shall be final and binding on the
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Company and the Holders) made (a) by agreement among the Company and the
Requisite Holders within thirty (30) days following the event requiring such
determination or (b) in the absence of such an agreement, by an Appraiser (as
defined below) selected in accordance with the further provisions of this
definition. If the Board and the Requisite Holders are unable to agree upon an
acceptable Appraiser within ten (10) days after the date either party proposed
that one be selected, the Appraiser will be selected by an arbitrator located in
New York City, New York, selected by the American Arbitration Association (or if
such organization ceases to exist, the arbitrator shall be chosen by a court of
competent jurisdiction). The arbitrator shall select the Appraiser (within ten
(10) days of his appointment) from a list, jointly prepared by the Board and the
Requisite Holders, of not more than six Appraisers of national standing in the
United States, of which no more than three may be named by the Board and no more
than three may be named by the Requisite Holders. The arbitrator may consider,
within the ten-day period allotted, arguments from the parties regarding which
Appraiser to choose, but the selection by the arbitrator shall be made in its
sole discretion from the list of six. The Board and the Requisite Holders shall
submit to the Appraiser their respective determinations of the valuation amount,
and any supporting arguments and other data as they may desire, within ten (10)
days of the appointment of the Appraiser, and the Appraiser shall as soon as
practicable thereafter make its own determination of the valuation amount. The
final valuation amount for purposes hereof shall be the average of the two
valuation amounts closest together, as determined by the Appraiser, from among
the valuation amounts submitted by the Board (the "Company's Valuation") and the
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Requisite Holders (the "Holders' Valuation") and the valuation amount calculated
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by the Appraiser. The fees and expenses of the Appraiser and arbitrator (if
any) used to determine the valuation amount shall be (i) paid by the Company if
the Company's Valuation is not used to determine the average in the preceding
sentence, (ii) paid by the Holders if the Holders' Valuation is not used to
determine the average in the preceding sentence or (iii) borne equally by the
Company and the Holders if the Company's Valuation and the Holders' Valuation
are both used to determine the average in the preceding sentence. As used
herein, "Appraiser" means (A) with respect to a determination of Market Value or
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the fair market value of any security, an investment banking firm and (B) with
respect to a determination of other valuation required hereunder, a firm of the
type generally considered to be qualified in making determinations of the type
required.
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"Warrant" has the meaning given to such term in Section 3.1(a).
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"Warrant Register" has the meaning given to such term in Section
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3.1(b).
"Warrant Shares" means (a) the shares of Common Stock issued or
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issuable upon exercise of a Warrant in accordance with Section 4.1 or upon
conversion of a Warrant in accordance with Section 4.2, (b) all other securities
or other property issued or issuable upon any such exercise or conversion in
accordance with this Agreement and (c) any securities of the Company distributed
with respect to the securities referred to in the preceding clauses (a) and (b).
1.2 Accounting Terms and Determinations.
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Except as otherwise may be expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Holders hereunder and under the Warrants shall be prepared, in accordance with
GAAP. All calculations made for the purposes of determining compliance with the
terms of this Agreement and the Warrants shall (except as otherwise may be
expressly provided herein) be made by application of GAAP.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF WARRANTS; RESERVATION OF WARRANT SHARES
2.1 Authorization and Issuance of Warrants.
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The Company has authorized the issuance and sale of Warrants for 250,000
shares of Common Stock and 625,000 shares of Common Stock, respectively, to
Chase and Access for an aggregate consideration of $2,500 and $6,250,
respectively. Such consideration shall be payable in immediately available
United States Dollars upon delivery of the Warrants, duly executed and dated,
which delivery shall be on or prior to the Closing Date.
2.2 Reservation of Warrant Shares.
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The Company has authorized the issuance of such number of shares of Common
Stock as shall be necessary to permit the Company to comply with its
obligations, as of the date hereof, to issue Warrant Shares pursuant to the
Warrants. The Company will at all times have authorized, and reserve and keep
available, free from preemptive or similar rights, for the purpose of enabling
it to satisfy any obligation to issue Warrant Shares upon the exercise or
conversion of each Warrant, the number of authorized but unissued Warrant Shares
issuable upon exercise or conversion of all outstanding Warrants. The Company
shall as promptly as necessary take all actions necessary to ensure that Warrant
Shares shall be duly authorized and, when issued upon exercise or conversion of
any Warrant in accordance with the terms hereof, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except to the extent of
any applicable provisions set forth in this Agreement, and in the Investor
Rights Agreement, as amended from time to time) and free and clear of all
preemptive or similar rights.
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ARTICLE III
FORM; REGISTER; CONVERSION FOR WARRANTS; TRANSFER
3.1 Form of Warrant; Register.
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(a) Form. Each Warrant issued hereunder shall be in the form of
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Exhibit B (each, a "Warrant") and shall be executed on behalf of the Company by
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its Chairman or its Chief Executive Officer and by its Chief Financial Officer,
its Treasurer or its Assistant Treasurer, except that a Warrant need not bear
any legend appearing on the first page of such form from and after such time as
all the restrictions to which such legend relates no longer apply. Upon initial
issuance, each Warrant shall be dated as of the date of signature thereof by the
Company.
(b) Register. Each Warrant issued, converted or transferred
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hereunder shall be registered in a warrant register (the "Warrant Register").
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The Warrant Register shall set forth the number of each Warrant, the name and
address of the Holder thereof and the original number of Warrant Shares
purchasable upon the exercise thereof. The Warrant Register will be maintained
by the Company and will be available for inspection by any Holder at the
principal office of the Company or such other location as the Company may
designate to the Holders in the manner set forth in Section 7.1. The Company
shall be entitled to treat the Holder of any Warrant as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other Person.
3.2 Exchange of Warrants for Warrants.
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(a) Exchange. The Holder may exchange any Warrant or Warrants issued
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hereunder for another Warrant or Warrants of like kind and tenor representing in
the aggregate the right to purchase the same number of Warrant Shares that could
be purchased pursuant to the Warrant or Warrants being so exchanged. In order to
effect an exchange permitted by this Section 3.2, the Holder shall deliver to
the Company such Warrant or Warrants, duly endorsed with signatures guaranteed,
accompanied by a written request signed by the Holder thereof specifying the
number and denominations of Warrants to be issued in such exchange and the names
in which such Warrants are to be issued. As promptly as practicable but in any
event within ten (10) Business Days of receipt of such a request, the Company
shall, without charge, issue, register and deliver to the Holder thereof each
Warrant to be issued in such exchange.
(b) Replacement. Upon receipt of evidence reasonably satisfactory to
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the Company (an affidavit of the Holder being satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any Warrant, and in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company (if the Holder is a financial institution or other
institutional investor, its own agreement being satisfactory) or, in the case of
any such mutilation, upon surrender of such Warrant, the Company shall, without
charge, issue register and deliver in lieu of such Warrant a new Warrant of like
kind representing the same rights represented by and dated the date of such
lost, stolen, destroyed or mutilated Warrant. Any such new Warrant shall
constitute an original contractual obligation of the Company.
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(c) Expenses. The Company shall pay all expenses and taxes (other
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than any applicable income or similar taxes payable by a Holder of a Warrant)
attributable to an exchange of a Warrant pursuant to this Section 3.2; provided,
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however, that the Company shall not be required to pay any tax that may be
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payable in respect of any transfer involved in the issuance of any Warrant in a
name other than that of the Holder of the Warrant being exchanged.
3.3 Transfer of Warrant.
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Each Warrant may be transferred, in whole or in part, to the extent
permitted by applicable securities laws (including, without limitation, to an
"accredited investor", as such term is defined in Rule 501(a) promulgated
pursuant to the Securities Act), by the Holder thereof by delivery of such
Warrant, accompanied by a properly completed, duly executed, Assignment Form, to
the Company. As promptly as practicable but in any event within fifteen (15)
Business Days of receipt of such duly executed Assignment Form, the Company
shall, without charge, issue, register and deliver to the Holder thereof a new
Warrant or Warrants of like kind and tenor representing in the aggregate the
right to purchase the same number of Warrant Shares that could be purchased
pursuant to the Warrant being transferred. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or a copy thereof, duly
certified, shall be deposited and remain with the Company. In case of transfer
by executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced and may be required
to be deposited and remain with the Company in its discretion. The Company shall
not be liable for complying with a request by a fiduciary or nominee of a
fiduciary to register a transfer of any Warrant which is registered in the name
of such fiduciary or nominee, unless made with the actual knowledge that such
fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with knowledge of such facts that the Company's
participation therein amounts to bad faith.
3.4 Transfer; Legends.
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Each Warrant and Warrant Share shall bear the legend borne by Exhibit B
hereto until such time as the General Counsel of the Company has received a
written opinion of counsel to the Holder of the Warrant, in form and substance
satisfactory to the General Counsel of the Company, to the effect that the
transfer restrictions to which the legend relates are no longer applicable.
ARTICLE IV
EXERCISE OF WARRANT; CONVERSION FOR WARRANT SHARES
4.1 Exercise of Warrants.
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Subject to compliance with applicable securities laws, on any Business Day
on or prior to the Expiration Time, a Holder may exercise a Warrant, in whole or
in part, by delivering to the Company such Warrant accompanied by a properly
completed Exercise Form and a certified or bank check or wire transfer of same
day funds in an aggregate amount equal to the product obtained by multiplying
(a) the Exercise Price times (b) the number of Warrant Shares being
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purchased. Any partial exercise of a Warrant shall be for a whole number of
Warrant Shares only.
4.2 Conversion of Warrants.
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(a) On any Business Day on or prior to the Expiration Time, a Holder may
convert a Warrant, in whole or in part, into Warrant Shares by delivering to the
Company such Warrant accompanied by a properly completed Conversion Form. The
number of shares of Common Stock to be received by a Holder upon such conversion
shall be equal to (a) the number of Warrant Shares allocable to the portion of
the Warrant being converted (the "Allocable Number"), as specified by such
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Holder in the Conversion Form less (b) the number of shares obtained by (i)
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multiplying the Allocable Number by the Exercise Price and (ii) dividing the
product obtained in (i) by the Market Price as of the Delivery Date (as defined
below). The Allocable Number need not be a whole number, but in the case of any
partial conversion of a Warrant under this Section 4.2, the Allocable Number
shall be determined so that the number of Warrant Shares to be issued in such
conversion shall be a whole number only.
(b) Immediately before the expiration of the Warrants, to the extent the
Warrants have not previously been exercised and the Market Price of one share of
the Warrant Shares issuable upon exercise of the Warrants is greater than the
Exercise Price per share, the Warrants automatically shall be, and shall be
deemed to have been, converted in accordance with Section 4.2(a) hereof (even if
not surrendered) as of the Business Day immediately preceding their Expiration
Date. To the extent the Warrants or any portion thereof are deemed converted
pursuant to this Section 4.2(b), the Company shall notify the Holders, within
ten (10) Business Days after the Expiration Date of the Warrants (or if the
Warrant Shares are not Publicly Traded on the Business Day immediately preceding
their Expiration Date, within ten (10) Business Days after the determination of
the Valuation Amount of the Warrant Shares pursuant to the Valuation Procedure),
of the number of Warrant Shares the Holder is to receive by reason of such
automatic conversion, provided, however, that in no case may any voting
securities to be issued to the Initial Holders upon such conversion, when
aggregated with any other voting securities of the Company held by the Initial
Holders or their Affiliates, exceed 5% of the class of such securities on an
undiluted basis, if holdings in excess of 5% would, in the reasonable opinion of
the Initial Holders, give rise to a regulatory problem. If the Warrant Shares
otherwise issuable to the Initial Holders upon such automatic conversion would
cause the aggregate number of voting securities held by the Initial Holders and
their Affiliates to exceed 5% of the class of such securities and to give rise
to a regulatory problem, (i) the number of voting securities to be so issued
shall be the number (the "Automatic Conversion Number") obtained by subtracting
---------------------------
the aggregate amount of voting securities of the Company otherwise held by the
Initial Holders and their Affiliates from the number constituting 5% of the then
issued and outstanding shares of such voting securities, and (ii) the Company
shall use its best efforts to amend its articles of incorporation, on or prior
to the thirtieth Business Day following the Expiration Date of the Warrants (or
if the number of Warrant Shares has been determined by the Valuation Procedure,
on or prior to the thirtieth Business Day following the completion of the
Valuation Procedure), to provide for a class of non-voting security which, but
for the absence of voting rights, shall have the same dividend, liquidation and
other rights and privileges as the Warrant Shares. Within five Business Days of
the acceptance and filing of such amendment by the Secretary of State for the
state in which the Company is then incorporated, the Company shall issue to the
Initial Holders a
10
certificate for the number of such nonvoting securities obtained by subtracting
the Automatic Conversion Number from the Warrant Shares. The Company shall issue
to the Holders certificates for the Warrant Shares issued upon automatic
conversion in accordance with Section 4.3, although the Company may condition
receipt of the certificate upon surrender of the Warrants to the Company.
4.3 Issuance of Common Stock.
------------------------
(a) Issuance of Common Stock. As promptly as practicable but in any
------------------------
event within ten (10) Business Days following the delivery date (the "Delivery
--------
Date") of (i) an Exercise Form or Conversion Form in accordance with Section 4.1
----
or 4.2, (ii) the related Warrant and (iii) in the case of Section 4.1, any
required payment of the Exercise Price, the Company shall, without charge, but
subject to Section 4.3(b), (c), (f), and (h) hereof, issue, register and deliver
one or more stock certificates representing the aggregate number of shares of
Common Stock to which the Holder of such Warrant is entitled and, upon
compliance with the applicable provisions of this Agreement, transfer to such
Holder appropriate evidence of ownership of other securities or property
(including any cash) to which such Holder is entitled, in such denominations,
and registered or otherwise placed in, or payable to the order of, such name or
names, as may be directed in writing by such Holder. The Company shall deliver
such stock certificates, evidence of ownership and any other securities or
property (including any cash) to the Person or Persons entitled to receive the
same, together with an amount in cash in lieu of any fraction of a share (or
fractional interest in any other security), as hereinafter provided.
(b) Partial Exercise or Conversion. If a Holder shall exercise or
------------------------------
convert a Warrant for less than all of the Warrant Shares that could be
purchased or received thereunder, the Company shall issue, register and deliver
to the Holder, as promptly as practicable but in any event within ten (10)
Business Days of the Delivery Date, a new Warrant evidencing the right to
purchase the remaining Warrant Shares. In the case of a conversion pursuant to
Section 4.2(a), the number of remaining Warrant Shares shall be the original
number of Warrant Shares subject to the Warrant so converted reduced by the
Allocable Number. Each Warrant surrendered pursuant to Section 4.1 or 4.2 shall
be cancelled.
(c) Fractional Shares. The Company shall not be required to issue
-----------------
fractional shares of Common Stock or fractional units of any other security upon
the exercise or conversion of a Warrant. If any fraction of a share of Common
Stock or fractional unit of any other security would be issuable on the exercise
or conversion of any Warrant, the Company may, in lieu of issuing such
fractional share or unit, pay to such Holder for any such fraction an amount in
cash equal to the product obtained by multiplying (i) such fraction times (ii)
-----
the Market Price for the Common Stock or for a unit of such other security, as
the case may be, as of the Delivery Date.
(d) Expenses. The Company shall pay all expenses and taxes (other
--------
than any applicable income or similar taxes payable by a Holder of a Warrant)
attributable to the initial issuance of Warrant Shares upon the exercise or
conversion of a Warrant; provided, however, that the Company shall not be
-------- -------
required to pay any tax that may be payable in respect of any transfer involved
in the issuance of any Warrant Shares or any certificate for, or any other
evidence of ownership of, Warrant Shares in a name other than that of the Holder
of the Warrant being exercised or converted.
11
(e) Record Ownership. To the extent permitted by Applicable Law, the
----------------
Person in whose name any certificate for shares of Common Stock or other
evidence of ownership of any other security is issued upon exercise or
conversion of a Warrant shall for all purposes be deemed to have become the
holder of record of such shares or other security on the Delivery Date,
irrespective of the date of delivery of such certificate or other evidence of
ownership (subject, in the case of any exercise to which Section 4.3(g) applies,
to the consummation of a transaction upon which such exercise is conditioned),
notwithstanding that the transfer books of the Company shall then be closed or
that such certificates or other evidence of ownership shall not then actually
have been delivered to such Person.
(f) Approvals. If any securities constituting Warrant Shares or any
---------
portion thereof to be issued upon exercise or conversion of a Warrant require
registration or approval under any Applicable Law or require listing on any
national securities conversion or quotation systems before such securities may
be so issued, the Company will as expeditiously as possible cause such
securities to be registered, approved or listed, as applicable, in accordance
with the Investor Rights Agreement, as amended from time to time.
(g) Conditional Exercise or Conversion. Any Exercise Form or Conversion
----------------------------------
Form delivered under Section 4.1 or 4.2(a) may condition the exercise or
conversion of any Warrant on the consummation of a transaction being undertaken
by the Company or the Holder of such Warrant, and such exercise or conversion
shall not be deemed to have occurred except concurrently with the consummation
of such transaction, except that, for purposes of determining whether such
exercise or conversion is timely it shall be deemed to have occurred on the
Delivery Date. If any exercise of a Warrant is so conditioned, then, subject to
delivery of the items required by Section 4.3(a) and compliance with the other
terms hereof, the Company shall deliver the certificates and other evidence of
ownership of other securities or other property in such manner as such Holder
shall direct as required in connection with the consummation of the transaction
upon which the exercise is conditioned. At any time that such Holder shall give
notice to the Company that such transaction has been abandoned or such Holder
has withdrawn from participation in such transaction, the Company shall return
the items delivered pursuant to Section 4.3(a), and such Holder's election to
exercise such Warrant shall be deemed rescinded.
(h) Regulatory Problem. No Holder shall exercise or convert any Warrant
------------------
for Warrant Shares if, after giving effect to such exercise or conversion, such
exercise or conversion would cause such Holder and its Affiliates to hold 5% or
more of any class of voting securities of the Company and such holdings, in the
reasonable opinion of a Holder, would give rise to a regulatory problem for the
Holder. In such event: (A) the limitations of this Section 4.3(h) shall apply to
the aggregate voting interests in the Company held by such Holders and their
Affiliates and each shall be entitled to vote its pro rata portion of 4.9% of
the class of securities entitled to vote; (B) the Company shall use its best
efforts to establish a class of non-voting securities as described in Section
4.2(b)(ii) and (C) the Expiration Date of the Warrants held by the Initial
Holders shall be the later of their original Expiration Date or 30 days after
the Company satisfies its obligations pursuant to clause (B) and notifies the
Initial Holders of its having done so.
12
ARTICLE V
ADJUSTMENT OF EXERCISE PRICE AND SHARES.
5.1 General.
-------
The Exercise Price and the number and kind of Warrant Shares issuable upon
exercise or conversion of each Warrant shall be subject to adjustment from time
to time in accordance with this Article V.
5.2 Stock Dividends, Subdivisions and Combinations.
----------------------------------------------
If, at any time after the Closing Date, the Company shall:
(i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock; or
(ii) subdivide, split or reclassify its outstanding shares of
Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then (A) the number of Warrant Shares issuable upon exercise or conversion of
each Warrant shall be adjusted so as to equal the number of Warrant Shares that
the Holder of such Warrant would have held immediately after the occurrence of
such event if the Holder had exercised or converted such Warrant immediately
prior to the occurrence of such event and (B) the Exercise Price shall be
adjusted to be equal to (x) the Exercise Price immediately prior to the
occurrence of such event multiplied by (y) a fraction (1) the numerator of which
-------------
is the number of Warrant Shares issuable upon exercise or conversion of the
Warrant immediately prior to the adjustment in clause (A) and (2) the
denominator of which is the number of Warrant Shares issuable upon exercise or
conversion of the Warrant immediately after the adjustment in clause (A). An
adjustment made pursuant to this Section 5.2 shall become effective immediately
after the occurrence of such event retroactive to the record date, if any, for
such event.
5.3 Issuance of Common Stock.
------------------------
(a) General. If, at any time after the Closing Date, the Company
-------
shall issue or sell (or, in accordance with Section 5.3(b), shall be deemed to
have issued or sold) any shares of Common Stock (other than any issuance for
which an adjustment is made pursuant to Section 5.2 or 5.5) without
consideration or for a consideration per share less than the Market Price for
the Common Stock determined as of the date of such issuance or sale, then,
effective immediately upon such issuance or sale, the Exercise Price and the
number of Warrant Shares issuable upon exercise or conversion of each Warrant
shall be adjusted as follows:
(i) The Exercise Price shall be reduced to the amount obtained
by multiplying the Exercise Price in effect immediately prior to such
issuance or sale by a fraction, (A) the numerator of which shall be the sum
of (x) the amount obtained by
13
multiplying the number of shares of Common Stock outstanding immediately
prior to such issuance or sale by the Market Price for the Common Stock as
of the date of such issuance or sale and (y) the consideration, if any,
received by the Company upon such issuance or sale, and (B) the denominator
of which shall be the amount obtained by multiplying the number of shares
of Common Stock outstanding immediately after such issuance or sale by such
Market Price.
(ii) The number of Warrant Shares issuable upon exercise or
conversion of such Warrant shall be increased to the number of shares
obtained by multiplying the number of Warrant Shares issuable upon exercise
of such Warrant immediately prior to such issuance or sale by a fraction,
(A) the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment in clause (i) of this Section 5.3(a),
and (B) the denominator of which shall be the Exercise Price in effect
immediately after such adjustment,
provided, however, that this Section 5.3(a) shall not apply to the issuance and
sale of up to 800,000 shares of Common Stock or Preferred Stock (and/or options
or warrants therefor) approved by the Board and issued or issuable to parties
providing the Company with equipment leases, real property leases, loans, credit
lines, guarantees of indebtedness, cash price reductions or similar financing,
such number of shares being subject to proportional adjustment to reflect
subdivisions, combinations and stock dividends affecting the number of
outstanding shares of such stock.
(b) Issuance of Options or Convertible Securities. The issuance or
---------------------------------------------
sale of Options or Convertible Securities shall be deemed, in accordance with
this Section 5.3(b), to be the issuance of Common Stock.
(i) Definitions. For the purposes of this Section 5.3(b), the
-----------
term "Options" means any warrants, options or other rights to subscribe for
-------
or to purchase (A) Common Stock or (B) Convertible Securities, and the term
"Convertible Securities" means any capital stock, evidence of indebtedness
----------------------
or other securities or rights directly or indirectly convertible into or
converted for Common Stock.
(ii) Issuance of Options. If the Company in any manner issues
or grants any Options, then the total maximum number of shares of Common
Stock issuable upon the exercise of such Options (or upon conversion or
exchange of the total maximum amount of Convertible Securities issuable
upon the exercise of such Options) shall be deemed, for purposes of Section
5.3(a), to be outstanding and to have been issued and sold by the Company.
For purposes of Section 5.3(a), the Common Stock issuable upon exercise of
Options or upon conversion or exchange of Convertible Securities issuable
upon exercise of Options for Convertible Securities shall be deemed to have
been issued and sold at a price per share equal to (A) the sum of (x) the
total amount, if any, received or receivable by the Company as
consideration for the issuance or granting of such Options plus (y) the
----
minimum aggregate amount of additional consideration payable to the Company
upon the exercise of all such Options plus (z) in the case of such Options
----
for Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable to the Company upon issuance or sale of such Convertible
Securities and the
14
conversion or exchange thereof divided by (B) the total maximum number of
----------
shares of Common Stock issuable upon exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options.
(iii) Issuance of Convertible Securities. If the Company in any
----------------------------------
manner issues or sells any Convertible Securities, then the maximum number of
shares of Common Stock issuable upon the conversion or exchange of such
Convertible Securities shall be deemed, for purposes of Section 5.3(a) to be
outstanding and to have been issued and sold by the Company. For purposes of
Section 5.3(a), the Common Stock issuable upon conversion or exchange of
Convertible Securities shall be deemed to have been issued and sold at a price
per share equal to (A) the sum of (x) the total amount received or receivable by
the Company as consideration for the issuance or sale of such Convertible
Securities plus (y) the minimum aggregate amount of additional consideration, if
----
any, payable to the Company upon the conversion or exchange thereof divided by
----------
(B) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities.
(iv) Superseding Adjustment. To the extent the Warrants have not
been exercised, if, at any time after any adjustment of the Exercise Price and
the number of Warrant Shares issuable upon exercise of the Warrants shall have
been made pursuant to Section 5.3(a) as a result of the issuance of Options or
Convertible Securities, or after any new adjustment of the Exercise Price and
the number of Warrant Shares shall have been made pursuant to this Section
5.3(b)(iv) (each of the foregoing, a "previous adjustment"):
-------- ----------
(A) such Options or the right of conversion or exchange of
such Convertible Securities shall expire, or be terminated or surrendered,
and all or a portion of such Options or the right of conversion or exchange
with respect to all or a portion of such Convertible Securities, as the
case may be, shall not have been exercised or treated as having been
exercised or otherwise canceled or acquired by the Company in connection
with any settlement, including any cash settlement, of such Options or the
rights of conversion or exchange of such Convertible Securities; or
(B) there has been any change in the number of shares of
Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (including as a
result of a change in the number of Convertible Securities issuable upon
the exercise of such Options or the operation of antidilution provisions
applicable thereto); or
(C) the consideration per share for which shares of Common
Stock are issuable upon the exercise of such Options or upon the conversion
or exchange of such Convertible Securities, or the maturity of such
Convertible Securities, shall be changed;
then the previous adjustment shall be rescinded and annulled and the shares
of Common Stock which were deemed to have been issued and that gave rise to
the
15
previous adjustment shall no longer be deemed to have been issued.
Thereupon, a recomputation shall be made of the adjustment, if any, of
the Exercise Price and the number of Warrant Shares issuable upon
exercise of the Warrants as a consequence of such Options or
Convertible Securities on the basis of:
(D) treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous
exercise of such Options or such right of conversion or exchange
(including Options or rights treated as exercised, otherwise cancelled
or acquired in connection with any settlement), as having been issued
on the date or dates of such issuance as determined for purposes of
the previous adjustment and for the total amount of consideration
actually received and receivable therefor (determined in the manner
described in Section 5.3(b)(ii) or (iii), as the case may be);
(E) treating the maximum number of shares of Common Stock
(1) issuable upon the exercise (or upon the conversion or exchange of
Convertible Securities issuable upon the exercise) of all Options
which then remain outstanding and (2) issuable upon the conversion or
exchange of all Convertible Securities which then remain outstanding,
as having been issued; and
(F) making the computations called for in Section 5.3(a)
hereof on the basis of the revised terms of such outstanding Options
or Convertible Securities, as the case may be, as if they were newly
issued at the time of such revision.
Any such adjustment of the Exercise Price and the number of Warrant Shares
issuable upon exercise or conversion of the Warrants resulting from such
recomputation shall supersede the previous adjustment.
(v) No Further Adjustments. Any adjustment of the Exercise Price
----------------------
or the number of Warrant Shares issuable upon the exercise or conversion of
Warrants to be made pursuant to this Section 5.3 with respect to the
issuance of (A) any Options (whether for Common Stock or Convertible
Securities), (B) any Convertible Securities issuable upon the exercise of
such Options or (C) any shares of Common Stock issuable upon the exercise
of such Options or the conversion or exchange of such Convertible
Securities shall be made effective upon the issuance of such Options. Any
adjustment of the Exercise Price or the number of Warrant Shares issuable
upon the exercise or conversion of Warrants to be made pursuant to this
Section 5.3 with respect to the issuance of (x) any Convertible Securities
(other than Convertible Securities issuable upon the exercise of Options)
or (y) any shares of Common Stock issuable upon the conversion or exchange
of such Convertible Securities shall be made effective upon the issuance of
such Convertible Securities. No further adjustment of the Exercise Price or
the number of Warrant Shares issuable upon the exercise of Warrants shall
be made upon the actual issuance of Common Stock or of Convertible
Securities upon the exercise of such Options or upon the actual issuance of
Common Stock upon conversion or exchange of such Convertible Securities.
16
5.4 Distribution of Equity Securities.
---------------------------------
If, at any time after date hereof, the Company shall distribute any of its
equity securities or rights to acquire equity securities (other than Common
Stock or Options) to holders of Common Stock on a pro rata basis, then the
Company shall cause effective provision to be made so that, effective as of the
effective date of such event retroactive to the record date, if any, of such
event, each Warrant shall, upon the basis and upon the terms and conditions
specified in such Warrant, in addition to the Warrant Shares immediately
theretofore purchasable and receivable upon the exercise or conversion of such
Warrant, be exercisable for the kind and number of shares or other units of
equity securities or rights to acquire equity securities to which a holder of
the number of Warrant Shares issuable upon exercise of such Warrant would have
been entitled had such Warrant been exercised immediately prior to the record
date of such event. In any such case, if necessary, the provisions of this
Agreement and the Warrants with respect to the rights and interests thereafter
of the Holders of the Warrants shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares or other units of
equity securities or rights to acquire equity securities thereafter deliverable
upon the exercise or conversion of the Warrants.
5.5 Capital Reorganization, Capital Reclassifications, Merger, Etc.
--------------------------------------------------------------
If, at any time after the date hereof, there shall be (i) any capital
reorganization or any reclassification of the capital stock of the Company
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision, split-
up or combination of shares to which Section 5.2 applies or any distribution to
which Section 5.4 applies), (ii) any consolidation, merger or business
combination of the Company with another Person or (iii) any sale or conveyance
by the Company of all or substantially all of its assets or property to, another
Person, then in each case the transaction shall be effected in such a way that
holders of the shares of Common Stock shall be entitled to receive stock,
securities or assets (including, without limitation, cash) with respect to or in
conversion for the shares of the Common Stock and the Company shall cause
effective provision to be made so that each Warrant shall, upon the basis and
upon the terms and conditions specified in this Agreement in lieu of the Warrant
Shares immediately theretofore purchasable and receivable upon the exercise of a
Warrant, effective as of the effective date of such event retroactive to the
record date, if any, of such event, be exercisable for the kind and number of
shares of stock, other securities, cash or other property to which a holder of
the number of Warrant Shares issuable upon exercise of such Warrant would have
been entitled upon such event. In any such case, if necessary, the provisions of
this Agreement and the Warrants with respect to the rights and interests
thereafter of the Holders of the Warrants shall be appropriately adjusted so as
to be applicable, as nearly as may reasonably be, to any shares of stock, other
securities, cash or other property thereafter deliverable upon the exercise or
conversion of the Warrants, and the provisions of this Section 5.5 shall
similarly apply to successive reorganizations, reclassifications, consolidating
mergers, business combinations or sales or conveyances.
5.6 Other Actions Affecting Common Stock.
------------------------------------
(a) Equitable Equivalent. If at any time or from time to time the
Company shall take any action affecting its Common Stock, other than any action
of a type otherwise described
17
in this Article V (whether or not such action of a type otherwise described in
this Article V results in an adjustment to the Warrants), then the number of
Warrant Shares issuable upon exercise or conversion of each Warrant shall be
adjusted to such extent, if any, and in such manner and at such time, as the
Board shall in good faith determine to be equitable in the circumstances,
provided that no such adjustment shall decrease the number of Warrant Shares
issuable upon exercise or conversion of such Warrant and provided, further, that
no adjustment shall be required for any cash dividends paid out
of retained earnings.
(b) No Avoidance. The Company will not, by amendment of its Articles
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company; provided that the Company shall not be deemed to be avoiding
--------
or seeking to avoid observance or performance if any action otherwise in
compliance with this Agreement is structured so as to avoid the need for,
or to minimize the extent of, any adjustment under this Article V. The
Company shall at all times in good faith assist in the carrying out of all
the provisions of this Article V and in the taking of all such action as
may be necessary or appropriate in order to protect the exercise rights of
the Holders against impairment.
5.7 Miscellaneous.
-------------
(a) Calculation of Consideration Received. If any Common Stock,
-------------------------------------
Options, Convertible Securities or Other Securities are issued or sold or deemed
to have been issued or sold for cash, then the consideration received therefor
shall be deemed to be the net amount received by the Company therefor. If any
Common Stock, Options, Convertible Securities or Other Securities are issued or
sold for consideration other than cash, then the amount of the consideration
other than cash received by the Company shall be the fair market value of such
consideration, as of the date of receipt, determined in accordance with the
Valuation Procedure.
(b) Treasury Shares. The number of shares of Common Stock outstanding
---------------
at any given time does not include shares owned or held by or for the account of
the Company or any Subsidiary, and the disposition of any shares so owned or
held shall be considered an issuance of Common Stock.
(c) Record Date. If the Company takes a record of the holders of
-----------
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities or
(B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issuance
or sale of the shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be. If the Company shall take any such record of the holders of its Common Stock
and shall, thereafter and before the taking of the action for which such record
was taken, legally abandon its plan to take much action, then thereafter no
adjustment shall be required by reason of the taking of such record and any such
adjustment previously made in respect thereof shall be rescinded and annulled.
18
(d) Deferral of Issuance. In any case in which this Article V shall
--------------------
require that any adjustment in the number of Warrant Shares purchasable or
otherwise receivable hereunder or in the Exercise Price be made effective as of
immediately after a record date for a specified event, the Company may elect to
defer, until the occurrence of such event, the issuing to the Holder of any
Warrant exercised or converted after such record date of the shares of Common
Stock and other capital stock of the Company, if any, issuable upon such
exercise or conversion over and above the number of shares of Common Stock and
other capital stock of the Company, if any, that would have been issuable upon
such exercise or conversion on the basis of the Exercise Price in effect prior
to such adjustment. In such case, the Company shall deliver to the Holder a due
▇▇▇▇ or other appropriate instrument evidencing the Holder's right to receive
such additional shares upon the occurrence of the event requiring such
adjustment.
(e) Notice; Adjustment Rules. Whenever the Exercise Price and the
------------------------
number of Warrant Shares shall be adjusted as provided in this Article V, the
Company shall provide to each Holder a statement, signed by the Chairman, the
President or the Chief Financial Officer of the Company, describing in detail
the facts requiring such adjustment and setting forth a calculation of the
Exercise Price and the number of Warrant Shares applicable to each Warrant after
giving effect to such adjustment. All calculations under this Article V shall be
made to the nearest one hundredth of a cent ($.0001) or to the nearest one-tenth
of a share, as the case may be. Adjustments pursuant to this Article V shall
apply to successive events or transactions of the types covered thereby.
Notwithstanding any other provision of this Article V, no adjustment shall be
made to the number of shares of Common Stock or to the Exercise Price if such
adjustment represents less than 1% of the number of shares previously required
to be so delivered, but any lesser adjustment shall be carried forward and shall
be made at the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to 1% or more of
the number of shares to be so delivered.
(f) Certain Adjustments. The Company may make such reductions in the
-------------------
Exercise Price or increase in the number of Warrant Shares to be received by any
Holder upon the exercise or conversion of a Warrant, in addition to those
adjustments required by this Article V, as it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Common Stock, or any issuance wholly for cash of any shares of Common Stock, or
any issuance wholly for cash of shares of Common Stock or Convertible
Securities, or any stock dividend, or any issuance of Options hereinafter made
by the Company to the holders of its Common Stock shall not be taxable to such
holders.
(g) Excluded Issuances. Notwithstanding any other provision of this
------------------
Article V, no adjustment shall be made pursuant to Section 5.3 or 5.5 in respect
of (i) the issuance of Common Stock in an underwritten public offering that is
registered with the Commission, (ii) the issuance from time to time of shares of
Common Stock upon the exercise or conversion of any of the Warrants, (iii) the
issuance of Common Stock or Options in any merger, share conversion,
consolidation, liquidation or other business combination required to be approved
and actually approved by the requisite vote (being not less than a majority
based on voting power) of the shareholders of the Company and (iv) securities
issued upon exercise of conversion or exchange rights, options or subscription
calls, warrants, commitments or claims, provided that the foregoing are issued
and outstanding on the date hereof and are listed on Schedule II hereto.
19
(h) Par Value. The Company shall not increase the par value of any
---------
shares of Common Stock or other securities issuable upon the exercise or
conversion of the Warrants to an amount that exceeds the Exercise Price. Before
taking any action that would cause an adjustment pursuant to this Article V that
would reduce the Exercise Price below the par value per share of the Common
Stock, the Company shall be required to take any corporate action which may be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
ARTICLE VI
COVENANTS OF THE COMPANY
6.1 Notices of Certain Actions.
--------------------------
In the event that the Company:
(a) shall authorize issuance to all holders of Common Stock of rights
or warrants to subscribe for or purchase capital stock of the Company or of any
other subscription rights or warrants; or
(b) shall authorize a dividend or other distribution to all holders
of Common Stock of its indebtedness, cash or other property or assets; or
(c) becomes a party to any consolidation or merger for which approval
of any shareholders of the Company will be required, or to a conveyance or
transfer of the properties and assets of the Company substantially as an
entirety, or of any capital reorganization or reclassification or change of the
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination); or
(d) commences a voluntary or involuntary dissolution, liquidation or
winding up; or
(e) takes any other action which would require an adjustment pursuant
to Article V;
then the Company shall provide a written notice to each Holder stating (i) the
date as of which the holders of record of Common Stock to be entitled to receive
any such rights, warrants or distribution are to be determined, (ii) the
material terms of any such consolidation or merger and the expected effective
date thereof, or (iii) the material terms of any such conveyance, transfer,
dissolution, liquidation or winding up, the date it is expected to become
effective, and the date as of which it is expected that holders of record of
Common Stock will be entitled to exchange their shares for securities or other
property, if any, deliverable upon such reclassification, conveyance, transfer,
dissolution, liquidation or winding up. Such notice shall be given not later
than seven (7) Business Days prior to the effective date (or the applicable
record date, if earlier) of such event. The failure to give the notice required
by this Section 6.1 or any defect therein shall not affect the legality or
validity of any distribution, right, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.
20
6.2 Merger or Consolidation of the Company.
--------------------------------------
The Company will not merge or consolidate with or into, or sell, transfer
or lease all or substantially all of its property (and such sale or transfer of
property shall not be effected in such a way that holders of the shares of
Common Stock shall be entitled to receive stock, securities or assets
(including, without limitation, cash) with respect to or in conversion for
shares of the Common Stock) to any other entity unless the successor or
purchasing entity expressly assumes, by supplemental agreement reasonably
satisfactory in form and substance to each Holder, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company; provided, however, that
-------- -------
the initial obligation of such successor with respect to the exercise or
conversion of Warrants shall be only as set forth in Section 5.5, and provided,
further, that if the successor or purchasing entity, as the case may be (if not
the Company), is not organized under the laws of the United States of America or
any state or political subdivision thereof and the Common Stock in such
transaction is converted into the right to receive securities of such entity,
such securities of such entity shall be marketable and freely tradable.
ARTICLE VII
MISCELLANEOUS
7.1 Notices.
-------
All notices, demands and requests of any kind to be delivered to any party
hereto in connection with this Agreement shall be in writing (i) delivered
personally, (ii) sent by nationally-recognized overnight courier, (iii) sent by
first class, registered or certified mail, return receipt requested or (iv) sent
by facsimile, in each case to such party at its address as follows:
(a) if to the Company, to:
Lexar Media, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President and Chief Financial Officer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
21
(b) if to any Holder, to such Holder's address as set forth on
Schedule I hereto.
Any notice, demand or request so delivered shall constitute valid notice under
this Agreement and shall be deemed to have been received (i) on the day of
actual delivery in the case of personal delivery, if delivered on a Business Day
(otherwise on the next Business Day), (ii) on the next Business Day after the
date when sent in the case of delivery by nationally-recognized overnight
courier, (iii) on the fifth Business Day after the date of deposit in the U.S.
mail in the case of mailing or (iv) upon receipt in the case of a facsimile
transmission. Any party hereto may from time to time by notice in writing served
upon the other as aforesaid designate a different mailing address or a different
Person to which all such notices, demands or requests thereafter are to be
addressed.
7.2 No Voting Rights; Limitations of Liability.
------------------------------------------
No Warrant shall entitle the Holder thereof to any rights as a shareholder
of the Company, as such, including, without limitation, voting rights, the right
to call meetings, consent or receive notices as a shareholder in respect of any
meeting or to the benefit of any fiduciary duty owed to a shareholder of the
Company as such, all of which rights and duties are expressly disclaimed and
waived by the Holder. No dividends are payable or will accrue on the Warrants or
the Warrant Shares until, and except to the extent that, the Warrants are
exercised or converted. No provision hereof, in the absence of affirmative
action by the Holder to purchase or otherwise acquire Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder shall give rise to
any liability of such Holder for the Exercise Price of Warrant Shares acquirable
by exercise of the Warrant or as a shareholder of the Company.
7.3 Amendments and Waivers.
----------------------
(a) Written Document. Any provision of this Agreement may be amended
----------------
or waived, but only pursuant to a written agreement signed by the Company and
the Requisite Holders, provided that no such amendment or modification shall
without the written consent of each Holder affected thereby (i) shorten the
Expiration Date of any Warrant, (ii) increase the Exercise Price of any Warrant,
(iii) change any of the provisions of this Section 7.3(a) or the definition of
"Requisite Holders" or any other provision hereof specifying the number or
percentage of Holders required to waive, amend, or modify any rights hereunder
or make any determination or grant any consent hereunder or otherwise act with
respect to this Agreement or any Warrants or (iv) increase the obligations of
any Holder or otherwise disproportionately adversely affect the rights and
benefits of any Holder under this Agreement.
(b) No Waiver; Cumulative Remedies. No failure on the part of any
-------------------------------
Holder to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement, the Warrants or
the Registration Rights shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege under this Agreement, the
Warrant or the Registration Rights preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
22
7.4 Remedies.
--------
(a) Each Holder shall have all rights and remedies reserved for
such Holder pursuant to this Agreement and all rights and remedies which
such Holder has been granted at any time under any other agreement or
contract and all of the rights which such Holder has under any law or
equity. Any Person having any rights under any provision of this Agreement
will be entitled to enforce such rights specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law or equity.
(b) The parties hereto agree that if any parties seek to resolve
any dispute arising under this Agreement pursuant to a legal proceeding,
the prevailing parties to such proceeding shall be entitled to receive
reasonable fees and expenses (including reasonable attorneys' fees and
expenses) incurred in connection with such proceedings.
(c) It is acknowledged that it will be impossible to measure in
money the damages that would be suffered by any party hereto if any Person
also party hereto fails to comply with any of the obligations imposed on it
in this Agreement and that in the event of any such failure, the aggrieved
party will be irreparably damaged and will not have an adequate remedy at
law. Any such aggrieved party shall, therefore, be entitled to injunctive
relief, including specific performance, to enforce such obligations, and if
any action should be brought in equity to enforce any of the provisions of
this Agreement, none of the parties hereto shall raise the defense that
there is an adequate remedy at law.
7.5 Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the
Company, each Holder and their respective successors and permitted assigns.
7.6 Counterparts.
------------
This Agreement may be executed in two or more counterparts each of
which shall constitute an original but all of which when taken together
shall constitute but one agreement.
7.7 GOVERNING LAW.
-------------
THIS AGREEMENT AND EACH WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS).
7.8 Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Company and each Holder of a Warrant or a Warrant Share any
legal or equitable right, remedy or claim hereunder.
23
7.9 Headings.
Section headings in this Agreement have been inserted for
convenience of reference only and shall not affect the construction of, or
be taken into consideration in interpreting, this Agreement.
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their authorized officers, all as of
the date and year first above written.
LEXAR MEDIA, INC.
By:________________________________________
Name:
Title:
ACCESS TECHNOLOGY PARTNERS, L.P.
By:__________________, its general partner
By:________________________________________
Name:
Title: General Partner
CHASE SECURITIES INC.
By:________________________________________
Name:
Title:
24
SCHEDULE I
----------
NUMBER OF
INVESTOR WARRANT SHARES
----------------------------------------------------------
ACCESS TECHNOLOGY PARTNERS, L.P. 625,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Chase Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------
CHASE SECURITIES INC. 250,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone:
Telecopier:
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------
----------------------------------------------------------
25
EXHIBIT A
Registration Rights
-------------------
Registration Rights shall be (a) the same, mutatis mutandi, as those currently
held by the holders of the Series E Preferred Stock of the Company pursuant to
the Investor Rights Agreement as amended from time to time and (b) such
additional rights, if any, as may hereafter be provided to such holders,
provided, however, that the Holders shall have executed counterpart signature
pages to the Amendment and become parties to, and be bound by, the Investors
Rights Agreement as amended by the Amendment.
26
EXHIBIT B
---------
THIS WARRANT AND THE WARRANT SHARES FOR WHICH IT MAY BE EXERCISED
(COLLECTIVELY, "THE SECURITIES") HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES OR BLUE
SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT DATED AS OF JUNE
26, 2000, AMONG THE ISSUER HEREOF AND CERTAIN OTHER SIGNATORIES THERETO, AND NO
TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED. THE ISSUER OF THE SECURITIES MAY REQUIRE AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR SALE IS IN COMPLIANCE WITH THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS. UPON THE FULFILLMENT OF
CERTAIN OF SUCH CONDITIONS, THE ISSUER HEREOF HAS AGREED TO DELIVER TO THE
HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS LEGEND, FOR THE SECURITIES
REPRESENTED HEREBY REGISTERED IN THE NAME OF THE HOLDER HEREOF. COPIES OF THE
WARRANT AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER
HEREOF UPON WRITTEN REQUEST.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
LEXAR MEDIA, INC.
No. __ Warrant to Purchase
____ Shares
of Common Stock
_________, 2000
Common Stock Purchase Warrant
-----------------------------
THIS CERTIFIES that, for value received, [Insert name of holder] (the
"Holder"), or nominees or assigns, is entitled to purchase from Lexar Media,
------
Inc., a California corporation (the "Company") and any successor thereto, ___
-------
fully paid and nonassessable shares of Common Stock, $.0001 par value, of the
Company and any successors thereto (as adjusted pursuant to the Warrant
Agreement (as defined below), the "Common Stock"), at the price of $8.00 per
------------
share (as adjusted pursuant to the Warrant Agreement, the "Exercise Price"),
--------------
27
at any time or from time to time during the period commencing on the date hereof
and ending at 5:00 P.M. Pacific time, on __, 2007 (the "Expiration Time").
---------------
This Warrant has been issued pursuant to a certain Warrant Agreement
dated as of June 26, 2000 (as amended or supplemented from time to time, the
"Warrant Agreement") between the Company and the Initial Holders named therein
------------------
and is subject to the terms and conditions, and the Holder is entitled to the
benefits, thereof, including without limitation provisions (i) for adjusting the
number of Warrant Shares issuable upon the exercise or conversion hereof and the
Exercise Price to be paid upon the exercise hereof and (ii) providing certain
other rights. A copy of the Warrant Agreement is on file and may be inspected
at the principal executive office of the Company. The Holder of this
certificate, by acceptance of this certificate, agrees to be bound by the
provisions of the Warrant Agreement. Capitalized terms used but not defined
herein shall have the meanings given to them in the Warrant Agreement.
SECTION 1. Exercise of Warrant. On any Business Day prior to the
-------------------
Expiration Time, the Holder may exercise this Warrant, in whole or in part, by
delivering to the Company this Warrant accompanied by a properly completed
Exercise Form in the form of Annex A and a certified or bank check or wire
transfer of same day funds in an aggregate amount equal to the product obtained
by multiplying (a) the Exercise Price by (b) the number of Warrant Shares being
purchased. Any partial exercise of a Warrant shall be for a whole number of
Warrant Shares only.
SECTION 2. Exercise Price. The Exercise Price is subject to
--------------
adjustment from time to time as provided in the Warrant Agreement.
SECTION 3. Conversion of Warrant. On any Business Day prior to the
---------------------
Expiration Date, the Holder may convert this Warrant, in whole or in part, into
Warrant Shares by delivering to the Company this Warrant accompanied by a
properly completed Conversion Form in the form of Annex B. The number of shares
to be received by the Holder upon such conversion shall be determined as
provided in Section 4.2 of the Warrant Agreement. Immediately prior to the
Expiration Date, to the extent, if any that this Warrant has not been exercised,
it shall be automatically converted under the circumstances, and to the extent,
described in Section 4.2(b) of the Warrant Agreement.
SECTION 4. Transfer. Subject to the limitations set forth in the
--------
Warrant Agreement, this Warrant may be transferred by the Holder by delivery to
the Company of this Warrant accompanied by a properly completed Assignment Form
in the form of Annex C.
SECTION 5. Lost, Stolen, Mutilated or Destroyed Warrant. If this
--------------------------------------------
Warrant is lost, stolen, mutilated or destroyed, the Company will issue a new
Warrant of like denomination and tenor upon compliance with the provisions set
forth in the Warrant Agreement.
SECTION 6. No Shareholder Rights. This Warrant shall not entitle the
---------------------
holder hereof to any voting rights or, except as otherwise provided in the
Warrant Agreement, other rights of a shareholder of the Company, as such.
28
SECTION 7. Representations and Warranties of the Holder. The Holder
--------------------------------------------
hereby represents and warrants to the Company as follows:
(a) Purchase for Own Account. Except for transfers to Holder's
------------------------
Affiliates, this Warrant and the Warrant Shares are and will be acquired by the
Holder hereunder for investment for the Holder's own account, not as a nominee
or agent, and not with a view to the public resale or distribution thereof
within the meaning of the Securities Act, and the Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the same. If not an individual, the Holder also represents that the Holder has
not been formed for the specific purpose of acquiring this Warrant or the
Warrant Shares.
(b) Disclosure of Information. The Holder has received or has had
-------------------------
full access to all the information it considers necessary or appropriate to make
an informed investment decision with respect to the acquisition of this Warrant
and the Warrant Shares. The Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and the Warrant Securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Holder or to which the
Holder has had access.
(c) Investment Experience. The Holder understands that the purchase
---------------------
of this Warrant and the Warrant Shares involves substantial risk. The Holder:
(i) has experience as an investor in securities of companies in the development
stage and acknowledges that the Holder is able to fend for itself, can bear the
economic risk of such Holder's investment in this Warrant and the Warrant Shares
and has such knowledge and experience in financial or business matters that the
Holder is capable of evaluating the merits and risks of its investment in this
Warrant and the Warrant Shares and/or (ii) has a preexisting personal or
business relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables the Holder to be aware
of the character, business acumen and financial circumstances of such persons.
(d) Accredited Investor Status. The Holder is an "accredited
--------------------------
investor" within the meaning of Regulation D promulgated under the Securities
Act.
SECTION 8. Successors. All of the provisions of this Warrant by or
----------
for the benefit of the Company or the Holder shall bind and inure to the benefit
of their respective successors and assigns.
SECTION 9. Headings. Section headings in this Warrant have been
--------
inserted for convenience of reference only and shall not affect the construction
of, or be taken into consideration in interpreting, this Warrant.
SECTION 10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS).
29
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers and this Warrant to be dated as of the date
first set forth above.
LEXAR MEDIA, INC.
By:_____________________________________________
Name:
Title: [Chairman or Chief Executive Officer]
ATTEST:
By:__________________________________
Name:
Title: [Chief Financial Officer, Treasurer or
Assistant Treasurer]
30
ANNEX A
-------
EXERCISE FORM
[To be signed upon exercise of Warrant]
TO LEXAR MEDIA, INC.
The undersigned, being the Holder of the within Warrant, hereby elects
to exercise the purchase right represented by such Warrant for, and to purchase
thereunder _________ shares of, the Common Stock of LEXAR MEDIA, INC. (the
"Company") and requests that the certificates for such shares be issued in the
name of, and be delivered to, _______________________, whose address is
__________________________________ ____________________________.
The undersigned warrants to the Company that (a) the undersigned (i)
is not acquiring the Warrant Shares with a view towards transferring such
Warrant Shares in violation of the Securities Act of 1933, as amended (the
"Securities Act"), and (ii) is an "accredited investor" within the meaning of
Regulation D under the Securities Act and (b) the representations and warranties
set forth in Section 7 of the Warrant are true and correct as of this date. The
undersigned acknowledges that the issuance of the Warrant Shares has not been
registered under the Securities Act and the Warrant Shares may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
therefrom is available.
The foregoing exercise is (check one):
______ irrevocable
______ conditioned upon the consummation of the transaction described
briefly below:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Dated:
______________________________
(Signature)
______________________________
(Address)
31
ANNEX B
-------
CONVERSION FORM
[To be signed upon cashless exercise of Warrant]
TO LEXAR MEDIA, INC.
The undersigned, being the Holder of the within Warrant, hereby
irrevocably elects to convert, pursuant to Section 4.2 of the Warrant Agreement
referred to in such Warrant, the portion of such Warrant representing the right
to purchase _________ shares of Common Stock of LEXAR MEDIA, INC. (the
"Company"). The undersigned hereby requests that the certificates for the
number of shares of Common Stock issuable upon such conversion pursuant to such
Section 4.2 be issued in the name of, and be delivered to, _____________, whose
address is ________________________________________.
The undersigned warrants to the Company that (a) the undersigned (i)
is not acquiring the Warrant Shares with a view towards transferring such
Warrant Shares in violation of the Securities Act of 1933, as amended (the
"Securities Act"), and (ii) is an "accredited investor" within the meaning of
Regulation D under the Securities Act and (b) the representations and warranties
set forth in Section 7 of the Warrant are true and correct as of this date. The
undersigned acknowledges that the issuance of the Warrant Shares has not been
registered under the Securities Act and the Warrant Shares may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
therefrom is available.
The foregoing conversion is (check one):
______ irrevocable
______ conditioned upon the consummation of the transaction described
briefly below:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Dated:
______________________________
(Signature)
______________________________
(Address)
32
ANNEX C
-------
ASSIGNMENT FORM
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto _________________________, all of the rights represented by the
within Warrant to purchase ______ shares of Common Stock of LEXAR MEDIA, INC.
(the "Company"), to which such Warrant relates, and appoints
-------
________________________ Attorney to transfer such Warrant on the books of the
Company, with full power of substitution in the premises.
Dated:
______________________________
(Signature)
______________________________
(Address)
33