EXHIBIT 10.25
NOTE AND WARRANT PURCHASE AGREEMENT
This NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement") is made as of
May 19, 2000 by and among Lexar Media, Inc., a California corporation (the
"Company"), and the parties listed on the Schedule of Investors attached to this
Agreement as Exhibit A (individually an "Investor" and collectively the
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"Investors").
RECITALS
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A. The Company is currently in need of funds to help finance its
operations.
B. The Investors are willing to advance funds to the Company in exchange
for the issuance to them of (i) certain promissory notes evidencing the
Company's obligation to repay the Investor's loans of the advanced funds and
(ii) certain warrants to purchase shares of the Company's capital stock, all as
provided in this Agreement.
NOW THEREFORE, the parties hereby agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
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1.1 Note Purchase. Subject to the terms and conditions of this
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Agreement, the Company agrees to sell to each Investor, and each Investor
severally agrees to purchase from the Company, a Promissory Note in the form
attached to this Agreement as Exhibit B (individually a "Note" and collectively
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the "Notes") in the principal amount set forth opposite such Investor's name on
Exhibit A.
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1.2 Warrant Issuance. As additional consideration for the purchase of
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the Note, subject to the terms and conditions of this Agreement, the Company
further agrees to sell and issue to each Investor (i) a warrant to purchase
shares of the Company's capital stock ("Warrant Stock") in the form attached
hereto as Exhibit C (individually a "Warrant" and collectively the "Warrants")
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and (ii) a warrant to purchase shares of the Company's capital stock ("Monthly
Warrant Stock") in the form attached hereto as Exhibit D (individually a
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"Monthly Warrant" and collectively the "Monthly Warrants").
2. CLOSING.
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2.1 The Closing. The purchase and sale of the Notes, the Warrants
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and the Monthly Warrants will take place at the offices of Fenwick & West LLP,
Two Palo Alto Square, Palo Alto, California, at 1:00 p.m. Pacific time, on May
19, 2000, or at such other time and place as the Company and the Investors who
have agreed to purchase a majority of the aggregate principal amount of the
Notes listed on Exhibit A mutually agree upon (which time and place are referred
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to as the "Closing"). At the Closing, each Investor will deliver to the Company
payment in full for the Note, the Warrant and the Monthly Warrant in the amount
set forth opposite such Investor's name on Exhibit A, which such Investor agrees
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to purchase at the Closing by (i) a
check payable to the Company's order, (ii) wire transfer of funds to the
Company, or (iii) any combination of the foregoing. At the Closing, the Company
will deliver to each Investor a duly executed Note in the principal amount set
forth opposite such Investor's name on Exhibit A, a duly executed Warrant and a
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duly executed Monthly Warrant.
2.2 Additional Closing(s).
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(a) Conditions of Additional Closing(s). At any time and from
-----------------------------------
time to time during the ninety (90) day period immediately following the Closing
(the "Additional Closing Period"), the Company may, at one or more additional
closings (each an "Additional Closing"), without obtaining the signature,
consent or permission of any of the Investors, offer and sell to other investors
(the "New Investors") Notes, Warrants and Monthly Warrants under terms no more
favorable to such New Investors than the terms and conditions set forth in this
Agreement, and such Notes having an aggregate principal amount of no more than
$16,000,000 less the aggregate principal amount of all Notes previously sold
hereunder. New Investors may include persons or entities who are already
Investors under this Agreement.
(b) Amendments. The Company and the New Investors purchasing
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Notes at each Additional Closing will execute counterpart signature pages to
this Agreement, and such New Investors will, upon delivery to the Company of
such signature pages, become parties to, and bound by, this Agreement to the
same extent as if they had been Investors at the Closing. Immediately after each
Additional Closing, the Schedule of Investors attached to this Agreement as
Exhibit A will be amended to list the New Investors purchasing Notes, Warrants
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and Monthly Warrants hereunder and the amount of the principal amount of each
Note purchased by each New Investor under this Agreement at each such Additional
Closing. The Company will promptly furnish to each Investor upon request a copy
of the amendments to Exhibit A referred to in the preceding sentence.
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(c) Status of New Investors. Upon the completion of each
-----------------------
Additional Closing as provided in this Section 2, each New Investor will be
deemed to be an "Investor" for all purposes of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
---------------------------------------------
represents and warrants to each Investor that the statements in the following
paragraphs of this Section 3 are all true and complete:
3.1 Organization, Good Standing and Qualification. The Company has
---------------------------------------------
been duly incorporated and organized, and is validly existing in good standing,
under the laws of the State of California. The Company has the corporate power
and authority to own and operate it properties and assets and to carry on its
business as currently conducted and as presently proposed to be conducted. The
Company is qualified to do business as a foreign corporation in good standing in
the State of Texas, which is the only jurisdiction other than California in
which the Company owns property, has offices or employs employees.
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3.2 Due Authorization. All corporate action on the part of the
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Company's directors and shareholders necessary for the authorization, execution,
delivery of, and the performance of all obligations of the Company under, this
Agreement, the Notes, the Warrants and the Monthly Warrants has been taken or
will be taken prior to the Closing, and this Agreement constitutes, and the
Notes, the Warrants and the Monthly Warrants when executed and delivered, will
constitute, valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except as may be limited by (i)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditor's rights
generally and (ii) the effect of rules of law governing the availability of
equitable remedies.
3.3 Corporate Power. The Company has the corporate power and
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authority to execute and deliver this Agreement, the Notes, the Warrants and the
Monthly Warrants to be purchased by the Investors hereunder, to issue the Notes,
the Warrants and the Monthly Warrants and to carry out and perform all its
obligations under this Agreement, the Notes, the Warrants and the Monthly
Warrants.
3.4 Valid Issuance.
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The Notes, the Warrants and the Monthly Warrants, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration provided for herein, will be duly and validly issued, fully paid
and nonassessable.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS. Each
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Investor hereby represents and warrants to, and agrees with, the Company, that:
4.1 Authorization. This Agreement constitutes such Investor's valid
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and legally binding obligation, enforceable in accordance with its terms except
as may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies. Each Investor represents that such Investor
has full power and authority to enter into this Agreement.
4.2 Purchase for Own Account. The Notes, the Warrants, the Monthly
------------------------
Warrants, the shares of the Company's capital stock issuable upon the conversion
of the Notes (the "Conversion Stock"), the Warrant Stock, the Monthly Warrant
Stock and the Company's Common Stock issuable upon conversion of such Conversion
Stock, Warrant Stock and Monthly Warrant Stock (collectively, the "Securities")
will be acquired for investment for such Investor'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 1933 Act, and such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
4.3 Disclosure of Information. Such Investor believes that such
-------------------------
Investor has received or has had full access to all the information it considers
necessary or appropriate to
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make an informed investment decision with respect to the Securities. Such
Investor further has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
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 such Investor or to
which such Investor had access. Such Investor acknowledges that it is aware of,
and has had the opportunity to discuss with the Company the status of the
Company's litigation with SanDisk. The foregoing, however, does not in any way
limit or modify the representations and warranties made by the Company in
Section 3.
4.4 Investment Experience. Such Investor understands that the
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purchase of the Securities involves substantial risk. Such Investor (i) has
experience as an investor in securities of companies in the development stage
and acknowledges that such Investor is able to fend for itself, can bear the
economic risk of such Investor's investment in the Securities and has such
knowledge and experience in financial or business matters that such Investor is
capable of evaluating the merits and risks of this investment in the Securities
and protecting its own interests in connection with this investment 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 such Investor to be aware of the character, business acumen and
financial circumstances of such persons.
4.5 Accredited Investor Status. Such Investor is an "accredited
--------------------------
investor" within the meaning of Regulation D promulgated under the ▇▇▇▇ ▇▇▇.
4.6 Restricted Securities. Such Investor understands that the
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Securities are characterized as "restricted securities" under the 1933 Act and
Rule 144 promulgated thereunder inasmuch as they are being acquired from the
Company in a transaction not involving a public offering, and that under the
1933 Act and applicable regulations thereunder such securities may be resold
without registration under the 1933 Act only in certain limited circumstances.
In this connection, such Investor represents that such Investor is familiar with
Rule 144 of the U.S. Securities and Exchange Commission, as presently in effect,
and understands the resale limitations imposed thereby and by the 1933 Act. Such
Investor understands that the Company is under no obligation to register any of
the securities sold hereunder.
4.7 No Solicitation. At no time was the Investor presented with or
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solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Securities.
4.8 Further Limitations on Disposition. Without in any way limiting
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the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until:
(a) there is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
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(b) such Investor shall have notified the Company of the proposed
disposition, and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and, at the expense of such
Investor or its transferee, with an opinion of counsel, reasonably satisfactory
to the Company, that such disposition will not require registration of such
securities under the 1933 Act.
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required: (i) for any
transfer of any Notes, Warrants or Monthly Warrants in compliance with Rule 144
or Rule 144A; (ii) for any transfer of any Notes, Warrants or Monthly Warrants
by an Investor that is a partnership or a corporation to (A) a partner of such
partnership or shareholder of such corporation, (B) a retired partner of such
partnership who retires after the date hereof, (C) the estate of any such
partner or shareholder; or (iii) for the transfer by gift, will or intestate
succession by any Investor to his or her spouse or lineal descendants or
ancestors or any trust for any of the foregoing; provided that in each of the
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foregoing cases the transferee agrees in writing to be subject to the terms of
this Section 4 to the same extent as if the transferee were an original Investor
hereunder.
4.9 Legends. Such Investor understands and agrees that the
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certificates evidencing the Securities will bear legends substantially similar
to those set forth below in addition to any other legend that may be required by
applicable law, by the Company's Articles of Incorporation or Bylaws, or by any
agreement between the Company and such Investor:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code or any other state
securities laws.
The legend set forth in (a) above shall be removed by the Company from any
certificate evidencing the Securities upon delivery to the Company of an opinion
of counsel, reasonably satisfactory to the Company, that a registration
statement under the 1933 Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale (other than pursuant to Rule 144 or Rule 145 under the ▇▇▇▇ ▇▇▇) without
such a
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registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Securities.
4.10 "Market Stand-Off" Agreement. Each Investor hereby agrees that,
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following the effective date of a registration statement of the Company's
initial sale of securities under the 1933 Act, for the period of time and to the
extent reasonably requested by the underwriter(s) and the Company, such Investor
shall not sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of any Securities or other shares of stock of the Company then owned by such
Investor, directly or indirectly, except securities covered by the registration
statement and transfers to donees who agree to be similarly bound, for the
period; provided however, that
(a) the executive officers and directors of the Company, as
well as any holder of at least five percent (5%) of the Company's Preferred
Stock or Common Stock, shall have agreed to be bound by substantially the same
terms and conditions,
(b) the time period requested for such market stand-off shall
not exceed one hundred eighty (180) days, and
(c) the restriction shall not apply to a registration relating
solely to employee, consultant or advisor benefit plans on Form S-1 or Form S-8
(or similar forms promulgated after the date hereof) or a registration relating
solely to a transaction pursuant to Rule 145 promulgated under the Act on Form
S-4 (or similar forms promulgated after the date hereof).
In order to enforce the foregoing covenant, the Company shall have the right to
place restrictive legends on the certificates representing the shares subject to
this Section and to impose stop-transfer instructions with respect to the
Securities and any other shares of stock of each Investor (and the shares or
securities of every other person subject to the foregoing restriction) during
such stand-off period if necessary to enforce such restrictions.
5. CONDITIONS TO CLOSING.
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5.1 Conditions to Investors' Obligations. The obligations of each
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Investor under Section 2 of this Agreement are subject to the fulfillment or
waiver, on or before the Closing, of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
to such waiver, which consent may be given by written, oral or telephone
communication to the Company, its counsel or to special counsel to the
Investors:
(a) Each of the representations and warranties of the Company
contained in Section 3 shall be true and correct on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of the Closing; and
(b) the Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be
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performed or complied with by it on or before the Closing and shall have
obtained all approvals, consents and qualifications necessary to complete the
purchase and sale described herein.
5.2 Condition to Company's Obligations. The obligations of the
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Company to each Investor under this Agreement are subject to the fulfillment or
waiver on or before the Closing of the following condition by such Investor:
(a) Each of the representations and warranties of such Investor
contained in Section 4 shall be true and correct on the date of the Closing with
the same effect as though such representations and warranties had been made on
and as of the Closing; and
(b) such Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
6. GENERAL PROVISIONS.
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6.1 Survival of Warranties. The representations, warranties and
----------------------
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of any of the Investors or the Company, as the case may be.
6.2 Successors and Assigns. The terms and conditions of this
----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
6.3 Governing Law. This Agreement shall be governed by and construed
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under the internal laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California, without reference to principles of conflict of laws or choice of
laws.
6.4 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5 Headings. The headings and captions used in this Agreement are
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used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
6.6 Notices. Unless otherwise provided, any notice required or
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permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office,
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by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address indicated for such party on Exhibit A or, in the case
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of the Company, at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other address as any party or the Company may designate by giving ten (10) days'
advance written notice to all other parties.
6.7 No Finder's Fees. Each party represents that it neither is nor
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will be obligated for any finder's or broker's fee or commission in connection
with this transaction. Each Investor agrees to indemnify and to hold harmless
the Company from any liability for any commission or compensation in the nature
of a finders' or broker's fee (and any asserted liability) for which the
Investor or any of its officers, partners, employees, or representatives is
responsible. The Company agrees to indemnify and hold harmless each Investor
from any liability for any commission or compensation in the nature of a
finder's or broker's fee (and any asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
6.8 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
Notes representing at least a majority of the aggregate principal amount of the
Notes at the time outstanding. Any amendment or waiver effected in accordance
with this Section 6.8 shall be binding upon each holder of any Notes, Warrants
and Monthly Warrants at the time outstanding, each future holder of such
securities, and the Company; provided, however, that New Investors may become
parties to this Agreement in accordance with Section 2.2 without any amendment
of this Agreement or any consent or approval of any Investor.
6.9 Severability. If one or more provisions of this Agreement are
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held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
6.10 Entire Agreement. This Agreement, together with all exhibits
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and schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter hereof.
6.11 Further Assurances. From and after the date of this Agreement,
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upon the request of any Investor or the Company, the Company and the Investors
shall execute and deliver such instruments, documents or other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
6.12 Waiver of Right of First Refusal. The Investors hereby waive
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any rights to notice of, and hereby waive any rights of first refusal with
respect to, the issuance of the Notes, the Warrants and the Monthly Warrants
contained in Section 4 of that certain Investors'
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Rights Agreement dated as of September 28, 1999 by and among the Company and
certain investors.
6.13 Waiver of Conflict of Interest. Each Investor and the Company
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is aware that Fenwick & West LLP ("F&W") may have previously performed and may
continue to perform certain legal services for certain of the Investors in
matters unrelated to F&W's representation of the Company. In connection with
its Investor representation, F&W may have obtained confidential information of
such Investors that could be material to F&W's representation of the Company in
connection with negotiation, execution and performance of this Agreement. By
signing this Agreement, each Investor and the Company hereby acknowledges that
the terms of this Agreement were negotiated between the Investors and the
Company and are fair and reasonable and waives any potential conflict of
interest arising out of such representation or such possession of confidential
information. Each Investor and the Company further represents that it has had
the opportunity to be, or has been, represented by independent counsel in giving
the waivers contained in this Section.
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In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
THE COMPANY: THE INVESTORS:
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By: ____________________________ By: _____________________________
Name: __________________________ Name: ___________________________
Title: _________________________ Title: __________________________
[SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]
Attachments:
Exhibit A - Schedule of Investors
Exhibit B - Form of Note
Exhibit C - Form of Warrant
Exhibit D - Form of Monthly Warrant
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EXHIBIT A
Schedule of Investors
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Principal
Investors Amount
--------- ----------
APV Technology Partners II, L.P. $ 300,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Thomvest Holdings, Inc. 1,399,545
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇
St. ▇▇▇▇ Venture Capital V, LLC 3,075,000
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mellon Ventures, L.P. 3,000,000
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
SunAmerica Inc. 5,000,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
GE Capital Equity Investments, Inc. 500,000
c/o GE Equity Investments, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Total: $13,274,545
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EXHIBIT B
Form of Note
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THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS NOTE HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS NOTE ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
PROMISSORY NOTE
OF
LEXAR MEDIA, INC.
$__________________ May ___, 2000
For value received, Lexar Media, Inc., a California corporation (the
"Company"), with principal offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, hereby promises to pay to ________________________________ the sum of
___________________________ Dollars ($_________) plus simple interest accrued on
unpaid principal at a rate equal to the lower of (a) the highest permissible
rate under applicable law and (b) six percent (6%) per annum from the date of
this Note until the principal amount hereof and all interest accrued thereon is
paid (or converted, as provided in Section 2 hereof). The principal amount of
this Note, and the interest accrued thereon, shall be due and payable in full on
May 31, 2001 at the principal offices of the Company or by mail to the address
of the registered holder of this Note in lawful money of the United States,
unless this Note shall have been previously converted pursuant to Section 2
hereof.
This Note is issued pursuant to that certain Note and Warrant Purchase
Agreement dated as of May ___, 2000 (the "Purchase Agreement"), by and among the
Company, the original holder of this Note and certain other investors listed on
the Schedule of Investors attached to the Purchase Agreement as Exhibit A, and
is subject to the provisions thereof.
1. Definitions. The following definitions shall apply for all purposes of
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this Note:
1.1 "Company" means the "Company" as defined above and includes any
corporation which shall succeed to or assume the obligations of the Company
under this Note.
1.2 "Conversion Price" means an amount equal to the lowest per share
selling price of Conversion Stock.
1.3 "Conversion Stock" means the Company's capital stock sold in the
Next Financing.
1.4 "Holder" means any person who shall at the time be the registered
holder of this Note.
1.5 "Initial Public Offering" means a firm commitment underwritten
public offering pursuant to an effective registration statement filed under the
Act covering the offer and sale of the Company's Common Stock for the account of
the Company.
1.6 "Next Financing" means the Company's next sale of its Common
Stock or Preferred Stock (with or without other securities of the Company or
some combination thereof) in one transaction or series of related transactions,
occurring at any time before the earlier of (a) the date on which this Note
becomes due or (b) the Closing of an Initial Public Offering, for an aggregate
purchase price paid to the Company of no less than Ten Million Dollars
($10,000,000) (excluding the principal amount of any Notes converted into
capital stock and issued therein).
1.7 "Note" means this Promissory Note.
1.8 "Notes" means a series of notes aggregating up to a maximum of
$16,000,000 in principal amount issued under the Purchase Agreement, of which
this Note is one, each such note containing substantially identical terms and
conditions as this Note.
2. Conversion. In the event the Company does not pay the full principal
----------
amount of this Note before the Next Financing, then, at the closing of the Next
Financing, all principal and interest accrued on this Note shall automatically
convert into shares of Conversion Stock at the Conversion Price, without the
need for any further action on the part of the Holder; provided, however, that
the Holder shall not be entitled to receive the stock certificate representing
the shares of Conversion Stock to be issued upon conversion of this Note until
the original of this Note is surrendered to the Company. Each Investor whose
Note is so converted will become a party to such stock purchase agreement,
investors' rights agreement, co-sale agreement and/or voting agreement as are
entered into by the investors in the Next Financing generally.
3. Issuance of Conversion Stock. As soon as practicable after conversion
----------------------------
of this Note, the Company at its expense will cause to be issued in the name of
and delivered to the
-2-
Holder, a certificate or certificates for the number of shares of Conversion
Stock to which the Holder shall be entitled upon such conversion (bearing such
legends as may be required by applicable state and federal securities laws in
the opinion of legal counsel of the Company, by the Company's Articles of
Incorporation or Bylaws, or by any agreement between the Company and the
Holder), together with any other securities and property to which the Holder is
entitled upon such conversion under the terms of this Note. Such conversion
shall be deemed to have been made on the date of the initial closing of the Next
Financing. No fractional shares will be issued upon conversion of this Note. If
upon any conversion of this Note a fraction of a share would otherwise result,
then in lieu of such fractional share the Company will pay the cash value of
that fractional share, calculated on the basis of the applicable Conversion
Price.
4. No Rights or Liabilities as Shareholder. This Note does not by
---------------------------------------
itself entitle the Holder to any voting rights or other rights as a shareholder
of the Company. In the absence of conversion of this Note, no provisions of
this Note, and no enumeration herein of the rights or privileges of the Holder,
shall cause the Holder to be a shareholder of the Company for any purpose.
5. No Impairment. The Company will not, by amendment of its Articles of
-------------
Incorporation or Bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms of this Note. Without limiting the generality of the foregoing, the
Company will take all such action as may be necessary or appropriate in order
that the Company may duly and validly issue fully paid and nonassessable shares
of Conversion Stock upon the conversion of this Note.
6. Priority of Note. The Notes shall rank equally without preference or
----------------
priority of any kind over one another, and all payments on account of principal
and interest with respect to any of the Notes shall be applied ratably and
proportionately on all outstanding Notes on the basis of the original principal
amount of outstanding indebtedness represented thereby.
7. Subordination. The indebtedness represented by this Note is hereby
-------------
expressly subordinated in right of cash payment to the prior payment in full of
(i) the Term Notes (as defined in that certain Note Purchase Agreement dated as
of August 8, 1997 by and among the Company and ▇▇▇▇ ▇▇ and ▇▇▇▇▇ ▇▇▇, as
amended) and (ii) all of the Company's secured indebtedness to banks, insurance
companies, lease financing institutions or other lending institutions (other
than small business investment companies or venture capital firms) regularly
engaged in the business of lending money ("Bank Debt"). If requested by the
Company the Holder of this Note will enter into a subordination agreement with
the Holders of the Term Notes and/or Bank Debt.
8. Prepayment. The Company may at any time, without penalty, upon at
----------
least five (5) days' advance written notice to the Holder, prepay in whole or in
part the unpaid principal sum of this Note, plus any unpaid accrued interest
under this Note. All payments will first be
-3-
applied to the repayment of accrued interest until all then outstanding accrued
interest has been paid, and then shall be applied to the repayment of principal.
9. Waivers. The Company and all endorsers of this Note hereby waive
-------
notice, presentment, protest and notice of dishonor.
10. Attorneys' Fees. In the event any party is required to engage the
---------------
services of any attorneys for the purpose of enforcing this Note, or any
provision thereof, the prevailing party shall be entitled to recover its
reasonable expenses and costs in enforcing this Note, including attorneys' fees.
11. Transfer. Neither this Note nor any rights hereunder may be assigned,
--------
conveyed or transferred, in whole or in part, without the Company's prior
written consent, which the Company may withhold in its sole discretion;
provided, however, that this Note may be assigned, conveyed or transferred
without the prior written consent of the Company to any person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with the Holder. The rights and obligations of the Company
and the Holder under this Note and the Purchase Agreement shall be binding upon
and benefit their respective permitted successors, assigns, heirs,
administrators and transferees.
12. Governing Law. This Note shall be governed by and construed under the
-------------
internal laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California, without reference to principles of conflict of laws or choice of
laws.
13. Headings. The headings and captions used in this Note are used for
--------
convenience only and are not to be considered in construing or interpreting this
Note. All references in this Note to sections and exhibits shall, unless
otherwise provided, refer to sections hereof and exhibits attached hereto, all
of which exhibits are incorporated herein by this reference.
14. Notices. Unless otherwise provided, any notice required or permitted
-------
under this Note shall be given in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or upon deposit with the
United States Post Office, by registered or certified mail, postage prepaid and
addressed to the Holder at the last address furnished to the Company by the
Holder in writing or, in the case of the Company, at the principal offices of
the Company, or at such other address as any party or the Company may designate
by giving ten (10) days' advance written notice to all other parties.
15. Amendments and Waivers. Any term of this Note may be amended, and the
----------------------
observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the holders of Notes representing at least a
majority of the aggregate principal amount of the Notes at the time outstanding.
Any amendment or waiver effected in accordance with this Section shall be
binding upon each holder of any Notes at the time outstanding, each future
holder of such securities, and the Company.
-4-
16. Severability. If one or more provisions of this Note are held to be
------------
unenforceable under applicable law, such provision(s) shall be excluded from
this Note and the balance of the Note shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
17. "Market Stand-Off" Agreement. The Holder hereby agrees that,
---------------------------
following the effective date of a registration statement of the Company's
initial sale of securities under the Act, for the period of time and to the
extent reasonably requested by the underwriter(s) and the Company, such Holder
shall not sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of this Note or any shares of Conversion Stock or other securities of the
Company then owned by the Holder, directly or indirectly, except securities
covered by the registration statement and transfers to donees who agree to be
similarly bound, for the period; provided however, that
(a) the executive officers and directors of the Company, as well
as any holder of at least five percent (5%) of the Company's Preferred
Stock or Common Stock, shall have agreed to be bound by substantially the
same terms and conditions,
(b) the time period requested for such market stand-off shall not
exceed one hundred eighty (180) days, and
(c) the restriction shall not apply to a registration relating
solely to employee, consultant or advisor benefit plans on Form S-1 or Form
S-8 (or similar forms promulgated after the date hereof) or a registration
relating solely to a transaction pursuant to Rule 145 promulgated under the
Act on Form S-4 (or similar forms promulgated after the date hereof).
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to impose stop-transfer instructions with respect to
the shares of Conversion Stock and any other shares of stock of the Holder (and
the shares or securities of every other person subject to the foregoing
restriction) during such stand-off period if necessary to enforce such
restrictions.
-5-
IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
name as of the date first above written.
THE COMPANY:
------------
By: __________________________
Name: ________________________
Title: _______________________
AGREED AND ACKNOWLEDGED:
THE HOLDER:
-----------
By: _______________________
Name: _____________________
Title: ____________________
[SIGNATURE PAGE TO PROMISSORY NOTE]
-6-
EXHIBIT C
Form of Warrant
---------------
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS WARRANT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS WARRANT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE COMMON STOCK
OF
LEXAR MEDIA, INC.
No. ______ Void after May 31, 2005
This certifies that for good and valuable consideration previously provided
to Lexar Media, Inc., a California corporation (the "Company"), with principal
offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, receipt of which is
hereby acknowledged, _________________ is entitled, subject to the terms and
conditions of this Warrant, to purchase from the Company at any time prior to
5:00 p.m. Pacific time on May 31, 2005 (the "Expiration Date"), up to that
number of shares of Warrant Stock (as defined below) as may be purchased for the
Maximum Purchase Amount (as defined below) at a price per share equal to the
Warrant Price (as defined below), upon surrender of this Warrant at the
principal offices of the Company, together with a duly executed subscription
form in the form attached hereto as Exhibit 1 and simultaneous payment of the
---------
full Warrant Price for the shares of Warrant Stock so purchased in lawful money
of the United States. The Warrant Price and the number and character of shares
of Warrant Stock purchasable under this Warrant are subject to adjustment as
provided herein.
This Warrant is issued pursuant to that certain Note and Warrant Purchase
Agreement dated as of May __, 2000 (the "Purchase Agreement"), by and among the
Company, the original holder of this Warrant and certain other investors listed
on the Schedule of Investors attached to the Purchase Agreement as Exhibit A,
and is subject to the provisions thereof.
1. Definitions. The following definitions shall apply for purposes of
-----------
this Warrant:
1.1 "Change of Control" means the consummation of any transaction or
series of related transactions that results in the holders of record of the
Company's capital stock immediately prior to the transaction or transactions
holding less than fifty percent (50%) of the voting power of the Company
immediately after the transaction or transactions, including the acquisition of
the Company by another entity and any reorganization, merger, consolidation or
share exchange, or which results in the sale of all or substantially all of the
assets of the Company.
1.2 "Company" means the "Company" as defined above and includes any
corporation which shall succeed to or assume the obligations of the Company
under this Warrant.
1.3 "Holder" means any person who shall at the time be the registered
holder of this Warrant.
1.4 "Initial Public Offering" means a firm commitment underwritten
public offering pursuant to an effective registration statement filed under the
Act covering the offer and sale of the Company's Common Stock to the public for
the account of the Company.
1.5 "Maximum Purchase Amount" means fifteen percent (15%) of the
principal amount of the Note.
1.6 "Next Financing" means the Company's next sale of its Common
Stock or Preferred Stock (with or without other securities of the Company or
some combination thereof) in one transaction or series of related transactions,
occurring at any time before the earlier of (a) the date the Note becomes due
and (b) the Closing of an Initial Public Offering, for an aggregate purchase
price paid to the Company of no less than Ten Million Dollars ($10,000,000)
(excluding the principal amount of any Notes converted into capital stock and
issued therein).
1.7 "Note" means the Promissory Note of even date herewith initially
payable to the initial Holder hereof.
1.8 "Notes" means a series of promissory notes aggregating up to a
maximum of $16,000,000 in principal amount issued under the Purchase Agreement,
of which the Note is one, each such note containing substantially identical
terms and conditions as the Note.
1.9 "Purchase Amount" means, at a given time, an amount equal to the
Maximum Purchase Amount less the aggregate amount previously paid to the Company
for the purchase of Warrant Stock upon exercise of this Warrant.
1.10 "Warrant" means this Warrant and any warrant(s) delivered in
substitution or exchange therefor, as provided herein.
1.11 "Warrants" means a series of warrants to purchase the Company's
Common Stock issued under the Purchase Agreement, of which this Warrant is one,
each such warrant containing substantially identical terms and conditions as
this Warrant.
1.12 "Warrant Price" means the lower of (a) $3.09 per share or (b) an
amount equal to the lowest per share issuance price of shares of Common Stock
issued or Common
-2-
Stock deemed to be issued (i.e., if the security issued is Preferred Stock the
per share issuance price of the Common Stock deemed to be issued is the price of
one share of such Preferred Stock divided by the number of shares of Common
Stock into which such Preferred Stock is convertible into) in the Next
Financing; provided, however, that if this Warrant is exercised before the Next
Financing then the "Warrant Price" shall be $3.09 per share. The Warrant Price
is subject to adjustment as provided herein.
1.13 "Warrant Stock" means the Company's Common Stock. The number
and character of shares of Warrant Stock are subject to adjustment as provided
herein and the term "Warrant Stock" shall include stock and other securities and
property at any time receivable or issuable upon exercise of this Warrant in
accordance with its terms.
2. Exercise.
--------
2.1 Method of Exercise. Subject to the terms and conditions of this
------------------
Warrant, the Holder may exercise this Warrant in whole or in part, at any time
or from time to time, on any business day before the Expiration Date, for up to
that number of shares of Warrant Stock that is obtained by dividing (a) the
Maximum Purchase Amount by (b) the then effective Warrant Price, by surrendering
this Warrant at the principal offices of the Company, with the subscription form
attached hereto duly executed by the Holder, and payment of an amount equal to
the product obtained by multiplying (i) the number of shares of Warrant Stock to
be purchased by the Holder by (ii) the Warrant Price or adjusted Warrant Price
therefor, if applicable, as determined in accordance with the terms hereof.
2.2 Form of Payment. Payment may be made by (i) a check payable to
---------------
the Company's order, (ii) wire transfer of funds to the Company, (iii)
cancellation of indebtedness of the Company to the Holder, or (iv) any
combination of the foregoing.
2.3 Partial Exercise. Upon a partial exercise of this Warrant: (i)
----------------
the Purchase Amount immediately prior to such exercise shall be reduced by the
aggregate amount paid to the Company upon such exercise of this Warrant, and
(ii) this Warrant shall be surrendered by the Holder and replaced with a new
Warrant of like tenor in which the Maximum Purchase Amount is the Purchase
Amount as so reduced. In no event may the cumulative aggregate purchase price
paid to the Company upon all exercises of the Warrant exceed the Maximum
Purchase Amount.
2.4 No Fractional Shares. No fractional shares may be issued upon
--------------------
any exercise of this Warrant, and any fractions shall be rounded down to the
nearest whole number of shares. If upon any exercise of this Warrant a fraction
of a share results, the Company will pay the cash value of any such fractional
share, calculated on the basis of the Warrant Price.
2.5 Restrictions on Exercise. This Warrant may not be exercised if
------------------------
the issuance of the Warrant Stock upon such exercise would constitute a
violation of any applicable federal or state securities laws or other laws or
regulations. As a condition to the exercise of this Warrant, the Holder shall
execute the subscription form attached hereto, confirming and acknowledging that
the representations and warranties of the Holder set forth in Section 4 of the
Purchase Agreement are true and correct as of this date of exercise.
-3-
2.6 Net Exercise Election. The Holder may elect to convert all or a
---------------------
portion of this Warrant, without the payment by the Holder of any additional
consideration, by the surrender of this Warrant or such portion to the Company,
with the net exercise election selected in the subscription form attached hereto
duly executed by the Holder, into up to the number of shares of Warrant Stock
that is obtained under the following formula:
X = Y (A-B)
-------
A
where X = the number of shares of Warrant Stock to be issued to the Holder
pursuant to this Section 2.6.
Y = the Maximum Purchase Amount divided by the Warrant Price.
A = the fair market value of one share of Warrant Stock, as
determined in good faith by the Company's Board of Directors, as at
the time the net exercise election is made pursuant to this Section
2.6.
B = the Warrant Price.
The Company will promptly respond in writing to an inquiry by the
Holder as to the then current fair market value of one share of Warrant Stock.
3. Issuance of Stock. This Warrant shall be deemed to have been exercised
-----------------
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date.
As soon as practicable on or after such date, the Company shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of whole shares of Warrant Stock issuable upon such
exercise.
4. Early Expiration. This Warrant shall automatically expire and be of no
----------------
further force and effect without any action by the Holder immediately prior to
the effective date of a Change of Control. If the Company proposes at any time
to effect a Change of Control, the Company shall mail to the Holder a notice
specifying the date on which the Change of Control is anticipated to become
effective.
5. Adjustment Provisions. The number and character of shares of Warrant
---------------------
Stock issuable upon exercise of this Warrant (or any shares of stock or other
securities or property at the time receivable or issuable upon exercise of this
Warrant) and the Warrant Price therefor, are subject to adjustment upon the
occurrence of the following events between the date this Warrant is issued and
the date it is exercised:
5.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
----------------------------------------------------------------
etc. The Warrant Price of this Warrant and the number of shares of Warrant Stock
---
issuable upon exercise of this Warrant (or any shares of stock or other
securities at the time issuable upon exercise of this Warrant) shall each be
proportionally adjusted to reflect any stock dividend, stock split,
-4-
reverse stock split, combination of shares, reclassification, recapitalization
or other similar event affecting the number of outstanding shares of Warrant
Stock (or such other stock or securities).
5.2 Adjustment for Other Dividends and Distributions. In case the
------------------------------------------------
Company shall make or issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution payable
respect to the Warrant Stock that is payable in (a) securities of the Company
(other than issuances with respect to which adjustment is made under Section
5.1), or (b) assets (other than cash dividends paid or payable solely out of
retained earnings), then, and in each such case, the Holder, upon exercise of
this Warrant at any time after the consummation, effective date or record date
of such event, shall receive, in addition to the shares of Warrant Stock
issuable upon such exercise prior to such date, the securities or such other
assets of the Company to which the Holder would have been entitled upon such
date if the Holder had exercised this Warrant immediately prior thereto (all
subject to further adjustment as provided in this Warrant).
5.3 Adjustment for Reorganization, Consolidation, Merger. Except as
----------------------------------------------------
provided in Section 4 (Early Expiration), in case of any reorganization of the
Company (or of any other corporation, the stock or other securities of which are
at the time receivable on the exercise of this Warrant), after the date of this
Warrant, or in case, after such date, the Company (or any such corporation)
shall consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then, and in each such
case, the Holder, upon the exercise of this Warrant (as provided in Section 2),
at any time after the consummation of such reorganization, consolidation, merger
or conveyance, shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise of this Warrant prior to
such consummation, the stock or other securities or property to which the Holder
would have been entitled upon the consummation of such reorganization,
consolidation, merger or conveyance if the Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in this
Warrant, and the successor or purchasing corporation in such reorganization,
consolidation, merger or conveyance (if other than the Company) shall duly
execute and deliver to the Holder a supplement hereto acknowledging such
corporation's obligations under this Warrant; and in each such case, the terms
of this Warrant shall be applicable to the shares of stock or other securities
or property receivable upon the exercise of this Warrant after the consummation
of such reorganization, consolidation, merger or conveyance.
5.4 Conversion of Stock. In case all the authorized Warrant Stock of
-------------------
the Company is converted, pursuant to the Company's Articles of Incorporation,
into other securities or property, or the Warrant Stock otherwise ceases to
exist, then, in such case, the Holder, upon exercise of this Warrant at any time
after the date on which the Warrant Stock is so converted or ceases to exist
(the "Termination Date"), shall receive, in lieu of the number of shares of
Warrant Stock that would have been issuable upon such exercise immediately prior
to the Termination Date (the "Former Number of Shares of Warrant Stock"), the
stock and other securities and property to which the Holder would have been
entitled to receive upon the Termination Date if the Holder had exercised this
Warrant with respect to the Former Number of Shares of Warrant Stock immediately
prior to the Termination Date (all subject to further adjustment as provided in
this Warrant).
-5-
5.5 Notice of Adjustments. The Company shall promptly give written
---------------------
notice of each adjustment or readjustment of the Warrant Price or the number of
shares of Warrant Stock or other securities issuable upon exercise of this
Warrant. The notice shall describe the adjustment or readjustment and show in
reasonable detail the facts on which the adjustment or readjustment is based.
5.6 No Change Necessary. The form of this Warrant need not be changed
-------------------
because of any adjustment in the Warrant Price or in the number of shares of
Warrant Stock issuable upon its exercise.
5.7 Reservation of Stock. If at any time the number of shares of
--------------------
Warrant Stock or other securities issuable upon exercise of this Warrant shall
not be sufficient to effect the exercise of this Warrant, the Company will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Warrant Stock or other securities
issuable upon exercise of this Warrant as shall be sufficient for such purpose.
6. No Rights or Liabilities as Shareholder. This Warrant does not by
---------------------------------------
itself entitle the Holder to any voting rights or other rights as a shareholder
of the Company. In the absence of affirmative action by the Holder to purchase
Warrant Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder, shall cause the
Holder to be a shareholder of the Company for any purpose.
7. No Impairment. The Company will not, by amendment of its Articles of
-------------
Incorporation or Bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms of this Warrant. Without limiting the generality of the foregoing, the
Company will take all such action as may be necessary or appropriate in order
that the Company may duly and validly issue fully paid and nonassessable shares
of Warrant Stock upon the exercise of this Warrant.
8. Attorneys' Fees. In the event any party is required to engage the
---------------
services of any attorneys for the purpose of enforcing this Warrant, or any
provision thereof, the prevailing party shall be entitled to recover its
reasonable expenses and costs in enforcing this Warrant, including attorneys'
fees.
9. Transfer. Neither this Warrant nor any rights hereunder may be
--------
assigned, conveyed or transferred, in whole or in part, without the Company's
prior written consent, which the Company may withhold in its sole discretion;
provided, however, that this Warrant may be assigned, conveyed or transferred
without the prior written consent of the Company to any person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with the Holder. The rights and obligations of the Company
and the Holder under this Warrant and the Purchase Agreement shall be binding
upon and benefit their respective permitted successors, assigns, heirs,
administrators and transferees.
10. Governing Law. This Warrant shall be governed by and construed under
-------------
the internal laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California, without reference to principles of conflict of laws or choice of
laws.
-6-
11. Headings. The headings and captions used in this Warrant are used for
--------
convenience only and are not to be considered in construing or interpreting this
Warrant. All references in this Warrant to sections and exhibits shall, unless
otherwise provided, refer to sections hereof and exhibits attached hereto, all
of which exhibits are incorporated herein by this reference.
12. Notices. Unless otherwise provided, any notice required or permitted
-------
under this Warrant shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the Holder at the last address furnished to the Company by the
Holder in writing or, in the case of the Company, at the principal offices of
the Company, or at such other address as any party or the Company may designate
by giving ten (10) days' advance written notice to all other parties.
13. Amendment; Waiver. Any term of this Warrant may be amended, and the
-----------------
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the holders of Warrants representing at least
a majority of the aggregate shares of Warrant Stock issuable upon exercise of
all the Warrants at the time outstanding. Any amendment or waiver effected in
accordance with this Section shall be binding upon each holder of any Warrants
at the time outstanding, each future holder of such securities, and the Company.
14. Severability. If one or more provisions of this Warrant are held to
------------
be unenforceable under applicable law, such provision(s) shall be excluded from
this Warrant and the balance of the Warrant shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
15. Terms Binding. By acceptance of this Warrant, the Holder accepts and
-------------
agrees to be bound by all the terms and conditions of this Warrant.
16. "Market Stand-Off" Agreement. The Holder hereby agrees that,
---------------------------
following the effective date of a registration statement of the Company's
initial sale of securities under the Act, for the period of time and to the
extent reasonably requested by the underwriter(s) and the Company, such Holder
shall not sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of this Warrant or any shares of Warrant Stock or other securities of the
Company then owned by the Holder, directly or indirectly, except securities
covered by the registration statement and transfers to donees who agree to be
similarly bound, for the period; provided however, that
(a) the executive officers and directors of the Company, as well
as any holder of at least five percent (5%) of the Company's Preferred
Stock or Common Stock, shall have agreed to be bound by substantially the
same terms and conditions,
(b) the time period requested for such market stand-off shall
not exceed one hundred eighty (180) days, and
(c) the restriction shall not apply to a registration relating
solely to employee, consultant or advisor benefit plans on Form S-1 or Form
S-8 (or similar forms
-7-
promulgated after the date hereof) or a registration relating solely to a
transaction pursuant to Rule 145 promulgated under the Act on Form S-4 (or
similar forms promulgated after the date hereof).
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to impose stop-transfer instructions with respect to
the shares of Warrant Stock and any other shares of stock of the Holder (and the
shares or securities of every other person subject to the foregoing restriction)
during such stand-off period if necessary to enforce such restrictions.
-8-
Dated: May __, 2000
THE COMPANY:
-----------
By: _____________________________
Name: ___________________________
Title: __________________________
AGREED AND ACKNOWLEDGED:
THE HOLDER:
-----------
By: _____________________________
Name: ___________________________
Title: __________________________
[SIGNATURE PAGE TO WARRANT]
-9-
Exhibit 1
---------
FORM OF SUBSCRIPTION
--------------------
(To be signed only upon exercise of Warrant)
To: Lexar Media, Inc.
(1) The undersigned Holder hereby elects to purchase ________________
shares of Common Stock of Lexar Media, Inc. (the "Warrant Stock"), pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price for such shares in full.
(1) Net Exercise Election. The undersigned Holder elects to convert
---------------------
the Warrant into shares of Warrant Stock by net exercise election pursuant to
Section 2.6 of the Warrant. This conversion is exercised with respect to
__________ shares of Common Stock of Lexar Media, Inc. (the "Warrant Stock")
covered by the Warrant.
[STRIKE PARAGRAPH ABOVE THAT DOES NOT APPLY]
(2) In exercising the Warrant, the undersigned Holder hereby confirms
and acknowledges that the representations and warranties set forth in Section 4
of the Purchase Agreement (as defined in the Warrant) as they apply to the
undersigned Holder continue to be true and correct as of this date.
(3) Please issue a certificate or certificates representing such
shares of Warrant Stock in the name or names specified below:
___________________________________ ___________________________________
(Name) (Name)
___________________________________ ___________________________________
(Address) (Address)
___________________________________ ___________________________________
(City, State, Zip Code) (City, State, Zip Code)
___________________________________ ___________________________________
(Federal Tax Identification Number) (Federal Tax Identification Number)
___________________________________ ___________________________________
(Date) (Signature of Holder)
EXHIBIT D
Form of Monthly Warrant
-----------------------
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS WARRANT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS WARRANT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE COMMON STOCK
OF
LEXAR MEDIA, INC.
No. _____ Void after May ___, 2005
This certifies that for good and valuable consideration previously
provided to Lexar Media, Inc., a California corporation (the "Company"), with
principal offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, receipt
of which is hereby acknowledged, ____________________ is entitled, subject to
the terms and conditions of this Warrant, to purchase from the Company at any
time prior to 5:00 p.m. Pacific time on May 31, 2005 (the "Expiration Date"), up
to that number of shares of Warrant Stock (as defined below) as may be purchased
for the Maximum Purchase Amount (as defined below) at a price per share equal to
the Warrant Price (as defined below), upon surrender of this Warrant at the
principal offices of the Company, together with a duly executed subscription
form in the form attached hereto as Exhibit 1 and simultaneous payment of the
---------
full Warrant Price for the shares of Warrant Stock so purchased in lawful money
of the United States; provided, however, that at any such time the Holder may
only purchase up to that number of shares of Warrant Stock as may be purchased
for the Purchase Amount (as defined below) at a price per share equal to the
Warrant Price. The Warrant Price and the number and character of shares of
Warrant Stock purchasable under this Warrant are subject to adjustment as
provided herein.
This Warrant is issued pursuant to that certain Note and Warrant
Purchase Agreement dated as of May ___, 2000 (the "Purchase Agreement"), by and
among the Company, the original holder of this Warrant and certain other
investors listed on the Schedule of Investors attached to the Purchase Agreement
as Exhibit A, and is subject to the provisions thereof.
1. Definitions. The following definitions shall apply for purposes of
-----------
this Warrant:
1.1 "Change of Control" means the consummation of any transaction or
series of related transactions that results in the holders of record of the
Company's capital stock immediately prior to the transaction or transactions
holding less than fifty percent (50%) of the voting power of the Company
immediately after the transaction or transactions, including the acquisition of
the Company by another entity and any reorganization, merger, consolidation or
share exchange, or which results in the sale of all or substantially all of the
assets of the Company.
1.2 "Company" means the "Company" as defined above and includes any
corporation which shall succeed to or assume the obligations of the Company
under this Warrant.
1.3 "Holder" means any person who shall at the time be the
registered holder of this Warrant.
1.4 "Initial Public Offering" means a firm commitment underwritten
public offering pursuant to an effective registration statement filed under the
Act covering the offer and sale of the Company's Common Stock to the public for
the account of the Company.
1.5 "Maximum Purchase Amount" means the principal amount of the Note.
1.6 "Next Financing" means the Company's next sale of its Common
Stock or Preferred Stock (with or without other securities of the Company or
some combination thereof) in one transaction or series of related transactions,
occurring at any time before the earlier of (a) the date the Note becomes due
and (b) the closing of an Initial Public Offering, for an aggregate purchase
price paid to the Company of no less than Ten Million Dollars ($10,000,000)
(excluding the principal amount of any Notes converted into capital stock and
issued therein).
1.7 "Note" means the Promissory Note of even date herewith initially
payable to the initial Holder hereof and issued under the Purchase Agreement.
1.8 "Notes" means a series of promissory notes aggregating up to a
maximum of $16,000,000 in principal amount issued under the Purchase Agreement,
of which the Note is one, each such note containing substantially identical
terms and conditions as the Note.
1.9 "Purchase Amount" means, at a given time, an amount equal to
eight and thirty-three hundredths percent (8.33%) of the Maximum Purchase Amount
multiplied by the number of full months after the date of the issuance of the
Note (up to a maximum of twelve months) less the aggregate amount previously
paid to the Company for the purchase of Warrant Stock upon exercise of this
Warrant.
1.10 "Warrant" means this Warrant and any warrant(s) delivered in
substitution or exchange therefor, as provided herein.
1.11 "Warrants" means a series of warrants to purchase the Company's
Common Stock dated of even date herewith issued under the Purchase Agreement, of
which this
-2-
Warrant is one, each such warrant containing substantially identical terms and
conditions as this Warrant.
1.12 "Warrant Price" means the lower of (a) $8.00 per share or (b) an
amount equal to the lowest per share issuance price of shares of Common Stock
issued or Common Stock deemed to be issued (i.e., if the security issued is
Preferred Stock, the per share issuance price of the Common Stock deemed to be
issued is the per share price of the share of such Preferred Stock divided by
the number of shares of Common Stock into which such Preferred Stock is
convertible into) on the earlier to occur of the Next Financing or the Company's
Initial Public Offering; provided, however, that if this Warrant is exercised
before either the Next Financing or Initial Public Offering then the "Warrant
Price" shall be $8.00 per share. The Warrant Price is subject to adjustment as
provided herein.
1.13 "Warrant Stock" means the Company's Common Stock. The number
and character of shares of Warrant Stock are subject to adjustment as provided
herein and the term "Warrant Stock" shall include stock and other securities and
property at any time receivable or issuable upon exercise of this Warrant in
accordance with its terms.
2. Exercise.
--------
2.1 Method of and Limitations on Exercise. Subject to the terms and
-------------------------------------
conditions of this Warrant, the Holder may exercise this Warrant in whole or in
part, at any time or from time to time, on any business day before the
Expiration Date, for up to that number of shares of Warrant Stock that is
obtained by dividing (a) the Purchase Amount by (b) the then effective Warrant
Price, by surrendering this Warrant at the principal offices of the Company,
with the subscription form attached hereto duly executed by the Holder, and
payment of an amount equal to the product obtained by multiplying (i) the number
of shares of Warrant Stock to be purchased by the Holder by (ii) the Warrant
Price or adjusted Warrant Price therefor, if applicable, as determined in
accordance with the terms hereof.
2.2 Form of Payment. Payment may be made by (i) a check payable to
---------------
the Company's order, (ii) wire transfer of funds to the Company, (iii)
cancellation of indebtedness of the Company to the Holder, or (iv) any
combination of the foregoing.
2.3 Partial Exercise. Upon a partial exercise of this Warrant: (i)
----------------
the Purchase Amount immediately prior to such exercise shall be reduced by the
aggregate amount paid to the Company upon such exercise of this Warrant, and
(ii) this Warrant shall be surrendered by the Holder and replaced with a new
Warrant of like tenor in which the Maximum Purchase Amount is the Purchase
Amount as so reduced. In no event may the cumulative aggregate purchase price
paid to the Company upon all exercises of the Warrant exceed the Maximum
Purchase Amount.
2.4 No Fractional Shares. No fractional shares may be issued upon
--------------------
any exercise of this Warrant, and any fractions shall be rounded down to the
nearest whole number of shares. If upon any exercise of this Warrant a fraction
of a share results, the Company will pay the cash value of any such fractional
share, calculated on the basis of the Warrant Price.
2.5 Restrictions on Exercise. This Warrant may not be exercised if
------------------------
the issuance of the Warrant Stock upon such exercise would constitute a
violation of any applicable
-3-
federal or state securities laws or other laws or regulations. As a condition to
the exercise of this Warrant, the Holder shall execute the subscription form
attached hereto, confirming and acknowledging that the representations and
warranties of the Holder set forth in Section 4 of the Purchase Agreement are
true and correct as of this date of exercise.
2.6 Net Exercise Election. The Holder may elect to convert all or a
---------------------
portion of this Warrant, without the payment by the Holder of any additional
consideration, by the surrender of this Warrant or such portion to the Company,
with the net exercise election selected in the subscription form attached hereto
duly executed by the Holder, into up to the number of shares of Warrant Stock
that is obtained under the following formula:
X = Y (A-B)
-------
A
where X = the number of shares of Warrant Stock to be issued to the Holder
pursuant to this Section 2.6.
Y = the Purchase Amount divided by the Warrant Price.
A = the fair market value of one share of Warrant Stock, as
determined in good faith by the Company's Board of Directors,
as at the time the net exercise election is made pursuant to this
Section 2.6.
B = the Warrant Price.
The Company will promptly respond in writing to an inquiry by the
Holder as to the then current fair market value of one share of Warrant Stock.
3. Issuance of Stock. This Warrant shall be deemed to have been exercised
-----------------
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date.
As soon as practicable on or after such date, the Company shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of whole shares of Warrant Stock issuable upon such
exercise.
4. Early Expiration. This Warrant shall automatically expire and be of
----------------
no further force and effect without any action by the Holder immediately prior
to the earlier of (i) the effective date of a Change of Control, or (ii) the
effective date of the Next Financing if the issuance price of shares of Common
Stock issued or Common Stock deemed to be issued (i.e., if the security issued
is Preferred Stock the per share issuance price of the Common Stock deemed to be
issued is the per share price of such Preferred Stock divided by the number of
shares of Common Stock into which such Preferred Stock is convertible into) in
the Next Financing is less than or equal to $5.50 per share (as adjusted for
stock splits, combinations and similar events). If the Company proposes at any
time to effect a Change of Control or the Next Financing, the Company shall mail
to the Holder a notice specifying the date on which the Change of Control or the
Next Financing is anticipated to become effective.
-4-
5. Adjustment Provisions. The number and character of shares of Warrant
---------------------
Stock issuable upon exercise of this Warrant (or any shares of stock or other
securities or property at the time receivable or issuable upon exercise of this
Warrant) and the Warrant Price therefor, are subject to adjustment upon the
occurrence of the following events between the date this Warrant is issued and
the date it is exercised:
5.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
----------------------------------------------------------------
etc. The Warrant Price of this Warrant and the number of shares of Warrant
----
Stock issuable upon exercise of this Warrant (or any shares of stock or other
securities at the time issuable upon exercise of this Warrant) shall each be
proportionally adjusted to reflect any stock dividend, stock split, reverse
stock split, combination of shares, reclassification, recapitalization or other
similar event affecting the number of outstanding shares of Warrant Stock (or
such other stock or securities).
5.2 Adjustment for Other Dividends and Distributions. In case the
------------------------------------------------
Company shall make or issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution payable
respect to the Warrant Stock that is payable in (a) securities of the Company
(other than issuances with respect to which adjustment is made under Section
5.1), or (b) assets (other than cash dividends paid or payable solely out of
retained earnings), then, and in each such case, the Holder, upon exercise of
this Warrant at any time after the consummation, effective date or record date
of such event, shall receive, in addition to the shares of Warrant Stock
issuable upon such exercise prior to such date, the securities or such other
assets of the Company to which the Holder would have been entitled upon such
date if the Holder had exercised this Warrant immediately prior thereto (all
subject to further adjustment as provided in this Warrant).
5.3 Adjustment for Reorganization, Consolidation, Merger. Except
----------------------------------------------------
as provided in Section 4 (Early Expiration), in case of any reorganization of
the Company (or of any other corporation, the stock or other securities of which
are at the time receivable on the exercise of this Warrant), after the date of
this Warrant, or in case, after such date, the Company (or any such corporation)
shall consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then, and in each such
case, the Holder, upon the exercise of this Warrant (as provided in Section 2),
at any time after the consummation of such reorganization, consolidation, merger
or conveyance, shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise of this Warrant prior to
such consummation, the stock or other securities or property to which the Holder
would have been entitled upon the consummation of such reorganization,
consolidation, merger or conveyance if the Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in this
Warrant, and the successor or purchasing corporation in such reorganization,
consolidation, merger or conveyance (if other than the Company) shall duly
execute and deliver to the Holder a supplement hereto acknowledging such
corporation's obligations under this Warrant; and in each such case, the terms
of this Warrant shall be applicable to the shares of stock or other securities
or property receivable upon the exercise of this Warrant after the consummation
of such reorganization, consolidation, merger or conveyance.
5.4 Conversion of Stock. In case all the authorized Warrant Stock
-------------------
of the Company is converted, pursuant to the Company's Articles of
Incorporation, into other securities or property, or the Warrant Stock otherwise
ceases to exist, then, in such case, the Holder, upon
-5-
exercise of this Warrant at any time after the date on which the Warrant Stock
is so converted or ceases to exist (the "Termination Date"), shall receive, in
lieu of the number of shares of Warrant Stock that would have been issuable upon
such exercise immediately prior to the Termination Date (the "Former Number of
Shares of Warrant Stock"), the stock and other securities and property to which
the Holder would have been entitled to receive upon the Termination Date if the
Holder had exercised this Warrant with respect to the Former Number of Shares of
Warrant Stock immediately prior to the Termination Date (all subject to further
adjustment as provided in this Warrant).
5.5 Notice of Adjustments. The Company shall promptly give written
---------------------
notice of each adjustment or readjustment of the Warrant Price or the number of
shares of Warrant Stock or other securities issuable upon exercise of this
Warrant. The notice shall describe the adjustment or readjustment and show in
reasonable detail the facts on which the adjustment or readjustment is based.
5.6 No Change Necessary. The form of this Warrant need not be
-------------------
changed because of any adjustment in the Warrant Price or in the number of
shares of Warrant Stock issuable upon its exercise.
5.7 Reservation of Stock. If at any time the number of shares of
--------------------
Warrant Stock or other securities issuable upon exercise of this Warrant shall
not be sufficient to effect the exercise of this Warrant, the Company will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Warrant Stock or other securities
issuable upon exercise of this Warrant as shall be sufficient for such purpose.
6. No Rights or Liabilities as Shareholder. This Warrant does not by
---------------------------------------
itself entitle the Holder to any voting rights or other rights as a shareholder
of the Company. In the absence of affirmative action by the Holder to purchase
Warrant Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder, shall cause the
Holder to be a shareholder of the Company for any purpose.
7. No Impairment. The Company will not, by amendment of its Articles of
-------------
Incorporation or Bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms of this Warrant. Without limiting the generality of the foregoing,
the Company will take all such action as may be necessary or appropriate in
order that the Company may duly and validly issue fully paid and nonassessable
shares of Warrant Stock upon the exercise of this Warrant.
8. Attorneys' Fees. In the event any party is required to engage the
---------------
services of any attorneys for the purpose of enforcing this Warrant, or any
provision thereof, the prevailing party shall be entitled to recover its
reasonable expenses and costs in enforcing this Warrant, including attorneys'
fees.
9. Transfer. Neither this Warrant nor any rights hereunder may be
--------
assigned, conveyed or transferred, in whole or in part, without the Company's
prior written consent, which the Company may withhold in its sole discretion;
provided, however, that this Warrant may be assigned, conveyed or transferred
without the prior written consent of the Company to any
-6-
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the Holder. The
rights and obligations of the Company and the Holder under this Warrant and the
Purchase Agreement shall be binding upon and benefit their respective permitted
successors, assigns, heirs, administrators and transferees.
10. Governing Law. This Warrant shall be governed by and construed under
-------------
the internal laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California, without reference to principles of conflict of laws or choice of
laws.
11. Headings. The headings and captions used in this Warrant are used for
--------
convenience only and are not to be considered in construing or interpreting this
Warrant. All references in this Warrant to sections and exhibits shall, unless
otherwise provided, refer to sections hereof and exhibits attached hereto, all
of which exhibits are incorporated herein by this reference.
12. Notices. Unless otherwise provided, any notice required or permitted
-------
under this Warrant shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the Holder at the last address furnished to the Company by the
Holder in writing or, in the case of the Company, at the principal offices of
the Company, or at such other address as any party or the Company may designate
by giving ten (10) days' advance written notice to all other parties.
13. Amendment; Waiver. Any term of this Warrant may be amended, and the
-----------------
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the holders of Warrants representing at least
a majority of the aggregate shares of Warrant Stock issuable upon exercise of
all the Warrants at the time outstanding. Any amendment or waiver effected in
accordance with this Section shall be binding upon each holder of any Warrants
at the time outstanding, each future holder of such securities, and the Company.
14. Severability. If one or more provisions of this Warrant are held to
------------
be unenforceable under applicable law, such provision(s) shall be excluded from
this Warrant and the balance of the Warrant shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
15. Terms Binding. By acceptance of this Warrant, the Holder accepts and
-------------
agrees to be bound by all the terms and conditions of this Warrant.
16. "Market Stand-Off" Agreement. The Holder hereby agrees that,
---------------------------
following the effective date of a registration statement of the Company's
initial sale of securities under the Act, for the period of time and to the
extent reasonably requested by the underwriter(s) and the Company, such Holder
shall not sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of this Warrant or any shares of Warrant Stock or other securities of the
Company then owned by the Holder, directly or indirectly, except securities
covered by the registration statement and transfers to donees who agree to be
similarly bound, for the period; provided however, that
-7-
(a) the executive officers and directors of the Company, as well
as any holder of at least five percent (5%) of the Company's Preferred
Stock or Common Stock, shall have agreed to be bound by substantially the
same terms and conditions,
(b) the time period requested for such market stand-off shall not
exceed one hundred eighty (180) days, and
(c) the restriction shall not apply to a registration relating
solely to employee, consultant or advisor benefit plans on Form S-1 or Form
S-8 (or similar forms promulgated after the date hereof) or a registration
relating solely to a transaction pursuant to Rule 145 promulgated under the
Act on Form S-4 (or similar forms promulgated after the date hereof).
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to impose stop-transfer instructions with respect to
the shares of Warrant Stock and any other shares of stock of the Holder (and the
shares or securities of every other person subject to the foregoing restriction)
during such stand-off period if necessary to enforce such restrictions.
-8-
Dated: May __, 2000
THE COMPANY:
-----------
By: _______________________________
Name: _____________________________
Title: ____________________________
AGREED AND ACKNOWLEDGED:
THE HOLDER:
-----------
By: _______________________________
Name: _____________________________
Title: ____________________________
[SIGNATURE PAGE TO WARRANT]
-9-
Exhibit 1
---------
FORM OF SUBSCRIPTION
--------------------
(To be signed only upon exercise of Warrant)
To: Lexar Media, Inc.
(1) The undersigned Holder hereby elects to purchase ________________
shares of Common Stock of Lexar Media, Inc. (the "Warrant Stock"), pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price for such shares in full.
(1) Net Exercise Election. The undersigned Holder elects to convert
---------------------
the Warrant into shares of Warrant Stock by net exercise election pursuant to
Section 2.6 of the Warrant. This conversion is exercised with respect to
__________ shares of Common Stock of Lexar Media, Inc. (the "Warrant Stock")
covered by the Warrant.
[STRIKE PARAGRAPH ABOVE THAT DOES NOT APPLY]
(2) In exercising the Warrant, the undersigned Holder hereby confirms
and acknowledges that the representations and warranties set forth in Section 4
of the Purchase Agreement (as defined in the Warrant) as they apply to the
undersigned Holder continue to be true and correct as of this date.
(3) Please issue a certificate or certificates representing such
shares of Warrant Stock in the name or names specified below:
___________________________________ ___________________________________
(Name) (Name)
___________________________________ ___________________________________
(Address) (Address)
___________________________________ ___________________________________
(City, State, Zip Code) (City, State, Zip Code)
___________________________________ ___________________________________
(Federal Tax Identification Number) (Federal Tax Identification Number)
___________________________________ ___________________________________
(Date) (Signature of Holder)