COMMON STOCK PURCHASE WARRANT To Purchase Shares of Common Stock of SYNTAX- BRILLIAN CORPORATION
EXHIBIT 4.19
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT.
COMMON STOCK PURCHASE WARRANT
To Purchase Shares of Common Stock of
SYNTAX-BRILLIAN CORPORATION
THIS COMMON STOCK PURCHASE WARRANT (“Warrant ”) certifies that, for value received,
(the “Holder”), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after the 181st
day after March 27, 2007 (the “Initial Exercise Date”) and on or prior to the close of
business on the third anniversary of the Initial Exercise Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from Syntax-Brillian Corporation, a Delaware corporation
(the “Company”), up to ___ shares (the “Warrant Shares”) of common stock, par
value $0.001 per share, of the Company (the “Common Stock”). The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase
Agreement”), dated as of March 27, 2007, among the Company and the purchasers signatory
thereto.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may
be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or
before the Termination Date, by delivery to the Company of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the address of such Holder appearing on
the books of the Company); provided, however , within five Trading Days of the date
said Notice of Exercise is delivered to the Company, if this Warrant is exercised in full, the
Holder shall have surrendered this Warrant to the Company and the Company shall have received
payment of the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has
been exercised in full. Partial exercises of this Warrant resulting in purchases of a portion of
the total number of Warrant Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise Form within five business days of receipt of such notice. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of
the provisions of this paragraph, following the purchase of a portion of the Warrant Shares
hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
b) Exercise Price. The exercise price of the Common Stock under this Warrant shall be
$8.7812, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at any time after one year from the date of issuance of this
Warrant there is no effective Registration Statement registering, or no current prospectus
available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be
exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to
receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:
| (A) = | the VWAP (as defined below) on the Trading Day immediately preceding the date of such election; | |||
| (B) = | the Exercise Price of this Warrant, as adjusted; and | |||
| (X) = | the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise. |
Notwithstanding anything herein to the contrary, on the Termination date, this Warrant shall
be automatically exercised via cashless exercise pursuant to this Section 2(c). For purposes of
this Warrant, “VWAP” means, for any date, the price determined by the first of the
following clauses that applies: (i) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as
reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern
Time); (ii) if the Common Stock is not then listed or quoted on a Trading Market and if prices for
the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average price of
the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (iii) if
the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “pink sheets” published by the Pink Sheets, LLC (or a similar
organization or agency succeeding to its
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functions of reporting prices), the most recent bid price per share of the Common Stock so
reported; or (iv) in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Purchasers and reasonably
acceptable to the Company.
d) Exercise Limitations.
i. Holder’s Restrictions. The Company shall not effect any exercise of this Warrant,
and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section
2(c) or otherwise, to the extent that after giving effect to such issuance after exercise, such
Holder (together with such Holder’s affiliates, and any other person or entity acting as a group
together with such Holder or any of such Holder’s affiliates), as set forth on the applicable
Notice of Exercise, would beneficially own in excess of the Beneficial Ownership Limitation (as
defined below). For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by such Holder and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially
owned by such Holder or any of its affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company subject to a limitation on conversion
or exercise analogous to the limitation contained herein beneficially owned by such Holder or any
of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section
2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder, it being acknowledged by a Holder that the
Company is not representing to such Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and such Holder is solely responsible for any schedules required to be
filed in accordance therewith. To the extent that the limitation contained in this Section 2(d)
applies, the determination of whether this Warrant is exercisable (in relation to other securities
owned by such Holder) and of which a portion of this Warrant is exercisable shall be in the sole
discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be each
Holder’s determination of whether this Warrant is exercisable (in relation to other securities
owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to
such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining
the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the
case may be, (y) a more recent public announcement by the Company, or (z) any other notice by the
Company or the Company’s transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including this Warrant, by such
Holder or its affiliates since the date as of which such number of outstanding shares of Common
Stock was reported. The “Beneficial Ownership
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Limitation” shall be 9.99% of the number of shares of Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The
provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor holder of this Warrant.
ii. Trading Market Restrictions. The Company may not issue upon exercise of this
Warrant a number of shares of Common Stock, which, when aggregated with any shares of Common Stock
issued upon prior exercise of this or any other Warrant issued pursuant to the Purchase Agreement,
would exceed 19.999% of the number of shares of Common Stock outstanding on the Trading Day
immediately preceding the Closing Date (such number of shares, the “Issuable Maximum”)
without first obtaining Stockholder Approval (as defined below). If on any attempted exercise of
this Warrant, the issuance of Warrant Shares would exceed the Issuable Maximum and the Company
shall not have previously obtained the vote of stockholders to approve the issuance of shares of
Common Stock in excess of the Issuable Maximum pursuant to the terms hereof (the “Stockholder
Approval”), then the Company shall issue to the Holder requesting a Warrant exercise such number of
Warrant Shares as may be issued below the Issuable Maximum and, with respect to the remainder of
the aggregate number of Warrant Shares, this Warrant shall not be exercisable until and unless
Stockholder Approval has been obtained.
e) Mechanics of Exercise.
i. Authorization of Warrant Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid, and nonassessable and free from all taxes, liens, and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
ii. Delivery of Certificates Upon Exercise. Certificates for shares purchased
hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system,
and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise
within three Trading Days from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth
above (“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised
on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to
have been issued, and Holder or any other person so designated to be named therein shall be deemed
to have become a holder of record of such shares for all purposes, as of the date the Warrant has
been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by
the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of such shares, have been
paid.
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iii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
iv. Rescission Rights. If the Company fails to cause its transfer agent to transmit to
the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section
2(e) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share
which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
vi. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this
Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto
duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.
vii. Closing of Books. The Company will not close its stockholder books or records in
any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
f) Call Provision. Subject to the provisions of Section 2(d) and this Section 2(f),
if, after the Effective Date, the VWAP for each of 20 consecutive Trading Days (the “Measurement
Period,” which 20 Trading Day period shall not have commenced until after the Effective Date)
exceeds 150% of the then Exercise Price (subject to adjustment for forward and reverse stock
splits, recapitalizations, stock dividends, and the like after the Initial Exercise Date) (the
“Threshold Price”), then the Company may, within three Trading Days of the end of such
period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise
has not yet been delivered (such right, a “Call”). To exercise this right, the Company
must deliver to the Holder an irrevocable written notice (a “Call Notice”), indicating
therein the portion of unexercised portion of this Warrant to which such notice applies. If the
conditions set forth below for such Call are satisfied for the period from the date of the Call
Notice through and including the Call Date (as defined below), then any portion of this Warrant
subject to such Call Notice for which a Notice of Exercise shall not have been received by the
Call Date will be cancelled at 5:00 p.m. (Arizona time) on the tenth Trading Day after the date the
Call Notice is received by the Holder (such date, the “Call Date”). Any unexercised portion of this
Warrant to
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which the Call Notice does not pertain will be unaffected by such Call Notice. In
furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise
with respect to Warrant Shares subject to a Call Notice that are tendered through 5:00 p.m.
(Arizona time) on the Call Date. The parties agree that any Notice of Exercise delivered following
a Call Notice shall first reduce to zero the number of Warrant Shares subject to such Call Notice
prior to reducing the remaining Warrant Shares available for purchase under this Warrant. For
example, if (i) this Warrant then permits the Holder to acquire 100 Warrant Shares, (ii) a Call
Notice pertains to 75 Warrant Shares, and (iii) prior to 5:00 p.m. (Arizona time) on the Call Date
the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (1) on the Call Date
the right under this Warrant to acquire 25 Warrant Shares will be automatically cancelled, (2) the
Company, in the time and manner required under this Warrant, will have issued and delivered to the
Holder 50 Warrant Shares in respect of the exercises following receipt of the Call Notice, and (3)
the Holder may, until the Termination Date, exercise this Warrant for 25 Warrant Shares (subject to
adjustment as herein provided and subject to subsequent Call Notices). Subject to the provisions of
this Section 2(f), the Company may deliver subsequent Call Notices for any portion of this Warrant
for which the Holder shall not have delivered a Notice of Exercise. Notwithstanding anything to the
contrary set forth in this Warrant, the Company may not deliver a Call Notice or require the
cancellation of this Warrant (and any Call Notice will be void), unless, from the beginning of the
20th consecutive Trading Days used to determine whether the Common Stock has achieved the Threshold
Price through the Call Date, (A) the Company shall have honored in accordance with the terms of
this Warrant all Notices of Exercise delivered by 5:00 p.m. (Arizona time) on the Call Date, (B)
the Registration Statement shall be effective as to all Warrant Shares and the prospectus
thereunder available for use by the Holder for the resale of all such Warrant Shares, (C) the
Common Stock shall be listed or quoted for trading on the Trading Market, (D) there is a sufficient
number of authorized shares of Common Stock for issuance of the Warrant Shares, and (E) the
issuance of the shares shall be in accordance with Section 2(d) herein. The Company’s right to Call
the Warrant shall be exercised ratably among the Holders based on each Holder’s initial purchase of
Common Stock.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise make a distribution or distributions on shares
of its Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the
Company pursuant to this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such event
and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted.
Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such divide nd or
distribution and shall become
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effective immediately after the effective date in the case of a subdivision, combination or
re-classification.
b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable,
at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or
offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or
Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective
price per share less than the then Exercise Price (such lower price, the “Base Share Price”
and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the
holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion, exercise or
exchange prices, or otherwise, or due to warrants, options, or rights per share which is issued in
connection with such issuance, be entitled to receive shares of Common Stock at an effective price
per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for
less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall
be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking
into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid, or
issued under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the
Holder in writing, no later than the Trading Day following the issuance of any Common Stock or
Common Stock Equivalents subject to this section, indicating therein the applicable issuance price,
or of applicable reset price, exchange price, conversion price, and other pricing terms (such
notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of
any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a
number of Warrant Shares based upon the Base Share Price regardless of whether the Holder
accurately refers to the Base Share Price in the Notice of Exercise.
c) Pro Rata Distributions. If the Company, at any time prior to the Termination Date,
shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of
its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe
for or purchase any security other than the Common Stock, then in each such case the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by a fraction of
which the denominator shall be the VWAP determined as of the record date mentioned above, and of
which the numerator shall be such VWAP on such record date less the then per share fair market
value at such record date of the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of the Common Stock as determined by the Board of Directors in
good faith. In either case the adjustments shall be described in a statement provided to the Holder
of the portion of assets or evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record date mentioned
above.
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d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the
Company effects any merger or consolidation of the Company with or into another Person, (ii) the
Company effects any sale of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (iv) the Company effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property (in any such case, a
“Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder
shall have the right to receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the
Holder, (A) upon exercise of this Warrant, the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the
number of shares of Common Stock for which this Warrant is exercisable immediately prior to such
event, or (B) if the Company is acquired in an all cash transaction, cash equal to the value of
this Warrant as determined in accordance with the Black-Scholes option pricing formula. For
purposes of any such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
To the extent necessary to effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent
with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into
Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is
effected shall include terms requiring any such successor or surviving entity to comply with the
provisions of this Section 3(d) and ensuring that this Warrant (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
e) Calculations. All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the
number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be
the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
f) Voluntary Adjustment By Company. The Company may at any time during the term of
this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
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g) Notice to Holders.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to
this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise
Price after such adjustment and setting forth a brief statement of the facts requiring such
adjustment.
ii. Notice to Allow Exercise by ▇▇▇▇▇▇. If (A) the Company shall declare a dividend
(or any other distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize
the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation, or winding up of the affairs of the Company;
then, in each case, the Company shall cause to be mailed to the Holder at its last address as it
shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (1) the date on which a
record is to be taken for the purpose of such dividend, distribution, redemption, rights, or
warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions, redemption, rights, or warrants are to be
determined, or (2) the date on which such reclassification, consolidation, merger, sale, transfer,
or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger , sale, transfer, or share exchange; provided that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. The Holder is entitled to exercise this Warrant during
the 20-day period commencing on the date of such notice to the effective date of the event
triggering such notice.
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the
conditions set forth in Sections 4(d) and 5(a) hereof and to the provisions of Section 4.1 of the
Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of
such transfer. Upon such surrender and, if required, such payment, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.
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b) New Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued, signed by the Holder
or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such
notice.
c) Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the
record Holder hereof from time to time. The Company may deem and treat the registered Holder of
this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered
pursuant to an effective registration statement under the Securities Act and under applicable
state securities or blue sky laws, the Company may require, as a condition of allowing such
transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form, substance and scope customary
for opinions of counsel in comparable transactions) to the effect that such transfer may be made
without registration under the Securities Act and under applicable state securities or blue sky
laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company, and (iii) that the transferee be an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the
Securities Act or a qualified institutional buyer as defined in Rule 144A (a) under the Securities
Act.
Section 5. Miscellaneous.
a) Title to Warrant. Prior to the Termination Date and subject to compliance with
applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the Holder in person
or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form
annexed hereto properly endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.
b) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder
to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof.
Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of
a cashless exercise), the Warrant Shares so purchased shall be deemed to be issued to such Holder
as the record owner of such shares as of the close of business on the later of the date of such
surrender or payment.
c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant or any stock certificate relating to the Warrant
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Shares, and in case of loss, theft, or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or
a legal holiday, then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday, or legal holiday.
e) Authorized Shares. The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by the Holder, the Company shall not by any
action, including, without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in par value, (ii)
take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and
(iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares
for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
f) Jurisdiction. All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
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g) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise
any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise
prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by
Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
i) Notices. Any notice, request, or other document required or permitted to be given
or delivered to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
j) Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
k) Remedies. Holder, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of its rights under
this Warrant. The Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law would be adequate.
l) Successors and Assigns. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder. The provisions of
this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant Shares.
m) Amendment. This Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company and the Holder.
n) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Warrant.
o) Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized.
Dated: March 27, 2007
| SYNTAX-BRILLIAN CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | Chief Financial Officer | |||||
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NOTICE OF EXERCISE
TO: SYNTAX-BRILLIAN CORPORATION
(1) The undersigned hereby elects to purchase Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
o in lawful money of the United States; or
o the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the
undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4) Accredited
Investor. The undersigned is an “accredited investor” as defined in Regulation
D promulgated under the Securities Act of 1933, as amended.
Name of Holder: |
||||
Signature of
Authorized Signatory of Holder: |
||||
Name of Authorized Signatory: |
||||
Title of Authorized Signatory: |
||||
Date: |
||||
ASSIGNMENT FORM
(To assign the foregoing warrant,
execute
this form and supply required information.
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to whose address is
.
Dated: |
||||||
| Holder’s Signature: | ||||||
| Holder’s Address: | ||||||
Signature Guaranteed: |
||||
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face
of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed
by a bank or trust company. Officers of corporations and those acting in a fiduciary or other
representative capacity should file proper evidence of authority to assign the foregoing Warrant.