Exhibit 4.1
FORM OF SUBSCRIPTION AGREEMENT
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (the "Agreement") has
been executed by the undersigned in connection with the sale in a private
placement pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), of certain shares of series A convertible preferred
stock (the "Preferred Stock"), convertible into shares of common stock (the
"Common Stock"), and of certain warrants (the "Warrants," and each individually,
a "Warrant") convertible into shares of Common Stock (the "Warrant Shares" and,
together with the Common Stock issuable upon conversion of the Preferred Stock,
the "Shares") of Sigma Designs, Inc. ("Sigma Designs"), 00000 Xxxxxxx Xxxxxxx,
Xxxxxxx, XX 00000, a corporation organized under the laws of California to the
persons and entities listed on the Schedule of Buyers attached as Exhibit A
hereto (the "Buyers" and, individually, each a "Buyer"). Sigma Designs and
Buyers (collectively, the "parties") each hereby represents, warrants and agrees
as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(i) Sigma Designs and Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission ("SEC") under the Securities Act; and
(ii) Each Buyer hereby subscribes for the number of shares of
Preferred Stock, convertible into Common Stock in accordance with the terms set
forth in the Certificate of Determination attached as Exhibit B to this
Agreement, specified opposite each Buyer's name in Column B on the Schedule of
Buyers at a cash purchase price of $100.00 per share payable in United States
Dollars at the Closing, as defined in Paragraph 5 hereof.
(iii) Each Buyer shall pay the purchase price by delivering
same day funds in United States Dollars to an escrow agent or as otherwise
agreed between the parties, to be delivered to the order of Sigma Designs upon
delivery of the Preferred Stock.
(iv) Each Buyer shall each receive from Sigma Designs at the
Closing, for no additional consideration, a Warrant to purchase the number of
shares of Common Stock set forth opposite its name in Column C on the Schedule
of Buyers. The Warrant shall be exercisable under the terms set forth in the
Form of Warrant attached as Exhibit C to this Agreement.
2. BUYER'S REPRESENTATIONS AND AGREEMENTS. Each Buyer represents,
warrants and agrees as follows:
(i) Each Buyer understands that the Preferred Stock and the
Warrant have not been registered under the Securities Act, or any other
applicable securities law, and, accordingly, none of the Preferred Stock nor the
Warrant may be offered, sold, transferred, pledged, hypothecated or otherwise
disposed of unless registered pursuant to, or in a transaction exempt from
registration under, the Securities Act and any other applicable securities law;
(ii) Each Buyer is an "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor")
that is acquiring the Preferred Stock and the Warrant either for its own account
or as a fiduciary or agent for one or more institutional accounts, each of which
is an Accredited Investor. Each Buyer has such knowledge and experience in
financial and business matters that they are capable of evaluating the merits
and risks of an investment in the Preferred Stock and the Warrant. Buyer has had
a
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reasonable opportunity to ask questions of and receive answers from Sigma
Designs concerning Sigma Designs and the offering of the Preferred Stock and the
Warrant. Buyer is not subscribing for the Preferred Stock and the Warrant as a
result of or pursuant to any advertisement, article, notice, or other
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio. Buyer is aware that it (or such
institutional account) may be required to bear the economic risk of an
investment in the Preferred Stock and the Warrant for an indefinite period, and
it (or such institutional account ) is able to bear such risk for an indefinite
period;
(iii) Buyer is acquiring the Preferred Stock and the Warrant
for its own account or for one or more institutional accounts as described in
Paragraph 2(ii) hereof, in each case for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution thereof (subject
to any requirement of law that the disposition of their property or the property
of such institutional account or accounts remain within their control). Buyer
agrees on its own behalf and on behalf of any such institutional account for
which it is acquiring the Preferred Stock and the Warrant to offer, sell or
otherwise transfer any Preferred Stock, Warrant or Shares only to Accredited
Investors (subject to any requirement of law that the disposition of their
property or the property of such institutional account or accounts remain within
its control) in conformity with the Securities Act and any other applicable
securities law and with the restrictions on transfer set forth on the
certificate(s) evidencing the Preferred Stock, the Warrant and Shares; provided,
however, that by making the representations herein, each Buyer does not agree to
hold the Preferred Stock, Warrant or Shares for any minimum or other specific
term and reserves the right to dispose of the Preferred Stock, Warrant or Shares
at any time in accordance with or pursuant to an effective registration
statement or an exemption under the Securities Act.
(iv) Each Buyer acknowledges that Sigma Designs or any
transfer agent of Sigma Designs shall register the transfer or exchange of any
of the Preferred Stock or Shares only upon receipt of the certificate(s)
evidencing such Preferred Stock or Shares with the transfer notice set forth
thereon appropriately completed and upon receipt in writing from the transferee
or the recipient of such Shares in such transfer or exchange (as the case may
be) of a certificate setting forth the representations in Paragraph 2 hereof;
(v) Each Buyer acknowledges that Sigma Designs and others will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and further agrees that if, prior to the closing,
any of such acknowledgments, representations and agreements made by Buyer are no
longer accurate, Buyer will promptly notify Sigma Designs;
(vi) Each Buyer has received all information from Sigma
Designs, including but not limited to Sigma Designs' latest Form 10-K, all Forms
10-Q and 8-K filed thereafter, and the Proxy Statement for its latest fiscal
year (collectively, the "Public Documents") and the Private Placement Memorandum
dated June 25, 1997 (the "Private Placement Memorandum") prepared by Sigma
Designs and Buyer acknowledges this information is sufficient to make an
informed business decision;
(vii) This Agreement and the matters contemplated herein have
been duly authorized, and this Agreement has been validly executed, and
delivered on behalf of Buyer and is a valid and binding agreement enforceable in
accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;
(viii) Buyer has no existing short position with respect to
the common stock of Sigma Designs and agrees not to enter into any short sales
or other hedging transactions with respect to the common stock of Sigma Designs
at any time after the execution of this Agreement by Buyer and prior to the date
on which Buyer files a notice of conversion with Sigma Designs;
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(ix) Each Buyer agrees not to effectuate or cause a third
party to effectuate a sale of, offer for sale, or solicit a purchase or offer to
purchase Sigma Designs' Common Stock with the intention of causing a reduction
in the Conversion Price (as defined in the Certificate of Designation);
(x) Each Buyer agrees not to use its ability to convert
Preferred Stock or exercise the Warrant such that such conversion or exercise
would result in Buyer beneficially owning more than 4.9999% of the outstanding
shares of the Common Stock. Sigma Designs may rely upon Buyer's notice of
conversion or exercise that such conversion or exercise will not cause Buyer to
exceed such 4.9999% limit and Sigma shall in no way be responsible for a
properly executed conversion or exercise causing Buyer to exceed the 4.9999%
limit; and
(xi) Each Buyer further agrees that, at all times after the
execution of this Agreement by Buyer and prior to the date on which the
Preferred Stock becomes convertible, they will each keep their purchase of the
Preferred Stock, Warrant or the Shares confidential, except as required by law
and except as necessary in the ordinary course of business of either Buyer.
3. SIGMA DESIGNS' REPRESENTATIONS AND AGREEMENTS. Sigma Designs
represents, warrants and agrees as follows:
(i) Sigma Designs and its subsidiaries are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power to own their properties and to carry on their business as now being
conducted. Each of Sigma Designs and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on Sigma Designs and its
subsidiaries taken as a whole (a "Material Adverse Effect").
(ii) As set forth in the Second Restated Articles of
Incorporation of Sigma Designs, as amended (the "Articles of Incorporation"),
the authorized capital stock of Sigma Designs consists of 22,000,000 shares of
Common Stock, of which 11,147,116 shares were issued and outstanding at June 9,
1997, and 2,000,000 shares of Preferred Stock, none of which were issued and
outstanding prior to the date hereof. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. No shares of Common Stock
or Preferred Stock are subject to preemptive rights or any other similar rights
or any liens or encumbrances suffered or permitted by Sigma Designs. There are
no securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Preferred Stock, the Warrants or the
Shares. Sigma Designs has furnished or made available to the Buyers true and
correct copies of Sigma Designs's Articles of Incorporation and By-laws and as
in effect on the date hereof, and the terms of all outstanding securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
(iii) Neither Sigma Designs, nor any of its affiliates, nor
any person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the Preferred Stock, the
Warrants, or the Shares under the Securities Act or cause this offering of
Preferred Stock or the Shares to be integrated with prior offerings by Sigma
Designs for purposes of the Securities Act or any applicable stockholder
approval provisions.
(iv) Neither Sigma Designs nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of Sigma Designs or any of
its subsidiaries, is any such dispute threatened. None of Sigma Designs' or its
subsidiaries' employees is a member of a union and Sigma Designs and its
subsidiaries believe that their relations with their employees are good.
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(v) Except as disclosed in the public documents, Sigma Designs
and its subsidiaries have sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals and governmental authorizations to conduct their
businesses as described in the Public Documents; the expiration of any
trademarks, trade names, patent rights, copyrights, licenses, approvals or
governmental authorizations would not have a Material Adverse Effect; and Sigma
Designs has no knowledge of any material infringement by it or its subsidiaries
of trademark, trade name rights, patent rights, copyrights, licenses, trade
secret or other similar rights of others, and there is no claim being made
against Sigma Designs or its subsidiaries regarding trademark, trade name,
patent, copyright, license, trade secret or other infringement which would
reasonably be expected to have a Material Adverse Effect.
(vi) Sigma Designs and its subsidiaries are (i) in compliance,
in all material respects, with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have received all material permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance, in all
material respects, with all terms and conditions of any such permit, license or
approval.
(vii) Any real property and facilities held under lease by
Sigma Designs and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made of such property and buildings by Sigma
Designs and its subsidiaries.
(viii) Each of Sigma Designs and its subsidiaries maintains
insurance of the types and in the amounts generally deemed adequate for its
business all of which insurance is in full force and effect.
(ix) Sigma Designs and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses with such exceptions that would not have a Material Adverse Effect,
and neither Sigma Designs nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit, with such exceptions that would not have a Material
Adverse Effect.
(x) Sigma Designs and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specified authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xi) Neither Sigma Designs nor any of its subsidiaries is
subject to any charter, corporate or other legal restriction, or any judgment,
decree, order, rule or regulation which in the judgment of Sigma Designs's
executive officers has a Material Adverse Effect. Neither Sigma Designs nor any
of its subsidiaries is a party to any contract or agreement which in the
judgment of Sigma Designs's executive officers has a Material Adverse Effect.
(xii) Sigma Designs has filed all material Federal, State,
local and foreign income tax returns which have been required to be filed and
have paid all material taxes indicated by said returns and all assessments
received by them or any of them to the extent that such taxes have become due
and are not being contested in good faith. All tax liabilities have been
adequately provided for in the financial statements of Sigma Designs.
(xiii) Sigma Designs has not conducted any general
solicitation or general advertising (as defined in Regulation D) with respect to
any of its securities;
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(xiv) The Preferred Stock and Shares when issued and delivered
will be duly and validly authorized and issued, fully-paid and nonassessable,
free and clear of any taxes, liens, encumbrances, charges, or adverse claims of
any nature whatsoever, and will not subject the holders thereof to personal
liability by reason of being such holders;
(xv) This Agreement, the Registration Rights Agreement, the
Warrants, and any related agreements, have been duly authorized, validly
executed and delivered on behalf of Sigma Designs and are valid and binding
agreements in accordance with their respective terms, subject to general
principles of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally;
(xvi) The execution and delivery of this Agreement, the
Registration Rights Agreement, the Warrants and any related agreement and the
consummation of the issuance of the Preferred Stock and the Warrants and the
transactions contemplated by such agreements do not and will not conflict with
or result in a breach by Sigma Designs of any of the terms or provisions of, or
constitute a default under, the Articles of Incorporation or bylaws of Sigma
Designs, or to the knowledge of the executive officers of Sigma Designs, any
indenture, mortgage, deed of trust, or any statute, rule or regulation
applicable to Sigma Designs or its subsidiaries or other material agreement or
instrument to which Sigma Designs is a party or by which it or any of its
properties or assets are bound, or any existing applicable decree, judgment or
order of any court, federal or state regulatory body, administrative agency or
other governmental body having jurisdiction over Sigma Designs or any of its
properties or assets, or to the knowledge of the Sigma Designs any statute, rule
or regulation applicable to Sigma Designs or its subsidiaries, except for such
conflict, breach or default as would not result in a Material Adverse Effect;
(xvii) No authorization, approval or consent of or filing with
any federal, state or local governmental body of the United States is legally
required for the issuance and sale of the Shares as contemplated by this
Agreement or any related agreements;
(xviii) Neither the Public Documents nor the Private Placement
Memorandum, as of their respective dates, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are made,
not misleading. Since January 31, 1997, there has been no material adverse
development in the business, properties, operations, financial condition or
results of operations of Sigma Designs, except as disclosed in the documents
referred to in Paragraph 2(vii) hereof.
(xix) Sigma Designs will issue one or more certificates
representing the Preferred Stock in the name of each Buyer in such denominations
to be specified by each Buyer prior to closing. The Preferred Stock and Warrants
will bear the restrictive legend specified in Paragraph 4 of this Agreement.
Sigma Designs further warrants that no instructions other than these
instructions and stop transfer instructions to give effect to Paragraph 2(i)
hereof will be given at any time to the transfer agent and also warrants that
the Preferred Stock, Warrants and Shares shall otherwise be transferable on the
books and records of Sigma Designs as and to the extent provided in this
Agreement, subject to compliance with Federal and State securities laws. As soon
as commercially practicable after the date hereof, Sigma Designs agrees to
furnish new instructions to the transfer agent instructing them to issue the
Common Stock without a restrictive legend, but only if and when a registration
statement registering the resale of such Common Stock has been declared
effective by the SEC. Nothing in this Paragraph shall affect in any way each
Buyer's obligations and agreement to comply with all applicable securities laws
upon resale of the Shares. Sigma Designs shall promptly notify the Transfer
Agent of the effectiveness or suspension of a registration statement registering
the Shares for resale.
(xx) There is no action, suit, notice of violation, proceeding
or investigation pending or, to the best knowledge of Sigma Designs, threatened
against or affecting Sigma Designs or any of its subsidiaries of any of their
respective properties before or by any court, governmental or administrative
agency or regulatory authority
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which relates to the validity of enforceability of any documents related to the
transaction contemplated hereby, the Preferred Stock, the Warrant, or the Shares
which may reasonably likely result in a Material Adverse Effect.
(xxi) Sigma Designs is, and at the Closing Date will be,
eligible to register securities for resale with the SEC under Form S-3.
(xxii) Neither Sigma Designs nor any of its subsidiaries is in
default under or in violation of (i) any indenture, loan, credit agreement, or
any other agreement or instrument by which it is bound, (ii) any order of any
court, arbitrator or governmental body or (iii) any statute, rule or regulation
of any governmental authority, except in the case of both (i) and (ii) as does
not have a Material Adverse Effect.
4. LEGENDS.
Each certificate evidencing the Preferred Stock, the Warrants and the
Shares shall bear a legend substantially to the effect of Paragraphs 2(i) and
2(ii) above and this Section 4. Such legend shall be in substantially the
following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT" OR THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE
SECURITIES LAWS AND HAVE BEEN ISSUED IN RELI ANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIRE MENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICI PATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANS FERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHER WISE DISPOSED OF, EXCEPT PURSUANT TO AN
EFFECTIVE REGIS TRATION STATEMENT UNDER THE ACT OR PURSUANT TO
A TRANS ACTION WHICH, IN AN OPINION OF COUNSEL REASONABLY
SATIS FACTORY TO SIGMA DESIGNS, IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF SIGMA DESIGNS SET FORTH
IN A PRIVATE SECURITIES SUBSCRIPTION AGREEMENT BETWEEN SIGMA
DESIGNS, INC. AND [BUYER] DATED JUNE 25, 1997. A COPY OF THE
AFORESAID SUBSCRIPTION AGREEMENT EVIDENC ING SUCH OBLIGATIONS
MAY BE OBTAINED FROM SIGMA DESIGNS' EXECUTIVE OFFICES."
Upon conversion of the Preferred Stock and the exercise of the
Warrants, Sigma Designs shall issue a Common Stock certificate without such
legend to the holder of such shares if and to the extent that (a) the SEC has
declared a registration statement effective under which such Common Stock is
sold or (b) such holder has provided Sigma Designs with an opinion of counsel
reasonably acceptable to Sigma Designs to the effect that a public sale or a
transfer of such security may be made without registration under the Securities
Act, or (c) such holder has provided Sigma Designs with reasonable assurances
that such security can be sold free of any volume limitations pursuant to Rule
144 under the Securities Act (or a successor thereto).
The certificates representing the Warrants, the shares of
Preferred Stock and underlying Common Stock shall also bear any other legends
required by applicable Federal or state securities laws, which legends shall be
removed when not required in accordance with this Section 4.
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5. COVENANTS.
(i) Each party shall use its reasonable best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in this
Agreement.
(ii) Sigma Designs agrees to file a Form D with respect to the
Preferred Stock, the Warrants and the Shares as required under Regulation D.
Sigma Designs shall, on or before the Closing Date, take such action as Sigma
Designs shall reasonably determine is necessary to qualify the Preferred Stock,
the Warrants, and the Shares for, or obtain exemption for the Preferred Stock,
the Warrants, and the Shares, for sale to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the states of
the United States.
(iii) Until the earlier of (i) the date as of which the Buyers
may sell all of the Shares without restriction pursuant to Rule 144(k)
promulgated under the Securities Act (or successor thereto), or (ii) the date on
which (A) the Investors shall have sold all the Shares and (B) none of the
Preferred Stock or Warrants is outstanding (the "Registration Period"), Sigma
Designs shall file all reports required to be filed with the SEC pursuant to the
Exchange Act of 1934, as amended (the "Exchange Act"), and Sigma Designs shall
not terminate its status as an issuer required to file reports under the
Exchange Act even if the Exchange Act or the rules and regulations thereunder
would otherwise permit such termination.
(iv) Sigma Designs will use the proceeds from the sale of the
Preferred Stock for substantially the same purposes and in substantially the
same amounts as indicated in the Private Placement Memorandum.
(v) Sigma Designs shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, no less than
200% of the number of shares of Common Stock needed to provide for the issuance
of the Shares.
(vi) Sigma Designs shall promptly secure the listing of the
Shares upon each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all Shares from time to time issuable
upon conversion of the Preferred Stock and exercise of the Warrants. Sigma
Designs shall maintain the Common Stock's authorization for quotation in the
over-the counter market. Sigma Designs shall promptly provide to each Buyer
copies of any notices it receives regarding the continued eligibility of the
Common Stock for trading in the over-the-counter market.
(vii) Unless Sigma Designs otherwise consents in writing, each
Buyer shall take such action as may be required so that all of the Preferred
Stock owned by such Buyer is voted in accordance with the recommendation of the
Board of Directors of Sigma Designs on all matters to be voted on by holders of
Sigma Designs' outstanding Preferred Stock (including any matters requiring a
class vote of the outstanding Preferred Stock) in not less than the same
proportion as the votes cast by holders of Sigma Designs' outstanding Common
Stock with respect to such matters. Each Buyer, as a holder of shares of Sigma
Designs' Preferred Stock shall be present, in person or by proxy, at all
meetings of shareholders of Sigma Designs, so that all shares of Sigma Designs'
outstanding Preferred Stock beneficially owned by the Buyer may be counted for
the purposes of determining the presence of a quorum at such meetings.
6. TRANSFER AGENT INSTRUCTIONS. Pursuant to Paragraph 2(iii) and
Section 4 of this Agreement, Sigma Designs shall issue irrevocable instructions
to its transfer agent to issue certificates, registered in the name of each
Buyer, for the Shares in such amounts as specified from time to time by the
Buyers to Sigma Designs upon conversion of the Preferred Stock or exercise of
the Warrants (the "Irrevocable Transfer Agent Instructions"). Prior to
registration of the Shares under the Securities Act, all such certificates shall
bear the
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restrictive legend specified in Section 4 of this Agreement. Sigma Designs
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Paragraph, and stop transfer instructions to
give effect to Section 4 hereof (in this case of the Shares, prior to
registration of such shares under the Securities Act) will be given by Sigma
Designs to its transfer agent and that the Preferred Stock, the Warrants, and
the Shares shall otherwise be freely transferable on the books and records of
Sigma Designs as and to the extent provided in this Agreement, the Registration
Rights Agreement, the Warrants and applicable laws, including securities laws.
Nothing in this Paragraph shall affect in any way the Buyers' obligations and
agreement to comply with all applicable securities laws upon resale of the
Preferred Stock, the Warrants, or the Shares. If either (a) a Buyer provides
Sigma Designs with an opinion of counsel, reasonably satisfactory in form and
substance to Sigma Designs, that registration of a resale by such Buyer of any
of the Preferred Stock, the Warrant, or Shares is not required under the
Securities Act or (b) its Shares are registered under the Securities Act, Sigma
Designs shall permit the transfer, and, in the case of the Shares, promptly
instruct its transfer agent to issue one or more certificates in such name and
in such denominations as specified by such Buyer. Sigma Designs acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, Sigma Designs acknowledges that the remedy at law for a
breach of its obligations under this Paragraph will be inadequate and agrees, in
the event of a breach or threatened breach by Sigma Designs of the provisions of
this Paragraph that the Buyer requesting, in accordance with this Agreement,
Sigma Designs to take such action shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate issuance and transfer.
7. CLOSING. Share certificates shall be delivered to Buyers and the
funds therefor shall be delivered to Sigma Designs on June 25, 1997 (the
"Closing") or at such time to be mutually agreed.
8. CONDITIONS TO CLOSING OF BUYERS. The Buyers' obligations to purchase
the Preferred Stock and the Warrants at the Closing are, at the option of each
Buyer, subject to the fulfillment on or prior to the Closing Date of each of the
following conditions:
(i) Delivery of certificate(s) representing the Preferred
Stock as described in Paragraph 1(ii) hereto and a Warrant as described in
Paragraph 1(iv) hereto,
(ii) Delivery of an opinion of counsel to Sigma Designs in
substantially the form attached hereto as Exhibit D; and
(iii) Sigma Designs and Buyers shall have entered into a
Registration Rights Agreement substantially in the form of Exhibit E hereto.
9. CONDITIONS TO CLOSING OF SIGMA DESIGNS. The obligation of Sigma
Designs to sell and issue the Preferred Stock and the Warrants at the Closing
is, at the option of Sigma Designs, subject to the fulfillment of the following
conditions:
(i) Delivery into escrow or otherwise as agreed between Buyers
and Sigma Designs by Buyers of the amount set forth in Paragraph 1 hereof.
(ii) Sigma Designs and Buyers shall have entered into a
Registration Rights Agreement substantially in the form of Exhibit E hereto.
(iii) The Certificate of Determination shall have been filed
with the Secretary of State of the State of California.
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10. EXPENSES. Sigma Designs and the Buyers shall each bear their own
expenses and legal fees with respect to this Agreement and the transactions
contemplated hereby; except that, assuming a successful completion of the
offering, Sigma Designs will pay at the Closing the reasonable legal fees of the
Buyers (up to a maximum total of $10,000 for Buyers to be divided among the
Buyers on a pro rata basis derived from the proportion of Preferred Stock each
Buyer holds upon the Closing) and reasonable expenses upon receipt of a xxxx
therefor, incurred by counsel to the Buyers.
11. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by
and construed in accordance with the laws of the State of California without
giving effect to the provisions governing the conflict of laws. The parties
jointly consent to personal jurisdiction in any state or federal court located
in the state of California, waive any objection as to jurisdiction or venue, and
agree not to assert any defense based on lack of jurisdiction or venue.
Facsimile signatures of this agreement shall be binding on all parties hereto.
12. CONVERSION. Sigma Designs shall use its reasonable best efforts to
issue and deliver to each Buyer a certificate or certificates for the number of
Common Stock to which such Buyer shall be entitled within five (5) business days
after such Buyer has fulfilled all conditions required for conversion as set
forth in this Agreement (the "Deadline"). Sigma Designs understands that a delay
in the issuance of the Common Stock beyond the Deadline could result in economic
loss to such Buyer. As compensation to such Buyer for such loss, and not as a
penalty, Sigma Designs agrees to pay liquidated damages to such Buyer for late
issuance of Common Stock upon conversion in the amount of one percent (1%) of
the requested conversion amount, per day, beginning on the sixth (6th) business
day from the date of receipt by Sigma Designs of a duly executed notice of
conversion, provided that the original Preferred Stock to be converted have been
delivered to Sigma Designs within such time period, all in accordance with this
Agreement, the Preferred Stock and the requirements of Sigma Designs' transfer
agent. Said liquidated damages shall accrue each day through the date the Common
Stock are issued to such Buyer upon conversion, and shall be paid by wire
transfer to an account designated by such Buyer upon the earlier to occur of (i)
issuance of the Shares to such Buyer, or (ii) each monthly anniversary of the
receipt by Sigma Designs of such Buyer's notice of conversion. Nothing herein
shall waive Sigma Designs' obligations to deliver Common Stock upon conversion
of the Preferred Stock.
Sigma Designs agrees that, in addition to any other remedies
which may be available to a Buyer requesting conversion of its Preferred Stock,
in the event Sigma Designs fails for any reason to effect delivery to such Buyer
of certificates representing Common Stock within five (5) business days
following receipt by Sigma Designs of a notice of conversion, such Buyer may, at
its sole election, revoke the notice of conversion by delivering a notice of
such effect to Sigma Designs, whereupon Sigma Designs and such Buyer shall each
be restored to their respective positions immediately prior to delivery of such
notice of conversion.
13. NOTICE. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
delivery to the party to be notified in person or upon delivery by courier
service or upon delivery after deposit with the United States mail, by
registered or certified mail, postage prepaid, or upon receipt by the party of a
facsimile copy, addressed (a) if to a Buyer, at such Buyer's address set forth
in Exhibit A, or at such other address as such Purchaser shall have furnished to
Sigma Designs in writing, or (b) if to any other holder of any Shares, at such
address as such holder shall have furnished Sigma Designs in writing, or, until
any such holder so furnishes an address to Sigma Designs, then to and at the
address of the last holder of such Shares who has so furnished an address to
Sigma Designs, or (c) if to Sigma Designs, one copy should be sent to at 00000
Xxxxxxx Xxxxxxx, Xxxxxxx, XX 00000, and addressed to the attention of the
Corporate Secretary, or at such other address as Sigma Designs shall have
furnished to the Purchasers.
14. ARBITRATION; REMEDIES. Any dispute that arises between the parties
to this Agreement shall first be submitted for resolution to arbitration under
the rules of the American Arbitration Association of Santa Xxxxx County,
California. In the event of a breach or a threatened breach by any party to this
Agreement of its
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obligations under this Agreement, any party injured or to be injured by such
breach will be entitled to specific performance of its rights under this
Agreement or to injunctive relief, in addition to being entitled to exercise all
rights provided in this Agreement and granted by law. The parties agree that the
provisions of this Agreement shall be specifically enforceable, it being agreed
by the parties that the remedy at law, including monetary damages, for breach of
any such provision will be inadequate compensation for any loss and that any
defense or objection in any action for specific performance or injunctive relief
that a remedy at law would be adequate is waived.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Buyers, each
of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
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Exhibit A
Schedule of Buyers
A B C
-------------------------- -------------------- ------------------------
Number
of Shares
Aggregate of Preferred Number of
Name of Purchaser Purchase Price Stock Warrant Shares
----------------------------------------------- -------------------------- -------------------- ------------------------
1. Banque Edouard Constant $4,000,000.00 40,000 57,142
2. RIC Equity Limited 500,000.00 5,000 7,143
Address of Purchasers
---------------------
1. Banque Edouard Constant
Registered Address: 00 Xxxxx xx Xxxx, XX 0000 Xxxxxx, 0,
Xxxxxxxxxxx
Attention: Xxxxx Xxxxx Xxxxxxxx
Mailing Address: KERNCO Trust SA
0, xxx Xxxxxxxxxx
X.X. Xxx 0000 XX, 0000 Xxxxxx 0,
Xxxxxxxxxxx
Attention: Xxxxxx Xxxxxx
2. RIC Equity Limited
Registered Address: E&Y Corporate Services (Cayman Islands) Ltd.
X.X. Xxx 0000, One Capital Place,
Xxxxxx Town, Grand Cayman, Cayman Islands,
British West Indies
Mailing Address: c/o Rana Investment Company
X.X. Xxx 00000, Xxxxxx 00000
Xxxxx Xxxxxx
Attention: Xxxxxx Xxxxxxx
Exhibit B
Certificate of Determination
CERTIFICATE OF DETERMINATION OF
PREFERENCES OF SERIES A PREFERRED STOCK OF
SIGMA DESIGNS, INC.
The undersigned, Xxxxx X. Xxxx and Kit Tsui, hereby certify that:
1. They are the duly elected President and Secretary, respectively, of
Sigma Designs, Inc., a California corporation (the "Corporation").
2. The Corporation hereby designates Fifty Thousand (50,000) shares of
Series A Preferred Stock.
3. None of the shares of the Series A Preferred Stock have been issued.
4. Pursuant to authority given by the Corporation's Second Restated
Articles of Incorporation, the Board of Directors of the Corporation has duly
adopted the following recitals and resolutions:
WHEREAS, the Second Restated Articles of Incorporation of the
Corporation provide for a class of shares known as Preferred Shares, issuable
from time to time in one or more series; and
WHEREAS, the Board of Directors of the Corporation is authorized within
the limitations and restrictions stated in the Second Restated Articles of
Incorporation to determine or alter the rights, preferences, privileges, and
restrictions granted to or imposed on any wholly unissued series of Preferred
Shares, to fix the number of shares constituting any such series, and to
determine the designation thereof, or any of them; and
WHEREAS, the Corporation has not issued any shares of Preferred Stock
and the Board of Directors of this Corporation desires to determine the rights,
preferences, privileges, and restrictions relating to this initial series of
Preferred Stock, and the number of shares constituting said Series and the
designation of said series;
NOW, THEREFORE, BE IT
RESOLVED: That the President and the Secretary of this Corporation are
each authorized to execute, verify and file a certificate of
determination of preferences with respect to the Series A Preferred
Stock in accordance with the laws of the State of California.
RESOLVED FURTHER: That the Board of Directors hereby determines the
rights, preferences, privileges and restrictions relating to said
initial Series of Preferred Stock shall be as set forth below:
"A. Fifty thousand of the authorized shares of Preferred Stock of
the Corporation, none of which have been issued or are outstanding, are
hereby designated "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock").
B. The rights, preferences, privileges, restrictions and other
matters relating to the Series A Preferred Stock are as follows:
1. Dividend Rights. The holders of Series A Preferred Stock
shall be entitled to receive quarterly in arrears, but only out of
funds that are legally available therefor, dividends in cash or common
stock of the Corporation, at the option of the Corporation, at the rate
of three percent (3%) of the "Original Issue Price" of the Series A
Preferred Stock per annum, accruing daily on the basis of a 360-day
year commencing with the issuance of such Series A Preferred Stock, on
each outstanding share of Series A Preferred Stock. The Original Issue
Price of the Series A Preferred Stock (as adjusted for any combination,
consolidation, shares distributions or shares dividends with respect to
such shares) shall be equal to $100.00 per share.
2. Voting Rights. Except as otherwise provided by law, the
holders of Series A Preferred Stock shall have no voting rights and
their consent shall not be required (except to the extent required by
law) for taking any corporate action.
3. Liquidation, Dissolution or Winding Up. In the event of
any liquidation, dissolution or winding up of the Corporation, either
voluntary or involuntary, the holders of the Series A Preferred Stock
shall be entitled to receive, prior and in preference to any
distribution of the assets or surplus funds of the Corporation to the
holders of the Common Stock by reason of their ownership thereof, an
amount equal to the Original Issue Price, plus an amount equal to
accrued and unpaid dividends on such Series A Preferred Stock to the
date of such payment (the "Liquidation Preference"). If, upon
occurrence of such event the assets and funds thus distributed among
the holders of the Series A Preferred Stock shall be insufficient to
permit the holders of the Series A Preferred Stock the full Liquidation
Preference, then the entire assets and funds of the Corporation legally
available for distribution shall be distributed among the holders of
the Series A Preferred Stock in proportion to the number of shares of
Series A Preferred Stock held by each such holder. After payment has
been made to the holders of the Series A Preferred Stock of the
Liquidation Preference, the holders of the Common Stock shall be
entitled to receive the remaining assets of the Corporation.
4. Consolidation, Merger, Exchange, Etc.. In case the
Corporation shall enter into any consolidation, merger, combination,
statutory share exchange or other transaction in which the Common Stock
is exchanged for or changed into other shares or securities, money
and/or any other property, then in any such case the Series A Preferred
Stock shall at the same time be either, at the option of the
Corporation, (a) similarly exchanged or changed into preferred shares
of the surviving entity providing the holders of such preferred stock
with (to the extent possible) the same relative rights and preferences
as the Series A Preferred Stock or (b) converted into the shares of
stock and other securities, money and/or any other property receivable
upon or deemed to be held by holders of Common Stock immediately
following such consolidation, merger, combination, statutory share
exchange or other transaction, and the holders of the Series A
Preferred Stock shall be entitled upon such event to receive such
amount of securities, money and/or any other property as the shares of
the Common Stock of the Corporation into which such shares of Series A
Preferred Stock could have been converted immediately prior to such
consolidation, merger, combination, statutory share exchange or other
transaction would have been entitled
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5. Conversion.
(a) At the option of the holder of the Series A
Preferred Stock, up to twenty-five percent (25%) of the Series A
Preferred Stock held by such holder may be converted, on or after 120
days from the closing of the purchase thereof, into fully paid and
nonassessable shares of the Corporation's Common Stock or, if the
Conversion Price (as defined below) is below $10.00 and the Corporation
so chooses, the Cash Equivalent (as defined below) at the Conversion
Price. The number of shares of Common Stock each share of Series A
Preferred Stock shall be convertible into shall be calculated by
dividing the Original Issue Price of the Series A Preferred Stock to be
converted by the conversion price, which shall be calculated at ten
percent (10%) less than (the "Discount") the low reported trading price
of the Corporation's Common Stock, as reported by Bloomberg, L.P., over
the five-day trading period ending on the day prior to conversion (the
"Conversion Price"); provided, however, that the Conversion Price shall
not exceed $10.00 in any case. Thereafter, an additional twenty-five
percent (25%) of the Series A Preferred Stock held by such holder shall
be convertible on or after the first day of each calendar month
thereafter on a cumulative basis. In the event the Corporation chooses
to issue cash in lieu of Common Stock upon conversion of the Series A
Preferred Stock, such cash amount (the "Cash Equivalent") shall be
calculated by multiplying (i) the quotient obtained by dividing (a) the
dollar amount of the Series A Preferred Stock that the holder of Series
A Preferred Stock has elected to convert by (b) the product of .9 and
the lowest intra day trading price of the Common Stock on the day of
conversion; and (ii) the closing bid price of the Common Stock on the
day of conversion. Such cash payment shall be delivered within five (5)
days of conversion. The holder of Series A Preferred Stock shall
indicate upon its notice of conversion its preferred method of
conversion, and the Company shall provide the holder of Series A
Preferred Stock with notice of its choice of the means of conversion,
Common Stock or the Cash Equivalent, within twenty four (24) hours
after receipt of the notice of conversion. Failure by the Company to
provide such notice will entitle the holder of Series A Preferred Stock
to its choice of the method of conversion. Should the Company elect to
remit the Cash Equivalent rather than Common Stock, such cash payment
shall be delivered within five (5) days of conversion, or the holder of
Series A Preferred Stock may elect to revoke his conversion or receive
a conversion in stock. In the event the Conversion Price equals or
exceeds $10.00, the Corporation shall effect a conversion only in
stock.
(b) Any Series A Preferred Stock that is outstanding
on the second anniversary of the initial issuance of the Series A
Preferred Stock will be automatically converted into shares of the
Corporation's Common Stock as provided above.
(c) Reservation of Stock Issuable Upon Conversion.
The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of the Series A
Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred Stock except to the extent
such conversion is limited by Section 5(d). To the extent that at any
time there are fewer shares of Common Stock available than are required
to effect such conversion, the Common Stock will be allocated on a pro
rata basis among holders of Series A Preferred Stock derived from the
proportion of Series A Preferred Stock each holder of Series A
Preferred Stock holds upon the closing of the transaction. If at any
time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding
shares of Series A Preferred Stock, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to
-3-
increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose except as
limited by Section 5(d).
(d) Notwithstanding Section 5(a), 5(b) and 5(c), the
Series A Preferred Stock issued herewith shall not be entitled to
conversion into Common Stock that would cause the Corporation to issue
greater than 2,220,000 shares of Common Stock. Any such conversion
requests with respect to such Series A Preferred Stock that would, in
the aggregate with all other Series A Preferred Stock previously
converted, cause the Company to issue more than 2,220,000 shares of
Common Stock shall be converted by the Corporation into cash at a rate
of one hundred and ten percent (110%) of the Original Issue Price of
such unconverted Series A Preferred Stock. Such cash payment shall be
delivered within five (5) days of conversion.
(e) Mechanisms for Effecting Conversions. The holder
shall effect conversions by surrendering the certificate or
certificates representing the shares of Series A Preferred Stock to be
converted to the Corporation, together with the form of conversion
notice attached hereto as Exhibit A (the "Conversion Notice"),
provided, however, that the holder shall not convert more than an
aggregate of 25% of the shares of Series A Preferred Stock originally
issued to it in any one month period. Each Conversion Notice shall
specify the number of shares of Series A Preferred Stock to be
converted, the preferred means of conversion of the holder of Series A
Preferred Stock, and the date on which such conversion is to be
effected, which date may not be prior to the date the holder delivers
such Conversion Notice by facsimile (the "Conversion Date"). If no
Conversion Date is specified in a Conversion Notice, the Conversion
Date shall be the date that the Conversion Notice is deemed delivered
pursuant to Section 10. If the holder is converting less than all
shares of Series A Preferred Stock represented by the certificate or
certificates tendered by the holder with the Conversion Notice, or if a
conversion hereunder cannot be effected in full for any reason, the
Corporation shall convert up to the number of shares of Series A
Preferred Stock which can be so converted and shall promptly deliver to
such holder a certificate for such number of shares as have not been
converted.
6. Fractional Shares. In lieu of any fractional shares to
which the holder of the Series A Preferred Stock would otherwise be
entitled, the Corporation shall pay cash equal to such fraction
multiplied by the closing price of one share of the Corporation's
Common Stock on the trading day prior to conversion, if such price is
available. If such price is not available, this Corporation shall pay
cash for fractional shares equal to such fraction multiplied by the
fair market value of one share of Series A Preferred Stock as
determined by the Board of Directors of this Corporation. Whether or
not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A
Preferred Stock of each holder at the time converting into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion.
7. Minimal Adjustments. No adjustment in the Original Issue
Price need be made if such adjustment would result in a change in the
Conversion Price of less than $0.01. Any adjustment of less than $0.01
which is not made shall be carried forward and shall be made at the
time of and together with any subsequent adjustment which, on a
cumulative basis, amounts to an adjustment of $0.01 or more in the
Conversion Price.
-4-
8. Adjustment of Conversion for Dividend and Distributions.
(a) In the event the Corporation shall at any time
after issuance of the Series A Preferred Stock declare or pay any
dividend or other distribution on Common Stock, payable in Common Stock
or other securities or rights convertible into, or exchangeable for,
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding Common Stock (by reclassification or otherwise) into
a greater or lesser number of Common Stock, then in each such case the
number of Common Stock issuable upon the conversion of the Series A
Preferred Stock shall be adjusted (the "Adjustment") by multiplying the
number of Common Stock to which the holder was entitled before such
event by a multiplier X/Y determined as follows:
X = The number of Common Stock
outstanding immediately after such
event.
Y = The number of Common Stock that were
outstanding immediately prior to
such event.
(b) In the event the Corporation shall at any time
after issuance of the Series A Preferred Stock, distribute to holders
of its Common Stock, other than as part of a dissolution or liquidation
or the winding up of its affairs, any shares of its capital stock, any
evidence of indebtedness, or other securities or any of its assets
(other than Common Stock or securities convertible into or exchangeable
for Common Stock), then, in any such case, the Preferred Stock holder
shall be entitled to receive, upon conversion of the Series A Preferred
Stock, with respect to each share of Common Stock issuable upon such
conversion, the amount of cash or evidence of indebtedness or other
securities or assets which such Series A Preferred Stock holder would
have been entitled to receive with respect to each such share of Common
Stock as a result of the happening of such event had the Series A
Preferred Stock holder converted to Common Stock immediately prior to
the record date or other date determining the shareholders entitled to
participate in such distribution (the "Determination Date") or, in lieu
thereof, if the Board of Directors of the Corporation should so
determine at the time of such distribution, a reduced Conversion Price
determined by multiplying the Conversion Price on the Determination
Date by a fraction, the numerator of which is the result of such
Conversion Price reduced by the value of such distribution applicable
to one share of Common Shares (such value to be determined in good
faith by the Corporation's Board of Directors) and the denominator of
which is such Conversion Price.
(c) In the event an Adjustment is made by the
Corporation, the Corporation shall notify each holder of Series A
Preferred Stock as soon as is commercially practicable and, if deemed
necessary, shall explain briefly to each holder the Adjustment
procedure and the reason for the Adjustment.
9. Vote to Change the Terms of Series A Preferred Shares.
The approval of the Board of Directors and the affirmative vote at a
meeting duly called by the Board of Directors for such purpose (or the
written consent without a meeting) of the holders of not less than
two-thirds (2/3) of the then outstanding Series A Preferred Stock shall
be required to either (i) amend, alter, change or repeal any of the
powers, designations, preferences and rights of the Series A Preferred
Stock or (ii) for a period of one year after the date this certificate
is filed with the California Secretary of State, authorize or issue a
class of equity securities or convertible debt ranking senior in
liquidation preference, dividends, or distribution of assets to the
Series A Preferred Stock.
-5-
10. Notices. All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed
effectively given upon delivery to the party to be notified in person
or upon delivery by courier service or upon delivery after deposit with
the United States mail, by registered or certified mail, postage
prepaid, or upon receipt by the party of a facsimile copy, addressed
(a) if to a holder of Series A Preferred Stock, at such address of such
holder of Series A Preferred Stock set forth in Exhibit A, or at such
other address as such holder of Series A Preferred Stock shall have
furnished to Sigma Designs, Inc. in writing, or (b) if to any other
holder of any Shares, at such address as such holder shall have
furnished Sigma Designs, Inc. in writing, or, until any such holder so
furnishes an address to Sigma Designs, Inc. then to and at the address
of the last holder of such Shares who has so furnished an address to
Sigma Designs, Inc. or (c) if to Sigma Designs, Inc. one copy should be
sent to Sigma Designs, Inc., 00000 Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx
00000 and addressed to the attention of the Corporate Secretary, or at
such other address as Sigma Designs, Inc. shall have furnished to the
holders of Series A Preferred Stock."
-6-
Exhibit A
SIGMA DESIGNS, INC.
CONVERSION NOTICE
AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holder
in order to Convert shares of Preferred Stock)
The undersigned hereby irrevocably elects to convert the number of shares of
Series A Convertible Preferred Stock indicated below, into shares of Common
Stock, no par value (the "Common Stock"), of Sigma Designs, Inc. (the
"Corporation") according to the conditions hereof, or, if applicable, its
preference for the Cash Equivalent, as of the date written below. If shares are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the
Corporation in accordance therewith. No fee will be charged to the Holder for
any conversion, except for such transfer taxes, if any.
Conversion calculations:
---------------------------------------------------
Date to Effect Conversion
Holder to indicate one Conversion Preference:
|_| Shares
|_| Cash Equivalent
---------------------------------------------------
Number of Shares of Preferred Stock to be Converted
---------------------------------------------------
Applicable Conversion Price
---------------------------------------------------
Signature
---------------------------------------------------
Name:
---------------------------------------------------
Address:
The Company undertakes within twenty-four (24) hours of its receipt, whether by
facsimile or other means provided for in Section 10 of the Certificate of
Determination, of this conversion notice (and, in any case prior to the time it
effects the conversion requested hereby), to notify the converting holder of its
choice, where applicable, of the means of conversion.
Exhibit C
FORM OF WARRANT
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF SIGMA DESIGNS, INC. (THE "COMPANY") SET
FORTH IN A PRIVATE SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND
[BUYER] DATED [DATE]. A COPY OF THE AFORESAID SUBSCRIPTION AGREEMENT EVIDENCING
SUCH OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES.
[Date]
Warrant to Purchase up to ________ Shares
of Common Stock of Sigma Designs, Inc.
Sigma Designs, Inc., a California corporation (the "Company"), hereby
acknowledges that ___________ ___________ (the "Buyer") or any other Warrant
Holder (hereinafter defined) is entitled, on the terms and conditions set forth
below, to purchase from the Company beginning the day after the six month
anniversary date of the closing of the purchase of this warrant (the "Warrant")
and ending three years after the six month anniversary date of the closing
forty-two ((42) months after the original issuance of this Warrant) up to
__________ fully paid and nonassessable shares of common stock, no par value, of
the Company (the "Common Stock"), as the same may be adjusted pursuant to
Section 5 herein, at the Purchase Price (hereinafter defined), as the same may
be adjusted pursuant to Section 5 herein. The resale of the shares of Common
Stock or other securities issuable upon exercise or exchange of this Warrant is
subject to the provisions of the Registration Rights Agreement by and between
the Company and the Investor dated as of June _____, 1997 (the "Registration
Rights Agreement").
16. Definitions.
a. The term "Warrant Holder" shall mean the Buyer or any assignee of
all or any portion of this Warrant.
b. The term "Warrant Shares" shall mean the shares of Common Stock or
other securities issuable upon exercise of this Warrant.
c. The term "Purchase Price" shall be an amount equal to 130% of the
Market Price for the Common Stock on the earlier of (i) the date
the registration statement, registering the Warrant Shares, is
declared effective by the Securities and Exchange Commission, or
(ii) if a registration statement has not been declared effective,
the 120th day after the Closing as may be adjusted pursuant to
Section 5 herein.
d. The term "Agreement" shall mean the Private Securities Subscription
Agreement, dated as of June __, 1997, between the Company and the
Buyer.
e. Other capitalized terms used herein which are defined in the
Agreement shall have the same meanings herein as therein.
17. Exercise or Exchange of Warrant.
a. This Warrant may be exercised by the Warrant Holder, in whole or
in part, at any time during the life of this Warrant as described
herein, and from time to time by surrender of this Warrant,
together with the form of subscription at the end hereof duly
executed by Warrant Holder, together with the full Purchase Price
(as defined in Section 1) for each share of Common Stock as to
which this Warrant is exercised to the Company at the address of
the Company set forth in Section 13 hereof. In the event that the
Warrant is not exercised in full, the number of Warrant Shares
shall be reduced by the number of such Warrant Shares for which
this Warrant is exercised, and the Company, at its expense, shall
forthwith issue and deliver to or upon the order of the Warrant
Holder a new Warrant of like tenor in the name of the Warrant
Holder or as the Warrant Holder may request, reflecting such
adjusted Warrant Shares. Warrants may be exchanged for shares of
Common Stock, the value of the Warrants so exchanged shall equal
the Closing Price (as hereinafter defined) minus the Purchase
Price for each share subject to the Warrant so exchanged. The
"Closing Price" shall mean (i) the closing bid price of such
Common Stock as quoted on the Principal Market (as herein defined)
on the Date of Exercise (as defined below) or (ii) if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on the Nasdaq National Market or
Small-Cap Market, the closing bid price on the over-the-counter
market as furnished by any New York Stock Exchange member firm
which makes a market in the Common Stock reasonably selected from
time to time by the Company for that purpose, or (iii) if the
Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on the Nasdaq National Market or
Small-Cap Market or traded over-the-counter and the average price
cannot be determined as contemplated above, the fair market value
of the Common Stock as reasonably determined in good faith by the
Company's Board of Directors.
b. The "Date of Exercise" of the Warrant shall be the date that the
advance copy of the form of exercise attached hereto as Exhibit A
(the "Exercise Form"), is sent by facsimile to the Company,
provided that the original Warrant and Exercise Form are received
by the Company within reasonable time thereafter. If the Warrant
Holder has not sent advance notice by facsimile, the Date of
Exercise shall be the date the original Exercise Form is received
by the Company.
18. Delivery of Stock Certificates.
a. Subject to the terms and conditions of this Warrant, as soon as
practicable after the exercise of this Warrant in full or in part,
and in any event within five (5) business days thereafter, the
Company at its expense (including, without limitation, the payment
by it of any applicable issue taxes) will cause to be issued in
the name of and delivered to the Warrant Holder, or as the Warrant
Holder may lawfully direct, a certificate or certificates for the
number of fully paid and non-assessable shares of Common Stock to
which the Warrant Holder shall be entitled on such exercise,
together with any other stock or other securities or property
(including cash, where applicable) to which the Warrant Holder is
entitled upon such exercise in accordance with the provisions
hereof.
b. This Warrant may not be exercised as to fractional shares of
Common Stock. In the event that the exercise of this Warrant, in
full or in part, would result in the issuance of any fractional
share of
-2-
Common Stock, then in such event the Warrant Holder shall be
entitled to cash equal to the fair market value of such fractional
share. For purposes of this Warrant, "fair market value" shall
equal the closing bid price of the Common Stock on the Nasdaq
National Market or Small-Cap Market, the American Stock Exchange
or the New York Stock Exchange, whichever is the principal trading
exchange or market for the Common Stock (the "Principal Market")
on the date of determination or, if the Common Stock is not listed
or admitted to trading on any national securities exchange or
quoted on the Nasdaq National Market or Small-Cap Market, the
closing bid price on the over-the- counter market as furnished by
any New York Stock Exchange member firm which makes a market in
the Common Stock reasonably selected from time to time by the
Company for that purpose, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted
on the Nasdaq National Market or Small-Cap Market or traded
over-the-counter and the average price cannot be determined as
contemplated above, the fair market value of the Common Stock
shall be as reasonably determined in good faith by the Company's
Board of Directors.
19. Covenants of the Company.
a. The Company shall use its reasonable best efforts to insure that a
registration statement under the Securities Act covering the
resale or other disposition thereof of the Warrant Shares by the
Warrant Holder is effective to the extent provided by the
Registration Rights Agreement.
b. All Warrant Shares that may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly
issued, fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issue thereof.
c. The Company shall take all necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation,
including, without limitation the notification of the Nasdaq
National Market, for the legal and valid issuance of this Warrant
and the Warrant Shares to the Warrant Holder.
d. From the date hereof through the last date on which this Warrant
is exercisable, the Company shall take all steps reasonably
necessary and within its control to insure that the Common Stock
remains listed or quoted on the Principal Market.
e. The Company shall at all times reserve and keep available, solely
for issuance and delivery as Warrant Shares hereunder, such shares
of Common Stock as shall from time to time be issuable as Warrant
Shares.
f. The Warrant Shares, when issued in accordance with the terms
hereof, will be duly authorized and, when paid for or issued in
accordance with the terms hereof, shall be validly issued, fully
paid and non-assessable. The Company has authorized and reserved
for issuance to the Warrant Holder the requisite number of shares
of Common Stock to be issued pursuant to this Warrant.
g. With a view to making available to the Warrant Holder the benefits
of any rule or regulation of the Securities and Exchange
Commission (the "SEC"), that may at any time permit the Warrant
Holder to sell securities of the Company to the public without
registration, including without limitation Rule 144, the Company
agrees to use its reasonable best efforts to (i) make and keep
public information available, as those terms are understood and
defined in such rule or regulation, at all times; and (ii) file
with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act.
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h. This Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
20. Adjustment of Purchase Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the
Purchase Price shall be subject to adjustment from time to time as
follows:
a. Subdivisions, Combinations and Other Issuances. If the Company
shall at any time after the date hereof but prior to the
expiration of this Warrant subdivide its outstanding securities as
to which purchase rights under this Warrant exist, by split-up, or
otherwise, or combine its outstanding securities as to which
purchase rights under this Warrant exist, the number of Warrant
Shares as to which this Warrant is exercisable as of the date of
such subdivision, split-up, or combination shall forthwith be
proportionately increased in the case of a subdivision, or
proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the Purchase Price,
so that after such adjustments the aggregate Purchase Price
payable hereunder for the increased number of shares of Common
Stock shall be the same as the aggregate Purchase Price in effect
immediately prior to such adjustments.
b. Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable
in Common Stock or other securities or rights convertible into or
exchangeable for Common Stock ("Common Stock Equivalents"),
without payment of any consideration by holders of Common Stock
for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock
issuable upon exercise or conversion thereof), then the number of
shares of Common Stock for which this Warrant may be exercised
shall be increased as of the record date (or the date of such
dividend distribution if no record date is set) for determining
which holders of Common Stock shall be entitled to receive such
dividends, in proportion to the increase in the number of
outstanding shares (and shares of Common Stock issuable upon
conversion of all such Common Stock Equivalents) of Common Stock
as a result of such dividend, and the Purchase Price shall be
adjusted so that the aggregate amount payable for the purchase of
all the Warrant Shares issuable hereunder immediately after the
record date (or on the date of such distribution, if applicable)
for such dividend shall equal the aggregate amount so payable
before the record date (or before the date of such distribution,
if applicable).
c. Other Distributions. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as
part of a dissolution or liquidation or the winding up of its
affairs, any shares of its capital stock, any evidence of
indebtedness or any of its assets (other than cash, Common Stock
or Common Stock Equivalents), then, in any such case, the Warrant
Holder shall be entitled to receive, upon exercise of this
Warrant, with respect to each share of Common Stock issuable upon
such exercise, (i) the amount of evidences of indebtedness or
other securities or assets (excluding cash and the Company's own
Common Stock or Common Stock Equivalents) which such Warrant
Holder would have been entitled to receive as a result of the
happening of such event with respect to each such share of Common
Stock subject to this Warrant had this Warrant been exercised
immediately prior to the record date or other date determining the
shareholders entitled to participate in such distribution (the
"Determination Date") or (ii) in lieu thereof, if the Board of
Directors of the Company should so determine at the time of such
distribution, a lower Purchase Price reduced by the value of such
distribution applicable to one share of Common Stock (such value
to be determined in good faith by the Company's Board of
Directors)
d. Merger, Consolidation, etc. If at any time after the date hereof
there shall be a merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of
the Company to, another entity (a "Consolidation Event"), then the
Warrant Holder shall be entitled to
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receive upon such transfer, merger or consolidation becoming
effective, and upon payment of the aggregate Purchase Price then
in effect, the number of shares or other securities or property of
or cash or other consideration from the Company or of the
successor corporation resulting from such merger or consolidation,
to which such Warrant Holder would have been entitled to receive
as a result of the happening of such event with respect to each
such share of Common Stock subject to this Warrant had this
Warrant been exercised immediately prior to such transfer, merger
or consolidation becoming effective or to the applicable record
date thereof, as the case may be. The Company shall not effect any
Consolidation Event unless the resulting successor or acquiring
entity (if not the Company) assumes by written instrument the
obligation to deliver to the Warrant Holder such shares of stock
and/or securities as the Warrant Holder is entitled to receive had
this Warrant been exercised in accordance with the foregoing;
provided, however, that if as of the third business day prior to
the consummation of the Consolidation Event the closing bid price
of the Common Stock shall be equal to at least 200% of the
Purchase Price, then the Warrant shall be automatically exchanged
on the date of consummation of the Consolidation Event, as
provided in Section 2 hereof.
e. Reclassification, Etc. If at any time after the date hereof there
shall be a reclassification of any securities as to which purchase
rights under this Warrant exist, into the same or a different
number of securities of any other class or classes, then the
Warrant Holder shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and
upon payment of the Purchase Price then in effect, the number of
shares or other securities or property or cash or other
consideration resulting from such reorganization or
reclassification, which would have been received by the Warrant
Holder for the shares of stock subject to this Warrant had this
Warrant at such time been exercised.
f. Purchase Price Adjustment. In the event that the Company issues or
sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities,
or any warrants or other rights to subscribe for or to purchase or
any options for the purchase of its Common Stock or any such
convertible securities (other than issuance of Preferred Stock or
of shares of Common Stock upon conversion thereof, shares or
options issued or which may be issued to employees, directors or
consultants pursuant to the Company's stock option or stock
purchase plans listed in the Public Documents or shares issued
upon exercise of options, warrants or rights outstanding on the
date of the Agreement and listed in the Public Documents) at an
effective purchase price per share which is less than the Purchase
Price then in effect and less than the fair market value (as
hereinabove defined) of the Common Stock on the trading day next
preceding such issue or sale, then in each such case, the Purchase
Price in effect immediately prior to such issue or sale shall be
reduced effective concurrently with such issue or sale to an
amount determined by multiplying the Purchase Price then in effect
by a fraction, (x) the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding immediately prior
to such issue or sale, including, without duplication, those
deemed to have been issued under any provision of the Preferred
Stock and the Warrants plus (2) the number of shares of Common
Stock which the aggregate consideration received by the Company
for such additional shares would purchase at such fair market
value then in effect and (y) the denominator of which shall be the
number of shares of Common Stock of the Company outstanding
immediately after such issue or sale including, without
duplication, those deemed to have been issued under any provision
of the Preferred Stock and Warrants; provided, however, there
shall be no reduction of the Purchase Price for such issuances or
sales at any time from ___________, 1997 through the term of this
Warrant in an aggregate (i.e., not per transaction) amount of up
to $7,000,000 provided that such issuance or sale is completed at
an effective purchase price per share of at least 85% of the fair
market value of the Common Stock on the trading day next preceding
such issue or sale. For purposes of the foregoing fraction, Common
Stock outstanding shall include, without limitation, any equity
offerings
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then outstanding, whether or not they are exercisable or
convertible when such fraction is to be determined.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Purchase Price pursuant to this
paragraph 5(f), so that after such adjustments the aggregate Purchase Price
payable hereunder for the increased number of shares of Common Stock shall be
the same as the aggregate Purchase Price in effect immediately prior to such
adjustments.
Notwithstanding anything else contained in this Warrant to the
contrary, there shall be no adjustment of the Purchase Price or the number of
shares of Common Stock issuable pursuant to the exercise of this Warrant in the
event that during the term of this Warrant, the Company issues shares of Common
Stock, or securities convertible into Common Stock to the Buyer.
g. Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to
this Section 5, the Warrant Holder shall, upon exercise of this
Warrant, become entitled to receive shares and/or other securities
or assets (other than Common Stock) then, wherever appropriate,
all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other
securities or assets shall be subject to adjustment from time to
time in a manner and upon terms as nearly equivalent as
practicable to the provisions of this Section 5.
21. No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms 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 action as may be necessary or appropriate in order
to protect the rights of the Warrant Holder against impairment. Without
limiting the generality of the foregoing, the Company (a) will not
increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
reasonably necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
on the exercise of this Warrant.
22. Notice of Adjustments; Notices. Whenever the Purchase Price or number
of Warrant Shares purchasable hereunder shall be adjusted pursuant to
Section 5 hereof, the Company shall promptly execute and deliver to the
Warrant Holder a certificate setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated and the Purchase Price
and number of shares purchasable hereunder after giving effect to such
adjustment, and shall cause a copy of such certificate to be mailed (by
first class mail, postage prepaid) to the Warrant Holder.
23. Rights As Stockholder. Prior to exercise of this Warrant, the Warrant
Holder shall not be entitled to any rights as a stockholder of the
Company with respect to the Warrant Shares, including (without
limitation) the right to vote such shares, receive dividends or other
distributions thereon or be notified of stockholder meetings. However,
in the event of any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company
shall mail to each Warrant Holder, at least 10 days prior to the date
specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or
right.
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24. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant and, in the case of any such loss, theft or
destruction of the Warrant, upon delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or,
in the case of any such mutilation, on surrender and cancellation of
such Warrant, the Company at its expense will execute and deliver, in
lieu thereof, a new Warrant of like tenor.
25. Consent to Jurisdiction. Each of the Company and the Warrant Holder (i)
hereby irrevocably submits to personal jurisdiction in any state or
federal court located in the State of California for the purposes of
any suit, action or proceeding arising out of or relating to this
Warrant.
26. Entire Agreement; Amendments. This Warrant and the Agreement contain
the entire understanding of the parties with respect to the matters
covered herein and therein. No provision of this Warrant may be waived
or amended other than by a written instrument signed by the party
against whom enforcement of any such amendment or waiver is sought.
27. Restricted Securities.
a. Registration or Exemption Required. This Warrant has been issued
in a transaction exempt from the registration requirements of the
Act in reliance upon the provisions of Section 4(2) promulgated by
the SEC under the Securities Act. This Warrant and the Warrant
Shares issuable upon exercise of this Warrant may not be resold
except pursuant to an effective registration statement or an
exemption to the registration requirements of the Securities Act
and applicable state laws.
b. Legend. The Warrant and any Warrant Shares issued upon exercise
thereof (until a registration statement has been declared
effective by the SEC with respect to the Warrant Shares, at which
time, such legend shall be removed, and the Warrant Shares shall
be freely tradeable), shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPO THECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE
HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN
OBLIGATIONS OF SIGMA DESIGNS, INC. SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND [BUYER]
DATED [DATE]. A COPY OF THE AFORESAID SUBSCRIPTION AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S
EXECUTIVE OFFICES."
The certificates representing the Warrants, the shares of Preferred Stock and
underlying Common Stock shall also bear any other legends required by applicable
Federal or state securities laws, which legends shall be removed when not
required in accordance with this Paragraph 2(iii).
-7-
c. Assignment. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Warrant Holder
may sell, transfer, assign, pledge or otherwise dispose of this
Warrant, in whole or in part. The Warrant Holder shall deliver a
written notice to the Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or
persons to whom the Warrant shall be assigned and the respective
number of warrants to be assigned to each assignee. The Company
shall effect the assignment within ten (10) days, and shall
deliver to the assignee(s) designated by the Warrant Holder a
Warrant or Warrants of like tenor and terms for the appropriate
number of shares.
28. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) upon
hand delivery or delivery by facsimile at the address or number
designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or
(b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
to the Company: Sigma Designs, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
Fax: (000) 000-0000
to the Warrant Holder:
Attn:
Fax:
with a copy to:
Attn:
Fax:
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 13 by giving at least 10 days
prior written notice of such changed address or facsimile number to the other
party hereto.
29. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of California.
The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.
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SIGMA DESIGNS, INC.
By: _________________________________
Xxxxx X. Xxxx
Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
Attest:
By: _________________________________
Kit Tsui
Secretary
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EXHIBIT A
EXERCISE FORM
SIGMA DESIGNS, INC.
The undersigned hereby irrevocably exercises the right to purchase
__________________ shares of Common Stock of SIGMA DESIGNS, INC., a California
corporation, evidenced by the attached Warrant, and herewith makes payment of
the Purchase Price with respect to such shares in full in the form of [cash or
check in the amount of $___], [______ Warrant Shares which represent the amount
of Warrant Shares as provided in the attached Warrant to be canceled in
connection with such exercise], all in accordance with the conditions and
provisions of said Warrant.
The undersigned requests that stock certificates for such Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to this Warrant in the name of the registered Holder and
delivered to the undersigned at the address set forth below.
Dated:___________________________________
_________________________________________
Signature of Registered Holder
_________________________________________
Name of Registered Holder (Print)
_________________________________________
Address
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Warrant Holder
desiring to transfer the Warrant)
FOR VALUED RECEIVED, the undersigned Warrant Holder of the attached
Warrant hereby sells, assigns and transfers unto the persons below named the
right to purchase ______________ shares of the Common Stock of SIGMA DESIGNS,
INC. evidenced by the attached Warrant and does hereby irrevocably constitute
and appoint ______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated:______________________________________
____________________________________________
Signature
Fill in for new Registration of Warrant:
____________________________________________
Name
____________________________________________
Address
____________________________________________
Please print name and address of assignee
(including zip code number)
NOTICE
The signature to the foregoing Exercise Form or Assignment must
correspond to the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change whatsoever.
Exhibit D
Form of Opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
June __, 1997
To the Purchasers Listed in Exhibit A
to the Sigma Designs, Inc.
Series A Preferred Stock Subscription
Agreement Dated as of June __, 1997
Ladies and Gentlemen:
Reference is made to that certain Private Securities Subscription
Agreement, dated as of June __, 1997 (the "Subscription Agreement") by and among
Sigma Designs, Inc., a California corporation (the "Company"), and the
purchasers listed in Exhibit A to the Subscription Agreement (the "Investors"),
which provides for the issuance by the Company to the Investors of up to
__________ shares of Series A Preferred Stock of the Company, without par value
(the "Series A Preferred Stock"). This opinion is rendered to you pursuant to
Section 6(ii) of the Subscription Agreement, and all terms used herein have the
meanings defined for them in the Subscription Agreement unless otherwise defined
herein.
We have acted as counsel for the Company in connection with the
negotiation of the Subscription Agreement and the issuance of the Series A
Preferred Stock. As such counsel, we have made such legal and factual
examinations and inquiries as we have deemed advisable or necessary for the
purpose of rendering this opinion. In addition, we have examined originals or
copies of documents, corporate records and other writings which we consider
relevant for the purposes of this opinion. In such examination we have assumed
the genuineness of all signatures on original documents, the conformity to
original documents of all copies submitted to us and the due execution and
delivery of all documents where due execution and delivery are a prerequisite to
the effectiveness thereof.
As used in this opinion, the expression "to our knowledge," "known to
us" or similar language with reference to matters of fact means that, after an
examination of documents made available to us by the Company, and after
inquiries of officers of the Company, but without any further independent
factual investigation, we find no reason to believe that the opinions expressed
herein are factually incorrect. Further, the expression "to our knowledge",
"known to us" or similar language with reference to matters of fact refers to
the current actual knowledge of the attorneys of this firm who have worked on
matters for the Company solely in connection with the Subscription Agreement and
the transactions contemplated thereby. Except to the extent expressly set forth
herein or as we otherwise believe to be necessary to our opinion, we have not
undertaken any independent investigation to determine the existence or absence
of any fact, and no inference as to our knowledge of the existence or absence of
any fact should be drawn from our representation of the Company or the rendering
of the opinion set forth below.
For purposes of this opinion, we are assuming that you have all
requisite power and authority, and have taken any and all necessary corporate or
partnership action, to execute and deliver the Subscription Agreement, and we
are assuming that the representations and warranties made by the Investors in
the Subscription Agreement and pursuant thereto are true and correct. We are
also assuming that the Investors have purchased the Series A Preferred Stock for
value, in good faith and without notice of any adverse claims within the meaning
of the California Uniform Commercial Code.
June __, 1997
Page 2
The opinions hereinafter expressed are subject to the following
qualifications:
(a) We express no opinion as to the effect of applicable bankruptcy and
other similar laws affecting the rights of creditors generally;
(b) We express no opinion as to the effect of rules of law governing
specific performance, liquidated damages, injunctive relief or other equitable
remedies;
(c) We express no opinion as to compliance with applicable anti-fraud
provisions of federal or state securities laws;
(d) We express no opinion as to the enforceability of the voting
provisions of Section 5(vii) of the Subscription Agreement; and
(e) We are members of the Bar of the State of California and we are not
expressing any opinion as to any matter relating to the laws of any jurisdiction
other than the laws of the United States of America and the laws of the State of
California.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Series A Preferred Stock issued under the Subscription Agreement
are validly issued, fully-paid and nonassessable, free and clear of any liens,
encumbrances, and preemptive rights or similar rights contained in the Company's
Second Restated Articles of Incorporation or Bylaws;
2. The Subscription Agreement has been duly authorized, and validly
executed and delivered by the Company and constitutes a valid and binding
agreement in accordance with its terms;
3. The execution and delivery of the Subscription Agreement and the
consummation of the issuance of the Series A Preferred Stock do not violate any
provision of the Second Restated Articles of Incorporation or Bylaws of the
Company, or, to our knowledge, any material indenture, mortgage, deed of trust
or other material agreement or instrument listed as an Exhibit in the Company's
most recent Form 10-K filed under the Securities Exchange Act of 1934, as
amended, or, to our knowledge, any existing applicable decree, judgment or order
of any court, federal or state regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or any of its properties
or assets;
4. No authorization, approval or consent of or filing with any federal,
state or local governmental body of the United States is legally required for
the issuance and sale of the Series A Preferred Stock as contemplated by the
Subscription Agreement.
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June __, 1997
Page 3
This opinion is furnished to the Investors solely for their benefit in
connection with the purchase of the Shares, and may not be relied upon by any
other person without our prior written consent.
Very truly yours,
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Professional Corporation
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