Warrant to Purchase Shares - 3dfx Interactive Inc. and Leland Stanford Junior University
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.
Warrant C-3 WARRANT TO PURCHASE SHARES
OF SERIES C PREFERRED STOCK
Company: 3Dfx Interactive, Inc., a California corporation (the "Company"), and
any corporation that shall succeed to the obligations of the Company
under this Warrant.
Number of Shares: 10,000
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Class of Stock: Series C Preferred
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Exercise Price: $3.75
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Expiration Date: November 30, 2001
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Date of Grant: November 30, 1996
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THIS CERTIFIES THAT, for value received, Leland Stanford
Junior University ("Holder") is entitled to purchase 10,000 shares of the
Company's Series C Preferred Stock (the "Shares") at $3.75 per share, (as may be
further adjusted pursuant to Section 5 hereof), subject to the provisions and
upon the terms and conditions set forth herein.
I. Definitions.
As used herein, the following terms, unless the context
otherwise requires, shall have the following meanings:
1. "Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
thereunder, as shall be in effect at the time.
2. "Common Stock" shall mean shares of the
presently authorized common stock of the Company and any stock into which such
common stock may hereafter be exchanged.
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3. "Holder" shall mean any person who shall at the
time be the holder of this Warrant.
4. "Shares" shall mean the shares of the Series C
Preferred Stock or Common Stock that the Holder is entitled to purchase upon
exercise of this Warrant, as adjusted pursuant to Section 5 hereof.
5. "Warrant Price" shall mean the Exercise Price at
which this Warrant may be exercised, as further adjusted pursuant to Section 5
hereof.
II. Term.
The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time on or before the Expiration Date.
III. Method of Exercise; Payment; Issuance of New Warrant.
Subject to Section 2 hereof, the purchase right represented by
this Warrant may be exercised by the Holder, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Appendix A duly executed) at the principal office of the Company and by payment
to the Company in accordance with the terms set forth below. In the event of any
exercise of the purchase right represented by this Section 3, certificates for
the Shares so purchased shall be delivered to the Holder within seven (7) days
of receipt of such payment and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder within such seven (7) day period.
The Holder may either (i) exercise all or any portion of the
outstanding Warrant by paying to the Company, by cash or check, an amount equal
to the aggregate Exercise Price of the Shares then being purchased or (ii)
receive Shares equal to the value (as determined below) of this Warrant by
surrender of the Warrant at the principal office of the Company together with a
notice of such election in which event the Company shall issue to the Holder a
number of shares of Stock computed using the following formula:
X = Y (A-B)
-------
A
Where: X = The number of shares to be issued to the Holder.
Y = The number of shares to be exercised under this Warrant.
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A = The fair market value of one Share.
B = The Exercise Price.
As used herein, current fair market value of the Shares shall
mean with respect to each Share the average of the closing prices of the
Company's Common Stock sold on the principal securities exchange on which the
Common Stock may at the time be listed, or, if there have been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day the Common Stock
is not so listed, the average of the representative bid and asked prices quoted
on the NASDAQ System as of 4:00 p.m., New York City time, or, if on any day the
Common Stock is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked price on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 10 days
consisting of the day as of which the current fair market value of Common Stock
is being determined and the nine consecutive trading days prior to such day. If
at any time the Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the current fair market
value of each Share shall be the highest price per share which the Company could
obtain from a willing buyer (not a current employee or director) for Shares sold
by the Company, from authorized but unissued shares, as determined in good faith
by the Board of Directors of the Company, unless the Company shall become
subject to a merger, acquisition, or other consolidation pursuant to which the
Company is not the surviving party, in which case the current fair market value
of the Shares shall be deemed to be the value received by the holders of the
Shares pursuant to the Company's acquisition. If the Shares consist of multiple
classes or series of the Company's capital stock, the fair market value of one
Share shall equal the weighted average fair market value of the classes or
series comprising the Shares, the fair market value of each such class or series
to be determined as provided herein.
IV. Exercise Price.
The Warrant Price at which this Warrant may be exercised shall
be the Exercise Price, as adjusted from time to time pursuant to Section 5
hereof.
V. Adjustment of Number and Kind of Shares and
Adjustment of Warrant Price.
A. Certain Definitions. As used in this Section 5 the
following terms shall have the following respective meanings:
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1. Options: rights, options or warrants to
subscribe for, purchase or otherwise acquire either shares of Series C Preferred
Stock, Common Stock or Convertible Securities; and
2. Convertible Securities: any evidences of
indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for Common Stock, including the Company's
Series C Preferred Stock.
B. Adjustments. The number and kind of securities purchasable
upon the exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
1. Reclassification, Reorganization, Consolidation
or Merger. In the case of any reclassification of the Series C Preferred Stock
or any reorganization, consolidation or merger of the Company with or into
another corporation (other than a merger or reorganization with respect to which
the Company is the continuing corporation and which does not result in any
reclassification of the Series C Preferred Stock), the Company, or such
successor corporation, as the case may be, shall execute a new warrant,
providing that the Holder shall have the right to exercise such new warrant and
upon such exercise to receive, in lieu of each share of the Series C Preferred
Stock, as applicable, theretofore issuable upon exercise of this Warrant, the
number and kind of securities receivable upon such reclassification,
reorganization, consolidation or merger by a holder of shares of the Series C
Preferred Stock of the Company for each share of the Series C Preferred Stock.
The aggregate warrant price of the new warrant shall be the aggregate Warrant
Price in effect immediately prior to the reclassification, reorganization,
consolidation or merger. Such new warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 5 including, without limitation, adjustments to the Warrant
Price and to the number of shares issuable upon exercise of this Warrant. The
provisions of this subsection B.1 shall similarly apply to successive
reclassification, reorganizations, consolidations or mergers.
2. Split, Subdivision or Combination or Shares. If
the Company at any time while this Warrant remains outstanding and unexpired
shall split, subdivide or combine the Series C Preferred Stock, for which this
Warrant is then exercisable, the Warrant Price shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination. Any adjustment under this subsection B.2 shall become
effective when the split, subdivision or combination becomes effective.
3. Stock Dividends. If the Company at any time
while this Warrant remains outstanding and unexpired shall pay a dividend with
respect to the Series C Preferred Stock for which this Warrant is then
exercisable, payable in shares
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of that Series C Preferred Stock, Options or Convertible Securities, the Warrant
Price shall be adjusted, from and after the date of determination of the
stockholders entitled to receive such dividend or distributions, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which shall be the
total number of shares of Series C Preferred Stock outstanding immediately prior
to such dividend or distribution, and (ii) the denominator of which shall be the
total number of shares of the Series C Preferred Stock outstanding immediately
after such dividend or distribution (including shares of Series C Preferred
Stock issuable upon exercise, conversion or exchange of any Options or
Convertible Securities issued as such dividend or distribution). If the Options
or Convertible Securities issued as such dividend or distribution by their terms
provide, with the passage of time or otherwise, for any decrease in the
consideration payable to the Company, or any increase in the number of shares
issuable upon exercise, conversion or exchange thereof (by change of rate or
otherwise), the Warrant Price shall, upon any such decrease or increase becoming
effective, be reduced to reflect such decrease or increase as if such decrease
or increase became effective immediately prior to the issuance of the Options or
Convertible Securities as the dividend or distribution. Any adjustment under
this subsection B.3 shall become effective on the record date.
C. Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price pursuant to this Section 5, the number of Shares issuable upon
exercise of this Warrant shall be adjusted to the product obtained by
multiplying the number of Shares issuable immediately prior to such adjustment
in the Warrant Price by a fraction (i) the numerator of which shall be the
Warrant Price immediately prior to such adjustment, and (ii) the denominator of
which shall be the Warrant Price immediately after such adjustment.
VI. Notice of Adjustments.
Whenever the Warrant Price shall be adjusted pursuant to
Section 5 hereof, the Company shall issue a certificate signed by its chief
financial officer or chief executive officer 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 Warrant Price 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 Holder.
VII. Compliance With Act; Transferability of Warrant;
Disposition of Shares.
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A. Legends. This Warrant and the Shares issued upon
exercise thereof shall be imprinted with a legend in substantially the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
B. Transferability and Non-negotiability of Warrant and
Shares. This Warrant and the Shares issued upon exercise thereof may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if reasonably
requested by the Company). Subject to the provisions of this Section 7.B, title
to this Warrant may be transferred in the same manner as a negotiable instrument
transferable by endorsement and delivery.
VIII. Investment Representations. By its acceptance of
this Warrant, the Holder makes the following representations and warranties:
(a) The Holder understands that the Warrant and the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Act"), and will be issued pursuant to an exemption from registration contained
in the Act based in part upon the representations of the Investor contained
herein.
(b) The Holder is acquiring the Warrant and the Shares solely
for its own account and not as a nominee for any other party and not with a view
toward the resale or distribution thereof.
IX. Lock-Up Provision. By acceptance of this Warrant, upon
receipt of a written request by the Company or by its underwriters, the Holder
shall not sell, sell short, grant an option to buy, or otherwise dispose of the
Warrant or any of the Shares (except for any such securities included in the
registration) for a period of one hundred and eighty (180) days following the
effective date of the initial registration of the Company's Common Stock under
the Securities Act of 1933, as amended; provided, however, that the Holder shall
have no obligation to enter into the agreement described in this Section IX
unless all executive officers and directors of the Company and all other
Investors and holders of other registration rights from the Company enter into
similar agreements. The Company may impose stop-transfer instructions with
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respect to any Securities held by the Holder subject to the foregoing
restriction until the end of said 180 day period.
X. Miscellaneous.
No fractional shares of the Shares shall be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Warrant
Price then in effect. The terms and provisions of this Warrant shall inure to
the benefit of, and be binding upon, the Company and the Holders hereof and
their respective successors and assigns. This Warrant shall be governed by and
construed under the laws of the State of California as applied to contracts
entered into between residents of the State of California to be wholly performed
in the State of California. The titles of the sections and subsections of this
Warrant are for convenience only and are not to be considered in construing this
Warrant. All pronouns used in the Warrant shall be deemed to include masculine,
feminine and neuter forms. The purchase price of this Warrant, $1.00, has been
paid on behalf of the Holder by an alumnus of Leland Stanford Junior University.
3DFX INTERACTIVE, INC.
By: /s/ Gary Martin
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Title: CFO
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APPENDIX A
NOTICE OF EXERCISE
TO:_________________
1. The undersigned hereby elects to purchase __________shares
of the______________ of 3Dfx Interactive, Inc., pursuant to terms of the
attached Warrant, and (i) [CHECK BOX__] tenders herewith payment of the
$__________ purchase price of such shares in full, together with all applicable
transfer taxes, if any, or (ii) [CHECK BOX __] hereby surrenders the Warrant and
elects to exercise the Warrant pursuant to the net exercise feature contained in
Section 3 of the Warrant.
2. Please issue a certificate or certificates representing
said shares of the___________________ in the name of the undersigned or in such
other name as is specified below:
3. The undersigned represents it is acquiring the shares
of_______________ solely for its own account and not as a nominee for any other
party and not with a view toward the resale or distribution thereof.
________________________________
(Name)
________________________________
(Address)
________________________________
________________________________
________________________________
(Taxpayer Identification Number)
_______________________________
[print name of Holder]
By:____________________________
Title:_________________________
Date:__________________________