<PAGE>
Exhibit 4.01
WARRANT REDUCTION OFFER STATEMENT
SILICON VALLEY RESEARCH, INC.
NOTICE OF TEMPORARY REDUCTION
OF WARRANT EXERCISE PRICE
Silicon Valley Research, Inc., a California corporation (the
"Company"), hereby offers to reduce temporarily the exercise price of its
warrants to purchase shares of its common stock, no par value (the "Common
Stock") dated May 29, 1998 (the "Warrants"), upon the terms and subject to the
conditions set forth in this Warrant Reduction Offer Statement (the
"Statement"). The Warrants are currently exercisable at $0.37 per share.
During the period (the "Reduction Period") starting on the date hereof and
ending at 5:00 p.m., Pacific Daylight Time, on October 20, 2000 (the "Expiration
Date"), holders of the Warrants ("Warrant Holders") are entitled to purchase
upon payment in cash of a reduced exercise price of $0.175 per one share of
Common Stock (the "$0.175 Reduced Exercise Price") or $0.155 (the "$0.155
Reduced Exercise Price") per one share of Common Stock. A holder of Warrants
may exercise all or any portion of his or her Warrants in accordance with the
terms of this Statement. In order to be entitled to the $0.155 Reduced Exercise
Price, the Warrant Holder must agree not to sell the shares of Common Stock
acquired upon exercise (the "Shares") for a period of 60 days. Those Warrant
Holders wishing to sell the Shares within 60 days of the exercise must exercise
the Warrants at the "$0.175 Reduced Exercise Price".
After the Expiration Date, the exercise price of the Warrants will
revert to $0.37 per share through their expiration on May 28, 2005, and holders
of the Warrants will no longer be entitled to the Reduced Exercise Price. The
Company is temporarily reducing the exercise price of the Warrants in order to
provide holders with an incentive to exercise the Warrants and to provide the
Company with financing for its current and future operations.
The Company originally issued the Warrants in a private placement of
2,377,909 Units ("Units") pursuant to a Unit Purchase Agreement dated as of May
29, 1998, among the Company and the investors named therein (the "Unit Purchase
Agreement"). Each Unit was composed of one share of Common Stock and one
Warrant. The Company filed, on December 2 1999, a registration statement on
Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") to register shares of Common Stock issuable upon
exercise of the Warrants. The Registration Statement was declared effective by
the Commission on December 7, 1999. The Common Stock issuable upon exercise of
the Warrants will be freely tradable pursuant to the Registration Statement.
____________________
INVESTMENT IN THE COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. INVESTORS MUST BE CAPABLE OF SUSTAINING A LOSS OF
THEIR ENTIRE INVESTMENT. SEE "CERTAIN RECENT CONSIDERATIONS."
THE WARRANT REDUCTION OFFER HAS NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE INFORMATION CONTAINED IN THIS WARRANT REDUCTION OFFER. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
The date of this Warrant Reduction Offer is October 13, 2000.
1
<PAGE>
This Warrant Reduction Offer is being sent to all registered holders
of the Warrants at the close of business on the date immediately preceding the
date hereof. The original exercise price of the Warrants was determined by
negotiations between the Company and the purchasers of the Warrants. The Common
Stock is listed on the OTC Bulletin Board (the "Bulletin Board") under the
symbol "SVRI". See "Price Range for the Common Stock".
This Warrant Reduction Offer is subject to a number of conditions.
The Company reserves the right to extend the Reduction Period up to 30 calendar
days and to amend or terminate the Warrant Reduction Offer. The exercise price
of the Warrants must be paid in cash, by check made payable to the order of
"Silicon Valley Research, Inc." or by wire transfer, in an amount equal to
$0.155 or $0.175 per share. See "Offering Summary" and "The Warrant Reduction
Offer".
This Warrant Reduction Offer is being made by the Company in reliance
on the exemptions from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act") afforded by Section 4(2) and/or Section
4(6) thereof. This Warrant Reduction Offer does not constitute an offer or
solicitation in any jurisdiction in which such offer or solicitation would be
unlawful. The Warrant Reduction Offer is not being made to, nor will the
Company accept the exercise from, any holder of the Warrants in any jurisdiction
in which the Warrant Reduction Offer or the acceptance thereof would not be in
compliance with the securities or blue sky laws of such jurisdiction.
If you require assistance in connection with the Warrant Reduction
Offer, please contact Lisa A. Evans, Finance Administrator, at the Company, at
(408) 361-0333.
____________________
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO HOLDERS TO EXERCISE OR TO REFRAIN FROM
EXERCISING THE WARRANTS. HOLDERS MUST MAKE THEIR OWN
DECISIONS ON WHETHER OR NOT TO EXERCISE.
____________________
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information 4
Offering Summary 5
The Warrant Reduction Offer 7
Use of Proceeds 11
Certain Recent Considerations 12
Description of Securities 12
Price Range for the Common Stock 13
Legal Matters 13
EXHIBITS
Warrant Exercise Agreement
Form 10-KSB for the year ended March 31, 2000
Form 10-QSB for the quarter ended June 30, 2000
</TABLE>
3
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company can be inspected and copied at the Securities and Exchange Commission's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Holders may also call the Commission at 1-800-SEC-0330 for further information
on the Public Reference Room. The Company's Securities and Exchange Commission
filings are also available to the public at the Commission's Web site at
http://www.sec.gov.
------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference: (i) Annual
Report on Form 10-KSB for the year ended March 31, 2000 and (ii) Quarterly
Report on Form 10-QSB for the quarter ended June 30, 2000. These documents are
included as exhibits to this Statement.
Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Statement to the extent that a
statement contained herein or in any other subsequently filed document which is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Statement.
4
<PAGE>
OFFERING SUMMARY
This summary highlights information contained in other parts of this
Statement. Because it is a summary, it may not contain all of the information
deemed necessary for a decision to invest in the Company's common stock.
Therefore, investors are urged to read the entire Statement carefully, including
"Certain Recent Considerations", the Form 10-KSB for the year ended March 31,
2000 and the Form 10-QSB for the quarter ended June 30, 2000, before making an
investment decision.
The Company
The Company, incorporated in 1979, develops and markets physical
design software for use by integrated circuit ("IC") designers, including those
of its subsidiary, Quality I.C. Corporation. The Company's software products
are used to automatically and efficiently arrange and connect the individual
components that comprise an integrated circuit. While this process, commonly
referred to as "place and route", is a crucial element of most chip designs,
some critical areas require a more manual approach. Designers at Quality I.C.
Corporation are skilled in the production of custom chip components to satisfy
demanding performance and area requirements. By combining both strengths, the
Company's design project support and consulting services encompass nearly all
aspects of the physical integrated circuit design process. The Company's end-
user customers include Hyundai, Innovision Labs, Micron, Motorola, N.E.C., OKI
Semiconductor, Samsung Electronics, SigmaTel, Sony, Texas Instruments and
Yamaha.
The Offering
--------------------------------------------------------------------------------
Warrants subject to Warrant Reduction Offer The Warrant Reduction Offer
includes Warrants to purchase an
aggregate of 1,859,948 shares of
Common Stock.
--------------------------------------------------------------------------------
Reduced Exercise Price $0.155 per one share of Common
Stock for those Warrant Holders
who agree not to sell the shares
of Common Stock acquired upon
exercise (the "Shares") for a
period of 60 days commencing on
the date of exercise or
$0.175 per one share of Common
Stock
--------------------------------------------------------------------------------
Reduction Period Commencing on the date hereof and
ending at 5:00 p.m. Pacific
Daylight Time on October 20, 2000.
--------------------------------------------------------------------------------
Purpose of Warrant Reduction Offer To provide holders with an
incentive to exercise the warrants
and to provide the Company with
financing for its current and
future operations. See "The
Warrant Reduction Offer -
Purpose".
--------------------------------------------------------------------------------
Use of Proceeds The Company intends to use the net
proceeds from the exercise of the
Warrants primarily for working
capital. See "Use of Proceeds".
--------------------------------------------------------------------------------
5
<PAGE>
--------------------------------------------------------------------------------
Expiration 5:00 p.m. Pacific Daylight Time,
on October 20, 2000, subject to
extension. See "The Warrant
Reduction Offer - Expiration Date;
Extensions and Amendments".
--------------------------------------------------------------------------------
Securities Outstanding
Prior to the Warrant Reduction 35,805,503 shares of Common Stock
Offer (1)
--------------------------------------------------------------------------------
After the Warrant Reduction
Offer (1) 37,665,451 shares of Common Stock
(assuming exercise of all
Warrants)
--------------------------------------------------------------------------------
Risk Factors Investment in the Common Stock is
speculative and involves a high
degree of risk. See "Certain
Considerations".
--------------------------------------------------------------------------------
How to Exercise Warrants Any holder of Warrants wishing to
exercise under the Warrant
Reduction Offer should (i)
complete and sign the Warrant
Exercise Agreement in the form
attached hereto as Exhibit A, (ii)
make a check payable to "Silicon
Valley Research, Inc." in an
amount equal to $0.155 per share
or $0.175 per share(or see wire
transfer instructions below), and
(iii) forward the original
Warrant, the Warrant Exercise
Agreement and your check (or wire
transfer) to Silicon Valley
Research, Inc. at 6360 San Ignacio
Avenue, San Jose, California
95119, Attention: Lisa Evans.
Payment of the exercise price may
only be in cash (same-day sale is
acceptable) under the Warrant
Reduction Offer. See "The Warrant
Reduction Offer - How to
Exercise".
--------------------------------------------------------------------------------
Acceptance of all Warrants The Company will accept any and
all Warrants properly exercised on
or prior to the Expiration Date,
subject to certain conditions. See
"The Warrant Reduction Offer-
Conditions of the Warrant
Reduction Offer".
--------------------------------------------------------------------------------
Delivery of Securities The Company will deliver
certificates for shares of Common
stock issuable upon exercise of
the Warrants as soon as
practicable after the Company is
in receipt of the required funds
and paperwork. See "The Warrant
Reduction Offer - Delivery of
Securities".
--------------------------------------------------------------------------------
_______________
(1) As of September 30, 2000, does not include outstanding options to purchase
an aggregate of 4,137,748 shares of Common Stock and outstanding warrants
to purchase an aggregate of 5,429,683 shares of Common Stock.
6
<PAGE>
THE WARRANT REDUCTION OFFER
Terms of the Offer
Upon the terms and subject to the conditions herein set forth, holders
of the Warrants are entitled to exercise such Warrants during the Reduction
Period at a reduced exercise price of price of $0.175 per one share of Common
Stock (the "$0.175 Reduced Exercise Price") or $0.155 (the "$0.155 Reduced
Exercise Price") per one share of Common Stock. A holder of Warrants (the
"Warrant Holder") may exercise all or any portion of his or her Warrants in
accordance with the terms of this Statement. In order to be entitled to the
$0.155 Reduced Exercise Price, the Warrant Holder must agree not to sell the
shares of Common Stock acquired upon exercise (the "Shares") for a period of 60
days commencing on the date of exercise. Those Warrant Holders wishing to sell
the Shares within 60 days of the exercise must exercise the Warrants at the
$0.175 Reduced Exercise Price. The Reduced Exercise Price is payable only in
cash (same-day-sale is acceptable) under the Warrant Reduction Offer and the
payment methods in Section 2(c)(A), (B), and (D) of the Warrants are not
permitted under the Warrant Reduction Offer. The shares of Common Stock issuable
upon exercise of the Warrants will be separately transferable upon their
issuance. After the Expiration Date, the exercise price of the Warrants will
revert to $0.37 per share through their expiration on May 28, 2005.
The Company will accept any and all of the Warrants that are properly
exercised, subject to the conditions set forth herein. As of the date of this
Statement, Warrants exercisable for a total of 1,859,948 shares of Common Stock
were outstanding. As soon as practicable after the Company is in receipt of the
required funds and paperwork, the Company will deliver registered certificates
evidencing the shares of Common Stock issuable upon exercise of the Warrants
properly exercised on or prior to the Expiration Date, subject to the conditions
set forth herein. See " - Conditions of the Warrant Reduction Offer".
No officer or director of the Company who beneficially own Warrants
has advised the Company as to whether or not he or she intends to exercise the
Warrants pursuant to the Warrant Reduction Offer.
Purpose
The purpose of the Warrant Reduction Offer is to provide holders of
the Warrants with an incentive to exercise the Warrants and to provide the
Company with financing for its current and future operations. The Warrant
Reduction Offer provides holders of outstanding Warrants an opportunity to
exercise the Warrants at a reduced exercise price. If all of the outstanding
Warrants are exercised at the Reduced Exercise Price, the Company would realize
gross proceeds of $300,000, before expenses, for use in the Company's
operations. See "Use of Proceeds".
7
<PAGE>
Expiration Date; Extensions and Amendments
The Reduction Period expires at 5:00 p.m., Pacific Daylight Time, on
October 20, 2000. Such Period may be extended for up to 30 calendar days in the
sole discretion of the Company, in which event the term "Expiration Date" will
mean the time and date as extended. The Company will notify each holder of a
Warrant of any extension as soon as practicable.
The Company also reserves the right to amend, at any time and from
time to time, the terms of the Warrant Reduction Offer, or terminate the Warrant
Reduction Offer, subject to compliance with all applicable requirements of law.
Any announcement relating to a change in the Warrant Reduction Offer will be
disseminated in a manner reasonably designed to inform each holder of a Warrant
of such change.
How to Exercise
The exercise of the Warrants pursuant to the Warrant Reduction Offer
in accordance with the procedures set forth below will, subject to acceptance by
the Company, constitute an agreement between the holder and the Company subject
to the terms and upon the conditions set forth herein.
To properly exercise a Warrant, a holder must: (i) complete and sign
the Warrant Exercise Agreement in the form attached hereto as Exhibit A, (ii)
make a check or wire transfer payable to "Silicon Valley Research, Inc." in the
amount of the aggregate exercise price equal to $0.175 or $0.155 per share, and
(iii) forward the original Warrant, the Warrant Exercise Agreement and your
check (or wire transfer) to Silicon Valley Research, Inc. at 6360 San Ignacio
Avenue, San Jose, California 95119, Attention: Lisa Evans, for receipt at or
prior to 5:00 p.m., Pacific Daylight Time, on the Expiration Date, except as
otherwise provided below. A holder may not use the Warrant Exercise Agreement
attached to the Warrant in connection with this Warrant Reduction Offer. In
signing the Warrant Exercise Agreement attached as Exhibit A, a holder will be
required to reaffirm the representations and warranties made by such holder in
the Unit Purchase Agreement with respect to the acquisition of the Common Stock
issuable upon exercise of the Warrants.
The method of delivery of the Warrant certificates and other documents
to the Company is at the election and risk of the holder. If such delivery is by
mail, the Company suggests that you use registered mail, return receipt
requested, and that your mailing is completed sufficiently in advance of the
Expiration Date to permit timely delivery to the Company. Please call Lisa A.
Evans, Finance Administrator, at the Company (408) 361-0333 if you have lost
your Warrant to arrange for replacement.
8
<PAGE>
To wire funds directly to the Company, please deliver the following
wire transfer instructions to your bank and mail the Warrant Exercise Agreement
and the original Warrant to the Company, as explained above.
Determination of Validity
All questions as to the validity, form, eligibility and acceptance of
the Warrants, and the terms and conditions of the Warrant Reduction Offer, will
be resolved by the Company in its sole discretion. Its determination will be
final and binding. The Company reserves the absolute right to reject any or all
exercises that are not in proper form or the acceptance of which would, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any irregularities or conditions of exercise of the
Warrants. Unless waived, any irregularities must be cured within such time as
determined by the Company in its sole discretion. Neither the Company nor the
Escrow Agent will be under any duty to give notification of defects in such
exercises or will incur any liabilities for failure to give such notification.
Exercise of the Warrants will not be deemed to have been made until all
irregularities have been cured or waived. Any Warrants received by the Escrow
Agent that are not properly exercised and as to which the irregularities have
not been cured or waived will be returned to the holder thereof, together with
the exercise price (without interest thereon), as soon as practicable after the
Expiration Date.
Tax Consequences
Each holder of the Warrants should consult with his or her tax adviser
with respect to the tax consequences of exercising the Warrants.
Delivery of Securities
Upon the terms and subject to the conditions of the Warrant Reduction
Offer, the Company will deliver shares of Common Stock upon exercise of Warrants
as soon as practicable after the Company is in receipt of the required funds and
paperwork. For purposes of the Warrant Reduction Offer, the Company will be
deemed to have accepted for exercise properly exercised Warrants when the
Company has given oral or written notice thereof to its transfer agent to
deliver the shares of Common Stock underlying such Warrants. Stock certificates
representing Shares exercised at the $0.155 Reduced Exercise Price will bear the
following legend:
9
<PAGE>
THE TRANSFER, ASSIGNMENT OR OTHER HYPOTHECATION OF THESE SHARES IS SUBJECT TO AN
AGREEMENT BETWEEN THE SHAREHOLDER AND THE CORPORATION. THE SHARES MAY NOT BE
TRANSFERRED WITHOUT THE WRITTEN CONSENT OF THE CORPORATION.
Warrants not accepted for exercise by the Company will be returned to the holder
thereof, together with the exercise price (without interest thereon), as soon as
practicable following the Expiration Date. Any holder of Warrants who elects
only to exercise a portion of his or her Warrants will receive, in addition to
the shares of Common Stock issuable for the portion of the Warrants so
exercised, a new Warrant certificate for the balance of the Warrants not
exercised.
If a holder of the Warrants wishes to have the shares of Common Stock
issuable upon exercise of the Warrants registered in a name other than the
holder's own name, then the holder in executing the Warrant Exercise Agreement
must have his or her signature guaranteed by a member firm of a national
securities exchange.
Conditions of the Warrant Reduction Offer
Notwithstanding any other provisions of the Warrant Reduction Offer,
the Company may amend or terminate the Warrant Reduction Offer and is not
required to accept for exercise any Warrants if, prior to the Expiration Date:
(i) there shall be pending, instituted or threatened any legal
action or administrative proceeding before any court or governmental agency, by
any person, challenging the Warrant Reduction Offer or, in the sole judgment of
the Board of Directors of the Company, otherwise adversely affecting the
transactions contemplated by the Warrant Reduction Offer;
(ii) there exists, in the sole judgment of the Board of Directors of
the Company, any actual or threatened legal impediment to the acceptance of the
Warrants or the issuance of the underlying Common Stock;
(iii) there shall have occurred (a) a declaration of a banking
moratorium by United States or California authorities; or (b) a commencement of
a war, armed hostilities or other international or national calamity directly
involving the United States; or
(iv) there shall have occurred any change or development affecting
the business or financial affairs of the Company which, in the sole judgment of
the Board of Directors of the Company, would or might prohibit, restrict or
delay consummation of the Warrant Reduction Offer or materially impair the
contemplated benefits of the Warrant Reduction Offer to the Company.
10
<PAGE>
In the event that the Company terminates the Warrant Reduction Offer
pursuant to any of the conditions set forth above, the Company will ensure the
prompt return of the Warrants to the holders who exercised them and the refund
of the exercise price paid, without interest thereon.
Expenses
The Company will pay all transfer taxes applicable to the Warrant
Reduction Offer. The Company has not retained a dealer-manager or similar agent
in connection with the Warrant Exercise Offer and will not make any payments to
brokers, dealers or other persons for soliciting acceptances of the Warrant
Reduction Offer.
Questions
Please call Lisa A. Evans, Finance Administrator, at the Company (408)
361-0333 if you have questions about the exercise of your Warrants.
USE OF PROCEEDS
In the event that all Warrants are exercised at the Reduced Exercise
Price, the Company estimates that the net proceeds therefrom will be
approximately $300,000 after payment of approximately $2,000 in fees and other
expenses of the Warrant Reduction Offer. However, the number of Warrants
exercised depends on several factors beyond the control of the Company, and the
Company is therefore unable to predict the amount of net proceeds. Holders of
the Warrants are not obligated to exercise their Warrants, and there can be no
assurance of what percentage, if any, will be exercised.
The Company expects to use the net proceeds from the Warrant Reduction
Offer for working capital. A portion of the net proceeds may also be used to
obtain the right to use complementary technologies. However, the Company has no
present understandings, commitments, agreements or intentions with respect to
any such acquisitions.
The expected expenditures described above are management's best
estimates, based on currently available information. Actual expenditures could
vary depending on numerous factors, including the progress of the Company's
research and development efforts, and competitive and technological advances. If
the number of Warrants exercised pursuant to the Warrant Reduction Offer is
insufficient to fund the Company, it will require additional financing to
continue operations or could be forced to cease operations altogether. As of the
date hereof, the Company has no commitments or plans to obtain additional debt
or equity financing, and there is no assurance that such financing could be
obtained on terms acceptable to the Company.
11
<PAGE>
CERTAIN RECENT CONSIDERATIONS
Investment in the shares of Common Stock is speculative and involves a high
degree of risk. Holders of the Warrants should carefully review with their
financial, legal, tax and other advisers the information contained in the
reports and statements filed by the Company with the Commission and those
attached as Exhibits to this Statement. Prospective investors should also give
special consideration to the matters discussed in the Form 10-QSB for the
quarter ended June 30, 2000 attached as Exhibit C hereto, under the heading
"Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations - Other Factors Affecting Future Results".
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 60,000,000 shares
of Common Stock and 1,000,000 shares of preferred stock, no par value.
Warrants
In connection with a private placement of 2,377,909 Units on June 8, 1998,
the Company issued the Warrants entitling the holders thereof to purchase an
aggregate of 2,377,909 shares of Common Stock at an exercise price of $0.37 per
share. The outstanding Warrants are temporarily exercisable at the Reduced
Exercise Price of $0.175 or $0.155 per share during the Reduction Period and
thereafter are exercisable for $0.37 per share until May 28, 2005.
The Warrants do not confer on the Warrant holders any voting or any other
rights of a stockholder of the Company. They are not redeemable by the Company.
The number of shares of Common Stock issuable upon the exercise of each
Warrant is subject to adjustment upon the occurrence of certain events,
including a stock dividend, stock split, reverse stock split or other similar
event altering the number of outstanding shares of the Company's Common Stock.
In the case of a capital reorganization, consolidation, merger or sale of the
assets of the Company effected in such a way as to grant holders of Common Stock
shares of stock, securities or assets of another entity, each Warrant will
become exercisable to purchase the number of shares of stock or other securities
or property to which such holder would have been entitled had such holder
exercised his Warrant immediately prior to the consummation of such event.
12
<PAGE>
PRICE RANGE FOR THE COMMON STOCK
The Common Stock is currently traded on the OTC Bulletin Board under the
symbol SVRI. From April 1992 to September 1995, the Common Stock was traded on
the Bulletin Board, from September 1995 until February 1996 on the Nasdaq
SmallCap Market, and from February 1996 until November 1998 was traded on the
Nasdaq National Market. The following table sets forth, for the fiscal periods
indicated, the low and high closing sales prices for the Common Stock as
reported by Nasdaq and the OTC Bulletin Board. The Company had approximately
300 shareholders of record and approximately 5,200 beneficial holders as of
March 31, 2000.
<TABLE>
<CAPTION>
Fiscal 1999 quarter ended June 30 Sept. 30 Dec. 31 Mar. 31
------- -------- ------- -------
<S> <C> <C> <C> <C>
High $1.38 $0.66 $0.41 $0.34
Low $0.59 $0.19 $0.16 $0.13
Fiscal 2000 quarter ended June 30 Sept. 30 Dec. 31 Mar. 31
------- -------- ------- -------
High $0.19 $0.15 $1.28 $1.19
Low $0.10 $0.13 $0.12 $0.48
Fiscal 2000 quarter ended June 30 Sept. 30
------- --------
High $0.72 $0.70
Low $0.19 $0.16
</TABLE>
The prices set forth above reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent actual
transactions.
The Company has not declared or paid dividends on its Common Stock in
fiscal 1999, 2000 or 2001. Certain covenants in the Company's loan agreements
restrict the payment of dividends. The Company currently anticipates that it
will retain all future earnings for use in the operation and expansion of its
business and does not anticipate paying any cash dividends in the foreseeable
future.
LEGAL MATTERS
The legality of the shares of Common Stock is being passed upon by Silicon
Valley Law Group, a law corporation, San Jose, California.
13
<PAGE>
EXHIBIT A
SILICON VALLEY RESEARCH, INC.
WARRANT EXERCISE AGREEMENT
(For use solely in connection with the Warrant Reduction Offer)
Silicon Valley Research, Inc.
6360 San Ignacio Avenue
San Jose, CA 95119
Attn: Lisa A. Evans
Ladies and Gentlemen:
I hold a warrant to purchase common stock (the "Warrant") issued by Silicon
Valley Research, Inc., a California corporation (the "Company") pursuant to a
Unit Purchase Agreement dated as of May 29, 1998, among the Company and the
investors named therein (the "Unit Purchase Agreement"). I understand that I
may exercise the Warrant for all or a portion of the number of shares of common
stock, no par value, of the Company (the "Common Stock") stated in the Warrant
for a reduced cash exercise price of $0.__ per share (the "Reduced Exercise
Price"), as more fully described in the Warrant Reduction Offer Statement of the
Company dated October 13, 2000 (the "Warrant Reduction Offer"). I understand
that the Warrant Reduction Offer expires on October 20, 2000, unless extended or
terminated earlier by the Company.
I desire to exercise my Warrant to purchase the number of shares indicated
below upon the terms and subject to the conditions set forth in the Warrant
Reduction Offer. If I do not exercise the full amount of my Warrant, I
understand that I will receive a new warrant certificate representing the
balance of my Warrant not exercised.
I understand that if I choose to exercise my Warrant at the $0.155 Reduced
Exercise Price that I may not sell the shares acquired by the exercise for 60
days commencing on the Date of Exercise. I also understand that the certificate
representing such shares will bear the following legend:
THE TRANSFER, ASSIGNMENT OR OTHER HYPOTHECATION OF THESE SHARES IS SUBJECT
TO AN AGREEMENT BETWEEN THE SHAREHOLDER AND THE CORPORATION. THE SHARES MAY
NOT BE TRANSFERRED WITHOUT THE WRITTEN CONSENT OF THE CORPORATION.
I acknowledge that: (i) my purchase of the Common Stock is speculative and
involves a high degree of risk; (ii) the Warrant Reduction offer has not been
approved by the Securities and Exchange Commission (the "Commission") or any
state securities commission, and neither the Commission nor any state securities
commission has passed upon the accuracy or adequacy of the information contained
in the Warrant Reduction Offer; (iii) I have carefully reviewed the Warrant
Reduction Offer Statement with my financial, legal, tax and other advisers as I
have deemed necessary; and (iv) I have determined that the Common Stock is a
suitable investment for me.
14
<PAGE>
By signing this Warrant Exercise Agreement, I hereby confirm that my
representations and warranties contained in Section 2 of the Unit Purchase
Agreement are true and correct as of the date hereof as if such representations
and warranties applied to the Common Stock to be issued upon the exercise of my
Warrant.
I understand that the Reduced Exercise Price is payable only in cash or via
same-day-sale and that the payment methods set forth in Section 2(c)(A), (B),
and (D) of the Warrant are not permitted under the Warrant Reduction Offer. I
am enclosing my original Warrant and a check or immediately available funds in
accordance with the directions set forth below to acquire the Common Stock in
accordance with the instructions below:
Warrant Holder:________________________ Date of Exercise:________________
Social Security Number:________________ Exercise Price Per Share:________
Address:_______________________________ Total Exercise Price:____________
_______________________________________ Exact Name of Title for Shares:
_________________________________
If I am a natural person, I have also enclosed the signed Spouse Consent
form attached to this Warrant Exercise Agreement.
Name(s) and address(es) to whom the Common Stock shall be issued and
delivered if different than above:
____________________________________
____________________________________
____________________________________
____________________________________
THE COMPANY IS UNDER NO OBLIGATION TO REPORT THE EXERCISE OF THE WARRANT TO
THE INTERNAL REVENUE SERVICE OR ANY STATE OR LOCAL INCOME TAX AUTHORITY. THE
WARRANT HOLDER UNDERSTANDS THAT HE OR SHE MAY SUFFER ADVERSE TAX CONSEQUENCES AS
A RESULT OF HIS OR HER PURCHASE OR DISPOSITION OF THE SHARES. THE WARRANT
HOLDER REPRESENTS THAT HE OR SHE HAS CONSULTED WITH ANY TAX CONSULTANT(S) THE
WARRANT HOLDER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF
THE SHARES AND THAT THE WARRANT HOLDER IS NOT RELYING ON THE COMPANY FOR ANY TAX
ADVICE.
Sincerely yours,
___________________________
Name of Warrant Holder
By:________________________
Print Name:
Title:
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<PAGE>
Exercise by Mail: To properly exercise the Warrant by mail, please: (i)
complete and sign the Warrant Exercise Agreement in the form attached hereto as
Exhibit A, (ii) make a check or wire transfer payable to "Silicon Valley
Research, Inc." in the amount of the aggregate exercise price equal to $0.155 or
$0.175 per share, and (iii) forward the original Warrant, the Warrant Exercise
Agreement and your check (or wire transfer) to Silicon Valley Research, Inc. at
6360 San Ignacio Avenue, San Jose, California 95119, Attention: Lisa Evans, for
receipt at or prior to 5:00 p.m., Pacific Daylight Time, on the Expiration Date,
except as otherwise provided above. Please call Lisa A. Evans, Finance
Administrator, at the Company (408) 361-0333 if you have lost your Warrant to
arrange for replacement.
Wire Transfer Instructions: To wire funds directly to the Company, please
deliver the following wire transfer instructions to your bank and mail this
Warrant Exercise Agreement and your original Warrant to the Company, as
explained above:
SPOUSAL CONSENT
The undersigned spouse of the Warrant holder has read, understands and
hereby approves the Warrant Exercise Agreement between the Warrant holder and
the Company (the "Agreement"). In consideration of the Company's granting my
spouse the right to purchase the shares as set forth in the Agreement, the
undersigned hereby agrees to be irrevocably bound by the Agreement and further
agrees that any community property interest shall similarly be bound by the
Agreement. The undersigned hereby appoints the Warrant holder as my attorney-
in-fact with respect to any amendment or exercise of any rights under the
Agreement.
Date: ____________________ _________________________________
Spouse
Address: _________________________
_________________________
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