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EXHIBIT 10.35
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE
TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
COMMON STOCK WARRANT
OF
EUPHONIX, INC.
This Warrant is being issued pursuant to that certain Secured Promissory
Note, dated September 7, 2000 (the "Note"), by and between Euphonix, Inc., a
California corporation (the "Company"), and the Lender (as defined therein).
This certifies that, for value received, Walter Bosch (the
"Warrantholder") is entitled, on the terms and subject to conditions set forth
below, to subscribe for and purchase from the Company at the Warrant Price
defined in Section 2 below, the number of shares of fully paid and
non-assessable shares of the Company's Common Stock (the "Common Stock") equal
to the number of shares of Common Stock to be issued to the Warrantholder
pursuant to section B.5 of the Note (the "Warrant Shares"). Such Warrant Price
and such number of Warrant Shares shall be subject to adjustment upon occurrence
of the contingencies set forth in this Warrant.
Upon delivery of this Warrant (with the Notice of Exercise in the form
attached as Attachment A), together with payment of the Warrant Price for the
Warrant Shares thereby purchased, which payment may be made by converting this
Warrant or any portion thereof pursuant to Section 3 below) ("Warrant
Conversion"), at the principal office of the Company or at such other office or
agency as the Company may designate by notice in writing to the holders hereof,
the holder of this Warrant shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased. All Warrant Shares which may
be issued upon the exercise of this Warrant will, upon issuance, be fully paid
and non-assessable and free from all taxes, liens and charges with respect
thereto.
This Warrant is subject to the following terms and conditions:
1. Term of Warrant. This Warrant may be exercised in whole or in part,
at any time after issuance and prior to the earlier to occur of (i) 5:00 p.m.,
Pacific Time, on the five-year
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anniversary of the date of this Warrant, and (ii) five business days prior to
the estimated closing date of an Acquisition (as defined below) (the "Term");
provided, however, that in the event this Warrant is exercised, in whole or in
part, in connection with an Acquisition, such exercise by the Warrantholder may
be conditioned upon the consummation of the Acquisition if so indicated by the
Warrantholder pursuant to the Notice of Exercise. For purposes of this Warrant,
"Acquisition" shall mean a sale of substantially all of the assets of the
Company, or a merger or consolidation of the Company with or into another
corporation or entity, pursuant to which the stockholders immediately prior to
such merger or consolidation hold less than 50% of the voting equity securities
of the surviving or acquiring entity immediately following such merger or
consolidation. Upon the expiration of the Term, this Warrant, to the extent not
exercised, shall terminate.
2. Warrant Price. The exercise price of this Warrant (the "Warrant
Price") shall equal the "Purchase Price" (as defined in the Note).
3. Method of Exercise.
(a) Cash Exercise. The purchase rights represented by this
Warrant may be exercised by the Warrantholder, in whole or in part, by the
surrender of this Warrant (with the duly executed Notice of Exercise attached as
Attachment A) at the principal office of the Company, and by the payment to the
Company, by certified or cashier's check, wire transfer or other acceptable
means to the Company, of an amount equal to the aggregate Warrant Price of the
Warrant Shares being purchased.
(b) Net Issue Exercise. In lieu of exercising this Warrant for
cash under Section 3(a) above, the Warrantholder may elect to receive Warrant
Shares equal to the value of this Warrant (or the portion thereof being
cancelled) by surrender of this Warrant at the principal office of the Company
and specification of such election on the Notice of Election, in which event the
Company shall issue to the Warrantholder a number of Warrant Shares computed
using the following formula:
X = Y(A-B)
------
A
Where X = the number of Warrant Shares to be issued to the
Warrantholder.
Y = the number of Warrant Shares for which this Warrant is
then being exercised.
A = the fair market value of one share of the Company's
Common Stock.
B = the Warrant Price (as adjusted to the date of such
calculation).
For purposes of this Section 3(b), the fair market value of the
Company's Common Stock shall mean the average closing ask prices of the
Company's Common Stock quoted on the Nasdaq National Market or Nasdaq Small Cap
Market, or the closing prices quoted on any exchange on which the Common Stock
is listed, whichever is applicable, as published in the Western Edition of
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The Wall Street Journal for the 30 trading days prior to the date of
determination of fair market value.
4. Adjustment of Warrant Price and Number of Warrant Shares. The number
and kind of Warrant Shares purchasable upon the exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time in accordance
with the following provisions:
(a) Reclassification or Consolidation. In case of any
reclassification, consolidation or change of outstanding securities of the class
issuable upon exercise of this Warrant (other than as a result of a subdivision
or combination), the Company shall execute a new Warrant, providing that the
holder of this Warrant shall have the right to exercise such new Warrant, and
procure upon such exercise in lieu of each Warrant Share previously issuable
upon exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification or change
by a holder of one Warrant Share. 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 4. The provisions of this Section 4(a) shall
similarly apply to successive reclassifications, consolidations or changes.
(b) Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price shall be proportionately decreased
in the case of a sub-division or increased in the case of a combination.
(c) Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price as contemplated under Section 4(b) above, the number of Warrant
Shares purchasable hereunder shall be adjusted, to the nearest whole share, to
the product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Warrant Price by a fraction, the numerator of
which shall be the Warrant Price immediately prior to such adjustment and the
denominator of which shall be the Warrant Price immediately thereafter.
5. Registration Rights. The Warrant Shares to be issued to the
Warrantholder upon exercise of this Warrant shall be granted Form S-3 (or other
appropriate form) registration rights pursuant to that certain Registration
Rights Agreement (the "Rights Agreement"), dated as of _____________, by and
between the Company and the Lender (as defined in the Rights Agreement).
(a) Notices. Upon (i) any adjustment of the Warrant Price and any
increase or decrease in the Warrant Shares purchasable upon the exercise of this
Warrant, or (ii) a proposed Acquisition, the Company shall give written notice
of such adjustment and increase/decrease promptly thereafter, or, in the event
of an Acquisition, at least ten business days prior to estimated closing date of
the Acquisition, to the registered holder of this Warrant (a "Notice"). The
Notice shall be mailed to the address of such holder as shown on the books of
the Company and shall state (i) the Warrant Price as adjusted and/or the
increased or decreased number of Warrant Shares purchasable upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation of
each, or (ii) the terms and estimated timing of the proposed Acquisition, as the
case may be.
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6. Miscellaneous.
(a) The terms of this Warrant shall be binding upon and shall
inure to the benefit of any successors or assigns of the Company and of any
permitted assigns of the Warrantholder. Neither this Warrant nor any right or
obligation hereunder may be transferred by the Warrantholder, except in
compliance with Section 1 of the Rights Agreement.
(b) No holder of this Warrant, as such, shall be entitled to vote
or receive dividends or be deemed to be a stockholder of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the holder of this Warrant, as such, any rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action,
receive notice of meetings or receive dividends, or otherwise.
(c) Receipt of this Warrant by the holder hereof shall constitute
acceptance of and agreement to the foregoing terms and conditions.
(d) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or distribution, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company at its expense will execute and deliver, in lieu thereof, a new
Warrant of like date and tenor.
(e) Any provision of this Warrant may be amended, waived or
modified upon the written consent of the Company and the Warrantholder;
provided, however, that the holders of the Warrants issued under the Purchase
Agreement representing a majority of the Warrant Shares issued or issuable upon
exercise of such Warrants may amend, waive or modify any provision of the
Warrants on behalf of all holders of the Warrants (including the Warrantholder).
(f) This Warrant shall be governed by the internal substantive
laws, but not the choice of law rules, of the State of California.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Dated: _________, 200_
EUPHONIX, INC.
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Steve Vining, Chief Executive Officer
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ATTACHMENT A
NOTICE OF EXERCISE
TO: Euphonix, Inc.
220 Portage Avenue
Palo Alto, CA 94306
Attn: Chief Executive Officer
1. The undersigned hereby elects to purchase ___________ shares of the
Common Stock of Euphonix, Inc. (the "Shares") pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full, together with all applicable transfer taxes, if any.
2. The undersigned hereby elects to exercise the purchase right with
respect to ______% of such shares of such Common Stock through Warrant
Conversion, as set forth in Section 3(b) of the attached Warrant.
3. Please issue a certificate(s) representing such shares of Common
Stock in the name of the undersigned or in such other name as is specified
below:
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(Name)
---------------------------------
---------------------------------
(Address)
4. If the attached Warrant is being exercised in connection with an
Acquisition, the undersigned hereby notifies Euphonix, Inc., by indicating
below, that its exercise hereunder is conditioned upon the consummation of the
Acquisition and, in the event the consummation of the Acquisition does not
occur, this Notice of Exercise shall be canceled and deemed null and void.
__________ The undersigned hereby states that its exercise of the
attached Warrant is conditioned upon the consummation of the
Acquisition and, in the event the consummation of the Acquisition
does not occur, this Notice of Exercise shall be canceled and
deemed null and void.
5. If the undersigned is electing to purchase the Shares prior to such
Shares being registered under the Securities Act of 1933, as amended (the
"Securities Act"), the undersigned represents that the Shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
Shares. In support thereof, the undersigned will execute the Investment
Representation Statement attached as Exhibit A. In the event the undersigned is
electing to purchase the Shares after such Shares have
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been registered under the Securities Act pursuant to a registration statement
declared effective by the Securities and Exchange Commission, the undersigned
will execute a modified Investment Representation Statement reasonably
satisfactory to the Company.
Signature of Warrantholder
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By:
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Title:
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Date:
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EXHIBIT A
THIS STATEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO EUPHONIX, INC.
ALONG WITH THE NOTICE OF EXERCISE BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THE ATTACHED WARRANT WILL BE ISSUED.
EUPHONIX, INC.
WARRANT EXERCISE
INVESTMENT REPRESENTATION STATEMENT
PURCHASER: Walter Bosch
COMPANY: Euphonix, Inc.
SECURITY: Common Stock
NUMBER OF SHARES: _______________
DATE :_______________, 200__
In connection with the purchase of the above-listed Securities, the
Purchaser represents to the Company the following:
(a) It has substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to the Company so that
it is capable of evaluating the merits and risks of its investment in the
Company and has the capacity to protect its own interests. It acknowledges that
its investment in the Company is highly speculative and entails a substantial
degree of risk and it is in a position to lose the entire amount of such
investment.
(b) It is acquiring the Securities for investment for its own account,
not as a nominee or agent, and not with the view to, or for resale in connection
with, any distribution thereof. It understands that the Securities have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
but instead are issued pursuant to a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
its representations as expressed herein. It is an "accredited investor" within
the meaning of Regulation D, Rule 501(a), promulgated by the Securities and
Exchange Commission.
(c) It acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of
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certain current public information about the Company, the resale occurring not
less than one year after a party has purchased and paid for the security to be
sold, the sale being effected through a "broker's transaction" or in
transactions directly with a "market maker" and the number of shares being sold
during any three-month period not exceeding specified limitations.
(d) It understands that no public market may exist for any of the
Securities and that the Company has made no assurances that a public market may
exist for the Securities.
(e) It has had an opportunity to discuss the Company's business,
management and financial affairs with its management. It has also had an
opportunity to ask questions of officers of the Company, which questions were
answered to its satisfaction. It understands that such discussions, as well as
any written information issued by the Company, were intended to describe certain
aspects of the Company's business and prospects but were not a thorough or
exhaustive description. It acknowledges that any business plans prepared by the
Company have been and continue to be subject to change and that such business
plans are necessary speculative in nature, and it can be expected that some or
all of the assumptions used in such plans may not materialize or may vary
significantly from actual results.
(f) It understands that the certificates evidencing the Securities may
be imprinted with legend(s) which prohibit the transfer of the Securities unless
they are registered or such registration is not required in the opinion of
counsel for the Purchaser, reasonably satisfactory to the Company, or unless the
Company receives a no-action letter from the SEC.
The following legends may be placed on the certificate(s) for the
Securities, or any substitutions therefor:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY.
(g) In connection with any public offering of the Company's securities,
it agrees, upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
of the Securities (other than those included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time
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(not to exceed 90 days) from the effective date of such registration as may be
requested by the underwriters.
(h) In accepting the transfer of the above-listed Securities, it agrees
to be bound by the terms and conditions of that certain Registration Rights
Agreement, dated ____________, as the same may be amended from time to time, by
and between the Company and the Purchasers (as defined in such Agreement).
Signature of Purchaser:
By:
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Title:
--------------------------------
Date:
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