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Exhibit 10.42
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
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SENSORY SCIENCE CORPORATION
COMMON STOCK PURCHASE WARRANT
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This certifies that, for good and valuable consideration, Sensory
Science Corporation, a Delaware corporation (the "Company"), grants to SONICblue
Incorporated, a Delaware corporation ("SONICblue" or the "Warrantholder"), the
right to subscribe for and purchase from the Company the number of fully paid
and nonassessable shares (the "Warrant Shares") of the Company's Common Stock,
$0.001 par value (the "Common Stock") specified herein, at the purchase price
per share (the "Exercise Price") determined as set forth herein, exercisable,
subject to the restrictions set forth herein, during the period (the "Exercise
Period") set forth in Section 1.4 hereof, all subject to the terms, conditions
and adjustments herein set forth. This Warrant (the "Warrant") is issued in
connection with and pursuant to that certain Loan Agreement (the "Loan
Agreement"), dated as of January 31, 2001, by and between the Company and
SONICblue. Certain capitalized terms used herein are defined in Section 8
hereof. Capitalized terms used herein not otherwise defined herein shall have
the meanings assigned to them in the Loan Agreement.
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1. Exercise of Warrant.
1.1 Duration and Exercise of Warrant.
(a) Cash Exercise. This Warrant may be exercised by the Warrantholder
by (i) the surrender of this Warrant to the Company, with a duly executed
Exercise Form specifying the number of Warrant Shares to be purchased, during
normal business hours on any Business Day during the Exercise Period and (ii)
the delivery of payment to the Company, for the account of the Company, of the
Exercise Price for the number of Warrant Shares specified in the Exercise Form,
(A) by wire transfer of immediately available funds to a bank account specified
by the Company; (B) by certified or bank cashier's check; (C) by cancellation of
indebtedness under the Loan Agreement, or (D) of any other amount due to the
Warrantholder under any other contract (including any purchase order) pursuant
to which the Warrantholder does business with the Company not paid within twenty
(20) days of when due, or as otherwise mutually agreed to between the parties.
The Company agrees that such Warrant Shares shall be deemed to be issued to the
Warrantholder as the record holder of such Warrant Shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for the Warrant Shares as aforesaid. A stock certificate or
certificates for the Warrant Shares specified in the Exercise Form shall be
delivered to the Warrantholder as promptly as practicable. If this Warrant shall
have been exercised only in part, the Company shall, at the time of delivery of
the stock certificate or certificates, deliver to the Warrantholder a new
Warrant evidencing the rights to purchase the remaining Warrant Shares, which
new Warrant shall in all other respects be identical with this Warrant. No
adjustments shall be made on Warrant Shares issuable on the exercise of this
Warrant for any cash dividends paid or payable to holders of record of Common
Stock prior to the date as of which the Warrantholder shall be deemed to be the
record holder of such Warrant Shares.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to
Section 1.1(a), this Warrant may be exercised by the Warrantholder by the
surrender of this Warrant to the Company, with a duly executed Exercise Form
marked to reflect Net Issue Exercise and specifying the number of Warrant Shares
to be purchased, during normal business hours on any Business Day during the
Exercise Period. The Company agrees that such Warrant Shares shall be deemed to
be issued to the Warrantholder as the record holder of such Warrant Shares as of
the close of business on the date on which this Warrant shall have been
surrendered as aforesaid. Upon such exercise, the Warrantholder shall be
entitled to receive shares equal to the value of this Warrant (or the portion
hereof being exercised) computed as of the date of surrender of this Warrant to
the Company using the following formula:
X = Y x (A-B)
---------
A
Where X = the number of shares of Common Stock to be issued to Warrantholder
under this Section 1.1(b);
Y = the number of shares of Common Stock otherwise purchasable under
this Warrant (at the date of such calculation);
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A = the fair market value of one share of Common Stock (at the date
of such calculation);
B = the Exercise Price (as adjusted to the date of such
calculation).
(c) Fair Market Value. For purposes of Section 1.1(b) "fair market
value" of one share of Common Stock shall mean:
(i) the average closing price per share of the Common Stock on
the principal national securities exchange on which the Common Stock is
listed or admitted to trading for the ten (10) Trading Day period
ending on the date of exercise, or,
(ii) if not listed or traded on any such exchange, the average
last reported sales price per share of the Common Stock on the Nasdaq
National Market or The Nasdaq SmallCap Market (collectively, "Nasdaq")
for the ten (10) Trading Day period ending on the date of exercise, or,
(iii) if not listed or traded on any such exchange or Nasdaq, the
average of the mean of the bid and asked prices per share of the Common
Stock as reported in the OTC Bulletin Board or, if not so reported, in
the "pink sheets" published by the National Quotation Bureau, Inc. for
the ten (10) Trading Day period ending on the date of exercise, or,
(iv) if such quotations are not available, the fair market value
per share of the Common Stock on the date such notice was received by
the Company as reasonably determined by the Board of Directors of the
Company.
1.2 Number of Warrant Shares. This Warrant shall entitle the
Warrantholder to purchase shares of Common Stock.
1.3 Exercise Price. The Exercise Price shall be equal to $0.56 (the
"Exercise Price"). From and after the issuance of this Warrant, the Exercise
Price shall be adjusted in accordance with Section 6 hereof.
1.4 Term of Warrant and Exercisability.
(a) Term of Warrant. This Warrant shall terminate on the later of (i)
[the first anniversary of the advance under the Loan Agreement]; (ii) the date
on which the indebtedness of the Company to the Warrantholder under the Loan
Agreement is paid in full. Nothing in this Section 1.4(a), however, shall
require SONICblue or the Company to negotiate or enter into an agreement
providing for the merger of the Company with SONICblue (directly or indirectly),
and neither party shall have any liability for failing to do so. The parties'
rights and obligations under Sections 2, 8 and 9 hereof shall survive the
termination of this Warrant.
(b) Exercisability. This Warrant shall be immediately exercisable,
during the Exercise Period, in whole or in part.
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1.5 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Warrantholder as reflected upon the books of the
Company.
1.6 Information. Upon receipt of a written request from a
Warrantholder, the Company agrees to deliver promptly to such Warrantholder a
copy of its current publicly available financial statements and to provide such
other publicly available information concerning the Company as such
Warrantholder may reasonably request (if electronic access to such information
via XXXXX is not then generally available to the public) in order to assist the
Warrantholder in evaluating the merits and risks of exercising the Warrant and
to make an informed investment decision in connection with such exercise.
2. Registration Under the Securities Act of 1933.
2.1 Piggyback Registration.
(a) Right to Include Registrable Securities. If at any time or from
time to time prior to the fifth anniversary of the date hereof, the Company
proposes to register any of its securities under the Securities Act on any form
for the registration of securities under such Act, whether or not for its own
account (other than by a registration statement on Form S-8 or other form which
does not include substantially the same information as would be required in a
form for the general registration of securities or would not be available for
the Registrable Securities) (a "Piggyback Registration"), it shall as
expeditiously as reasonably possible give written notice to all Holders of its
intention to do so and of such Holders' rights under this Section 2.1. Such
rights are referred to hereinafter as "Piggyback Registration Rights." All
references to "Warrant Shares" and "Warrants" for purposes of this Article 2
shall refer to any such shares or warrants issued by the Company to SONICblue.
Upon the written request of any such Holder made within ten (10) days after
receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such Holder), the Company shall include
in the Registration Statement the Registrable Securities which the Company has
been so requested to register by the Holders thereof and the Company shall keep
such registration statement in effect and maintain compliance with each federal
and state law or regulation for the period necessary for such Holder to effect
the proposed sale or other disposition (but in no event for a period greater
than one hundred (180) days).
(b) Withdrawal of Piggyback Registration by Company. If, at any time
after giving written notice of its intention to register any securities in a
Piggyback Registration but prior to the effective date of the related
Registration Statement, the Company shall determine for any reason not to
register such securities, the Company shall give notice of such determination to
each Holder and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such Piggyback Registration. All best
efforts obligations of the Company pursuant to Section 2.4 shall cease if the
Company determines to terminate prior to such effective date any registration
where Registrable Securities are being registered pursuant to this Section 2.1.
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(c) Piggyback Registration of Underwritten Public Offerings. If a
Piggyback Registration involves an offering by or through underwriters, then (i)
all Holders requesting to have their Registrable Securities included in the
Company's Registration Statement must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to other selling stockholders and (ii) any Holder requesting to have his or its
Registrable Securities included in such Registration Statement may elect in
writing, not later than seven (7) Business Days prior to the effectiveness of
the Registration Statement filed in connection with such registration, not to
have his or its Registrable Securities so included in connection with such
registration.
(d) Payment of Registration Expenses for Piggyback Registration. The
Company shall pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to a Piggyback Registration Right
contained in this Section 2.1.
(e) Priority in Piggyback Registration. If a Piggyback Registration
involves an offering by or through underwriters, the Company, except as
otherwise provided herein, shall not be required to include Registrable
Securities therein if and to the extent the underwriter managing the offering
reasonably believes in good faith and advises each Holder requesting to have
Registrable Securities included in the Company's Registration Statement that
such inclusion would materially adversely affect such offering; provided that
(i) if other selling stockholders who are employees, officers, directors or
other affiliates of the Company have requested registration of securities in the
proposed offering, the Company will reduce or eliminate such other selling
stockholders' securities before any reduction or elimination of Registrable
Securities; and (ii) any such reduction or elimination (after taking into
account the effect of clause (i)) shall be pro rata to all other holders of the
securities of the Company exercising "Piggyback Registration Rights" similar to
those set forth herein in proportion to the respective number of shares they
have requested to be registered; and provided further, however, that in no event
shall the amount of Registrable Securities of the selling Holders included in
the offering be reduced below twenty-five percent (25%) of the total amount of
securities included in such offering.
2.2 Demand Registration.
(a) Request for Registration. If, at any time prior to the fifth
anniversary of the date hereof, Holders holding at least twenty-five percent
(25%) of the Registrable Securities request that the Company file a registration
statement on Form S-3 (or Form S-1 or Form S-2 if Form S-3 is not then available
to the Company) under the Securities Act, as soon as practicable thereafter the
Company shall use its best efforts to file a registration statement with respect
to all Warrant Shares that it has been so requested to include (the "Demand
Registration") and obtain the effectiveness thereof, and to take all other
action necessary under any federal or state law or regulation to permit the
Registrable Securities specified in the notices of the Holders thereof to be
sold or otherwise disposed of; provided, however, the Company shall be entitled
to defer such registration for a period of up to forty-five (45) days if and to
the extent that its Board of Directors shall determine that such registration
would interfere with a pending corporate transaction. The Company shall also
promptly give written notice to the Holders and the holders of any other
Warrants and/or the holders of any Warrant Shares who or that have not made a
request to the Company pursuant to the provisions of this Section 2.2(a) of its
intention to effect any required registration or qualification, and shall use
its best to effect as expeditiously as
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possible such registration or qualification of all such other Warrant Shares
that are then held and/or that may be acquired upon the exercise of the
Warrants, the Holders of which have requested such registration or qualification
within fifteen (15) days after such notice has been given by the Company. The
Company shall be required to effect a registration or qualification pursuant to
this Section 2.2(a) on a total of two (2) occasions.
(b) Payment of Registration Expenses for Demand Registration. The
Company shall pay all Registration Expenses in connection with the Demand
Registration.
(c) Selection of Underwriters. If the Demand Registration is requested
to be in the form of an underwritten offering, the managing underwriter shall be
selected by the Holders of a majority of the Registrable Securities to be
registered. Such selection shall be subject to the Company's consent, which
consent shall not be unreasonably withheld.
(d) Procedure for Requesting Demand Registration. Any request for a
Demand Registration shall specify the aggregate number of the Registrable
Securities proposed to be sold and the intended method of disposition. Within
ten (10) days after receipt of such a request the Company will give written
notice of such registration request to all Holders, and the Company will include
in such registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within fifteen (15)
Business Days after the date on which such notice is given by the Company. Each
such request shall also specify the aggregate number of Registrable Securities
to be registered and the intended method of disposition thereof.
2.3 Registration Procedures. If and whenever the Company is required to
use its commercially reasonable efforts to take action pursuant to any federal
or state law or regulation to permit the sale or other disposition of any
Registrable Securities that are then held or that may be acquired upon exercise
of the Warrants in order to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Section 2, the Company
shall, as expeditiously as practicable:
(a) prepare and file with the SEC, as soon as practicable within
forty-five (45) days after the end of the period within which requests for
registration may be given to the Company (but subject to the provision for
deferral contained in Section 2.2(a) hereof) a Registration Statement or
Registration Statements relating to the registration on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution thereof, subject to Section 2.1(e) hereof, and use its best efforts
to cause such Registration Statements to become effective; provided that before
filing a Registration Statement or Prospectus or any amendment or supplements
thereto, including documents incorporated by reference after the initial filing
of any Registration Statement, the Company will furnish to the Holders of the
Registrable Securities covered by such Registration Statement and the
underwriters, if any, copies of all such documents provided to be filed, which
documents will be subject to the review of such Holders and underwriters; and
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
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disposition by the sellers thereof set forth in such Registration Statement or
supplement to such Prospectus;
(b) prepare and file with the SEC such amendments and post-effective
amendments to a Registration Statement as may be necessary to keep such
Registration Statement effective for a period of one hundred eighty (180) days
or until the distribution contemplated in the Registration Statement has been
completed; provided, however, that (i) such 180-day period shall be extended for
a period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
securities of the Company, and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 180-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the Act governing the obligation to
file a post-effective amendment permit, in lieu of filing a post-effective
amendment that (x) includes any prospectus required by Section 10(a)(3) of the
Securities Act or (y) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference of information required to be included in (x) and
(y) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement;
(c) notify the selling Holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose; (iv) if at any time the representations and warranties of the Company
contemplated by paragraph (m) below cease to be true and correct in all material
respects; (v) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (vi) of the happening of any event that makes any statement of
a material fact made in the Registration Statement, the Prospectus or any
document incorporated therein by reference untrue or which requires the making
of any changes in the Registration Statement or Prospectus so that they will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriters, immediately
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters believe (on advice of counsel) should
be included therein as required by applicable law relating to such sale of
Registrable Securities, including, without limitation, information with respect
to the purchase price being paid for the Registrable Securities by such
underwriters and
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with respect to any other terms of the underwritten (or "best-efforts"
underwritten) offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
(f) furnish to each selling Holder of Registrable Securities and each
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary Prospectus) any amendment or supplement
thereto as such Persons may reasonably request; the Company consents to the use
of such Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities, cooperate
with the selling Holders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or underwriter reasonably requests in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Registration Statement;
provided that the Company will not be required to qualify to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject the Company to general service of process in any jurisdiction where it
is not at the time so subject;
(i) cooperate with the selling Holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters may
request at least two (2) Business Days prior to any sale of Registrable
Securities to the underwriters;
(j) use its commercially reasonable efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(k) upon the occurrence of any event contemplated by Section 2.3(c)(vi)
above, prepare a supplement or post-effective amendment to the applicable
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being
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sold thereunder, such that the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
(l) with respect to each issue or class of Registrable Securities, use
its best efforts to cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange, if any, on which similar
securities issued by the Company are then listed if requested by the Holders of
a majority of such issue or class of Registrable Securities;
(m) enter into such agreements (including an underwriting agreement)
and take all such other action reasonably required in connection therewith in
order to expedite or facilitate the disposition of such Registrable Securities
and in such connection, if the registration is in connection with an
underwritten offering (i) make such representations and warranties to the
underwriters, in such form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions in form, scope and substance shall be
reasonably satisfactory to the underwriters) addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
underwriters; (iii) obtain "cold comfort" letters and updates thereof from the
Company's accountants addressed to the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with underwritten offerings; (iv)
set forth in full in any underwriting agreement entered into the indemnification
provisions and procedures of Section 2.4 hereof with respect to all parties to
be indemnified pursuant to said Section; and (v) deliver such documents and
certificates as may be reasonably requested by the underwriters to evidence
compliance with clause (i) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company; the
above shall be done at each closing under such underwriting or similar agreement
or as and to the extent required hereunder;
(n) make available for inspection by one or more representatives of the
Holders of Registrable Securities being sold, any underwriter participating in
any disposition pursuant to such registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such representatives, in connection with such; and
(o) otherwise use its best efforts to comply with all applicable
federal and state regulations; and take such other action as may be reasonably
necessary to or advisable to enable each such Holder and each such underwriter
to consummate the sale or disposition in such jurisdiction or jurisdiction in
which any such Holder or underwriter shall have requested that the Registrable
Securities be sold.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities and such other
information as may otherwise be required by the Securities Act to be included in
such Registration Statement.
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2.4 Indemnification.
(a) Indemnification by Company. In connection with each Registration
Statement relating to disposition of Registrable Securities, the Company shall
indemnify and hold harmless each Holder and each underwriter of Registrable
Securities and each Person, if any, who controls such Holder or underwriter
(within the meaning of section 15 of the Securities Act or section 20 of the
Exchange Act) against any and all losses, claims, damages and liabilities, joint
or several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary Prospectus or any amendment
thereof or supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that such indemnity shall not inure to the benefit of any Holder or underwriter
(or any person controlling such Holder or underwriter within the meaning of
section 15 of the Securities Act or section 20 of the Exchange Act) on account
of any losses, claims, damages or liabilities arising from the sale of the
Registrable Securities if such untrue statement or omission or alleged untrue
statement or omission was made in such Registration Statement, Prospectus or
preliminary Prospectus, or such amendment or supplement, in reliance upon and in
conformity with information furnished in writing to the Company by such Holder
or underwriter specifically for use therein. The Company shall also indemnify
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of section 15 of the Securities
Act or section 20 of the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities, if
requested. This indemnity agreement shall be in addition to any liability which
the Company may otherwise have.
(b) Indemnification by Holder. In connection with each Registration
Statement, each Holder shall indemnify, to the same extent as the
indemnification provided by the Company in Section 2.4(a), the Company, its
directors and each officer who signs the Registration Statement and each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act) but only insofar as such losses, claims,
damages and liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in the
Registration Statement, the Prospectus or preliminary Prospectus or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
information furnished in writing by such Holder to the Company specifically for
use therein. In no event shall the liability of any selling Holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above, with respect to information
so furnished in writing by such Persons specifically
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for inclusion in any Prospectus, Registration Statement or preliminary
Prospectus or any amendment thereof or supplement thereto.
(c) Conduct of Indemnification Procedure. Any party that proposes to
assert the right to be indemnified hereunder will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 2.4(a) or 2.4(b) shall be available to
any party who shall fail to give notice as provided in this Section 2.4(c) if
the party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was materially prejudiced by the failure to
give such notice, but the omission so to notify such indemnifying party of any
such action, suit or proceeding shall not relieve it from any liability that it
may have to any indemnified party for contribution otherwise than under this
Section. In case any such action, suit or proceeding shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses, except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment of counsel by
such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnified party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.
(d) Contribution. In connection with each Registration Statement
relating to the disposition of Registrable Securities, if the indemnification
provided for in Section 2.4(a) or 2.4(b) hereof is unavailable to an indemnified
party thereunder in respect to any losses, claims, damages or liabilities
referred to therein, then the indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in paragraphs (a) or (b) of this Section 2.4
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to
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state a material fact relates to information supplied by the indemnifying party
or the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
(e) Underwriting Agreement to Control. Notwithstanding the foregoing
provisions of this Section 2.4, to the extent that the provisions on
indemnification and contribution contained in any underwriting agreement entered
into in connection with the underwritten public offering of the Registrable
Securities are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall control.
(f) Specific Performance. The Company and the Holder acknowledge that
remedies at law for the enforcement of this Section 2.4 may be inadequate and
intend that this Section 2.4 shall be specifically enforceable.
(g) Survival of Obligations. The obligations of the Company and the
Holder under this Section 2.4 shall survive the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this Article
2, and otherwise.
2.5 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
(b) 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;
and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, the Securities
Act and the Exchange Act, or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company and (iii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities without registration
or pursuant to such form.
2.6 Restrictions on Transfer; Compliance with Securities Laws. This
Warrant and the Warrant Shares issued upon the exercise of the Warrant may not
be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and transferee
(including the delivery of investment representation letters and legal
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opinions reasonably satisfactory to the Company, if such are requested by the
Company). The Warrantholder, by acceptance hereof, acknowledges that this
Warrant and the Warrant Shares to be issued upon exercise hereof are being
acquired solely for the Warrantholder's own account and not as a nominee for any
other party, and for investment, and that the Warrantholder will not offer, sell
or otherwise dispose of any Warrant Shares to be issued upon exercise hereof
except under circumstances that will not result in a violation of the Securities
Act or any state securities laws. Upon exercise of this Warrant, the
Warrantholder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the Warrantholder's own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale.
2.7 Restrictive Legends. This Warrant shall (and each Warrant issued
upon transfer in whole or in part of this Warrant pursuant to this Section 2 or
issued in substitution for this Warrant pursuant to Section 4 shall) be stamped
or otherwise imprinted with a legend in substantially the following form:
"THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
Except as otherwise permitted by this Section 2, each stock certificate for
Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT."
Notwithstanding the foregoing, the Warrantholder may require the
Company to issue a stock certificate for Warrant Shares without a legend if (i)
such Warrant Shares, as the case may be, have been registered for resale under
the Securities Act or sold pursuant to Rule 144 under the Securities Act (or a
successor rule thereto) or (ii) the Warrantholder has received an opinion of
counsel reasonably satisfactory to the Company that such registration is not
required with respect to such Warrant Shares.
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3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Warrantholder (except as otherwise may be
prohibited, restricted or limited by law or any rule or regulation of a
regulatory entity) as follows:
3.1 Organization; Authority Relative to this Warrant. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to execute and deliver this Warrant, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Warrant by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company. This Warrant has been
duly and validly executed and delivered by the Company and constitutes a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, and by general equitable principles.
3.2 Authority to Issue Shares. The Company has taken all necessary
corporate action to authorize and reserve and permit it to issue, and at all
times from the date hereof through the end of the Exercise Period shall have
reserved, all the Warrant Shares issuable pursuant to this Warrant. All of the
shares of Common Stock issuable under this Warrant, upon their issuance and
delivery in accordance with the terms of this Warrant, will be duly authorized,
validly issued, fully paid and nonassessable, will be delivered free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Warrantholder's voting rights, charges,
adverse rights and other encumbrances of any nature whatsoever (other than this
Warrant) and will not be subject to any preemptive rights.
3.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Warrant by the Company does not,
and the performance by the Company of its obligations hereunder and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the certificate of incorporation or bylaws of the Company, (ii)
assuming that all consents and filings described in Section 3.3(b) have been
obtained or made, conflict with or violate any law applicable to the Company or
by which any property or asset of the Company is bound or affected or (iii)
result in any violation pursuant to, any note, bond, mortgage, indenture,
contract, agreement , lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by which the Company or any of its
properties may be bound or affected.
(b) No consent of, or filing with, any governmental entity is required
by the Company in connection with the execution and delivery of this Warrant,
the performance by the Company of its obligations hereunder or the consummation
by the Company of the transactions contemplated hereby, except for (i)
compliance with the Xxxx-Xxxxx-Xxxxxx Act and (ii) consents or filings the
failure of which to be obtained or made would not, individually or in the
aggregate, prevent or materially delay the consummation of the transactions
contemplated hereby or the performance by the Company of any of its obligations
hereunder.
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3.4 Reservation and Registration of Shares, Etc. The Company covenants
and agrees that all Warrant Shares which are issuable upon the exercise of this
Warrant will, upon issuance, be validly issued, fully paid and nonassessable and
free from all taxes, liens, security interests, charges and other encumbrances
with respect to the issue thereof, other than taxes in respect of any transfer
occurring contemporaneously with such issue. The Company further covenants and
agrees that, during the Exercise Period, the Company will at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Warrant and will, at its expense, upon each such
reservation of shares, procure such listing of such shares of Common Stock
(subject to issuance or notice of issuance) as then may be required on all stock
exchanges on which the Common Stock is then listed or on Nasdaq.
4. Exchange, Loss or Destruction of Warrant. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, of
such bond or indemnification as the Company may require, and, in the case of
such mutilation, upon surrender and cancellation of this Warrant, the Company
will execute and deliver a new Warrant of like tenor. The term "Warrant" as used
in this Agreement shall be deemed to include any Warrants issued in substitution
or exchange for this Warrant.
5. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary.
6. Certain Adjustments.
6.1 Adjustments. The number of Warrant Shares purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
as follows:
(a) Stock Dividends. If at any time prior to the exercise of this
Warrant in full (i) the Company shall fix a record date for the issuance of any
stock dividend payable in shares of Common Stock or (ii) the number of shares of
Common Stock shall have been increased by a subdivision or split-up of shares of
Common Stock, then, on the record date fixed for the determination of holders of
Common Stock entitled to receive such dividend or immediately after the
effective date of subdivision or split-up, as the case may be, the number of
shares of Common Stock to be delivered upon exercise of this Warrant will be
increased so that the Warrantholder will be entitled to receive the number of
shares of Common Stock that such Warrantholder would have owned immediately
following such action had this Warrant been exercised immediately prior thereto,
and the Exercise Price will be adjusted as provided below in paragraph (f).
(b) Combination of Stock. If at any time prior to the exercise of this
Warrant in full the number of shares of Common Stock outstanding shall have been
decreased by a combination of the outstanding shares of Common Stock, then,
immediately after the effective date of such combination, the number of shares
of Common Stock to be delivered upon exercise of this Warrant will be decreased
so that the Warrantholder thereafter will be entitled to receive the number of
shares of Common Stock that such Warrantholder would have owned immediately
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following such action had this Warrant been exercised immediately prior thereto,
and the Exercise Price will be adjusted as provided below in paragraph (f).
(c) Reorganization, etc. If at any time prior to the exercise of this
Warrant in full any capital reorganization of the Company, or any
reclassification of the Common Stock, or any consolidation of the Company with
or merger of the Company with or into any other person or any sale, lease or
other transfer of all or substantially all of the assets of the Company to any
other person, shall be effected in such a way that the holders of Common Stock
shall be entitled to receive stock, other securities or assets (whether such
stock, other securities or assets are issued or distributed by the Company or
another person) with respect to or in exchange for Common Stock, then, upon
exercise of this Warrant the Warrantholder shall have the right to receive the
kind and amount of stock, other securities or assets receivable upon such
reorganization, reclassification, consolidation, merger or sale, lease or other
transfer by a holder of the number of shares of Common Stock that such
Warrantholder would have been entitled to receive upon exercise of this Warrant
had this Warrant been exercised immediately before such reorganization,
reclassification, consolidation, merger or sale, lease or other transfer,
subject to adjustments that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 6.
(d) Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued to any Warrantholder in connection with the exercise of this
Warrant. Instead of any fractional shares of Common Stock that would otherwise
be issuable to such Warrantholder, the Company will pay to such Warrantholder a
cash adjustment in respect of such fractional interest in an amount equal to
that fractional interest of the fair market value of one share of Common Stock
as of the date of exercise.
(e) Carryover. Notwithstanding any other provision of this Section 6,
no adjustment shall be made to the number of shares of Common Stock to be
delivered to the Warrantholder (or to the Exercise Price) if such adjustment
represents less than one percent (1%) of the number of shares to be so
delivered, but any lesser adjustment shall be carried forward and shall be made
at the time and together with the next subsequent adjustment which together with
any adjustments so carried forward shall amount to one percent (1%) or more of
the number of shares to be so delivered.
(f) Exercise Price Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of the Warrant is adjusted, as herein provided,
the Exercise Price payable upon the exercise of this Warrant shall be adjusted
by multiplying such Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant Shares
purchasable immediately thereafter.
(g) No Duplicate Adjustments. Notwithstanding anything else to the
contrary contained herein, in no event will an adjustment be made under the
provisions of this Section 6 to the number of Warrant Shares issuable upon
exercise of this Warrant or the Exercise Price for any event if an adjustment
having substantially the same effect to the Warrantholder as any adjustment that
otherwise would be made under the provisions of this Section 6 is made by the
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Company for any such event to the number of shares of Common Stock (or other
securities) issuable upon exercise of this Warrant.
6.2 No Adjustment for Dividends. Except as provided in Section 1
hereof or Section 6.1 hereof, no adjustment in respect of any dividends shall be
made during the term of the Warrant or upon the exercise of this Warrant.
6.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail by first class, postage prepaid, to the
Warrantholder, notice of such adjustment or adjustments and a certificate of the
chief financial officer of the Company setting forth the number of Warrant
Shares and the Exercise Price of such Warrant Shares after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made.
7. Notices of Corporate Action. In the event of:
(a) 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 or other distribution, or 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, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any Change of Control,
or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company,
the Company will mail to the Warrantholder a notice specifying (i) the date or
expected 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 any such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, Change of Control,
dissolution, liquidation or winding-up is to take place and the time, if any
such time is to be fixed, as of which the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for the securities or other property deliverable upon such
reorganization, reclassification, recapitalization, Change of Control,
dissolution, liquidation or winding-up. Such notice shall be mailed at least ten
(10) days prior to the date therein specified, in the case of any date referred
to in the foregoing subdivision (i), and at least ten (10) days prior to the
date therein specified, in the case of the date referred to in the foregoing
subdivision (ii).
8. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Business Day: any day other than a Saturday, Sunday or a day on which
national banks are authorized by law to close in the City of San Francisco,
State of California.
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Change of Control: shall mean (i) the consolidation of the Company with
or merger of the Company with or into any other person in which the Company is
not the surviving corporation or in which the Company's stockholders prior to
such transaction do not own, directly or indirectly, immediately after such
transaction, fifty percent (50%) or more of the outstanding securities entitled
to vote generally for the election of directors or similar managing authority of
the surviving or resulting entity in such transaction, (ii) the sale of all or
substantially all of the assets of the Company to any other person or (iii) any
sale or transfer of any capital stock of the Company after the date of this
Warrant, following which forty (40%) or more of the combined voting power of the
Company becomes beneficially owned by one person or group acting together. For
purposes of this definition of Change of Control, "group" shall have the meaning
as such term is used in Section 13(d) under the Exchange Act and the rules and
regulations thereunder.
Company: the meaning specified on the cover of this Warrant.
Exchange Act: the Securities Exchange Act of 1934, as amended, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Securities Exchange Act of 1934, as amended, shall include a
reference to a comparable section, if any, of any successor federal statute.
Exercise Form: an Exercise Form in the form annexed hereto as Exhibit
A.
Exercise Price: the meaning specified in Section 1.3, as such price may
be adjusted pursuant to Section 6 hereof.
Holder: shall mean a holder of Registrable Securities.
Nasdaq: the meaning specified in Section 1.1(c)(ii).
Person: shall mean an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
Prospectus: shall mean any prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the Prospectus, including post-effective amendments and all material
incorporated by reference in such Prospectus.
Registration Expenses: shall mean any and all expenses incurred in
connection with any registration or action incident to performance of or
compliance by the Company with Article 2, including, without limitation, (i) all
SEC, national securities exchange and NASD registration and filing fees; all
listing fees and all transfer agent fees; (ii) all fees and expenses of
complying with state securities or blue sky laws (including the fees and
disbursements of counsel of the underwriters in connection with blue sky
qualifications of the Registrable Securities); (iii) all printing, mailing,
messenger and delivery expenses, (iv) all fees and disbursements of counsel for
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the Company and of its accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such performance and
compliance, and (v) any disbursements of underwriters customarily paid by
issuers or sellers of securities including the reasonable fees and expenses of
any special experts retained in connection with the requested registration, but
excluding underwriting discounts and commissions, brokerage fees and transfer
taxes, if any, and fees of counsel or accountants retained by the Holders of
Registrable Securities to advise them in their capacity as Holders of
Registrable Securities.
Registrable Securities: shall mean any Warrant Shares issued to the
Warrantholder, and/or other securities that may be or are issued by the Company
upon exercise of this Warrant, including those which may thereafter be issued by
the Company in respect of any such securities by means of any stock splits,
stock dividends, recapitalizations, reclassifications or the like, and as
adjusted pursuant to Article 6 hereof; provided, however, that as to any
particular security contained in Registrable Securities, such securities shall
cease to be Registrable Securities when (i) a Registration Statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such Registration Statement; or (ii) they shall have been sold to the
public pursuant to Rule 144 (or any successor provision) under the Securities
Act.
Registration Statement: shall mean any registration statement of the
Company filed or to be filed with the SEC which covers any of the Registrable
Securities pursuant to the provisions of this Warrant, including all amendments
(including post-effective amendments) and supplements thereto, all exhibits
thereto and all material incorporated therein by reference.
SEC: the Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act or the Exchange Act, whichever is
the relevant statute for the particular purpose.
Securities Act: the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any successor federal statute.
Trading Day: any day other than a day on which securities are not
traded, listed or reported on the principal securities exchange or securities
market on which the Common Stock is traded, listed or reported.
Warrantholder: the meaning specified on the cover of this Warrant.
Warrant Shares: the meaning specified on the cover of this Warrant,
subject to the provisions of Section 1 and Section 6 hereof.
9. Miscellaneous.
9.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant.
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9.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company and the Warrantholder and their
respective successors. Nothing in this Warrant, expressed or implied, is
intended to or shall confer on any person other than the Company and the
Warrantholder, or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Warrant.
9.3 Restrictions on Transferability. Subject to the terms and
conditions of this Warrant and compliance with all applicable securities laws,
this Warrant and all rights hereunder (and any shares of common stock acquired
upon exercise of this Warrant) may be transferred in whole or in part, only (a)
to a wholly owned subsidiary of the Warrantholder, or (b) in a sale effectuated
pursuant to Rule 144 promulgated under the Securities Act, or (c) in an offering
registered under section 5 of the Securities Act.
9.4 Amendments and Waivers. This Warrant may not be modified or
amended except by an instrument or instruments in writing signed by the Company
and the Warrantholder. Either the Company or the Warrantholder may, by an
instrument in writing, waive compliance by the other party with any term or
provision of this Warrant on the part of such other party hereto to be performed
or complied with. The waiver by any such party of a breach of any term or
provision of this Warrant shall not be construed as a waiver of any subsequent
breach.
9.5 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
9.6 Further Assurances. Each of the Company and the Warrantholder shall
do and perform all such further acts and things and execute and deliver all such
other certificates, instruments and documents as the Company or the
Warrantholder may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Agreement.
9.7 Notices. All notices and other communications required or
permitted to be given under this Warrant shall be in writing and shall be deemed
to have been duly given if delivered personally or sent by United States mail,
postage prepaid, or by facsimile (with electronic confirmation of successful
transmission) to the parties hereto at the following addresses or to such other
address as any party hereto shall hereafter specify by notice to the other party
hereto:
(a) if to the Company, Sensory Science Corporation
addressed to: 0000 Xxxx XxXxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: President and Chief
Executive Officer
Telecopier: ___________________
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(b) if to the Warrantholder, SONICblue Incorporated
addressed to: 0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attention: President and Chief
Executive Officer
Telecopier: (000) 000-0000
Except as otherwise provided herein, all such notices and communications shall
be deemed to have been received on the date of delivery thereof, if delivered
personally, or on the third Business Day after the mailing thereof.
9.8 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Warrant or
affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
9.9 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware (irrespective of its choice of law
principles).
9.10 No Rights or Liabilities as Stockholder. Nothing contained in this
Warrant shall be determined as conferring upon the Warrantholder any rights as a
stockholder of the Company or as imposing any liabilities on the Warrantholder
to purchase any securities whether such liabilities are asserted by the Company
or by creditors or stockholders of the Company or otherwise.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Dated: January 31, 2001.
SENSORY SCIENCE CORPORATION
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
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EXHIBIT A
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase Warrant Shares and (check one):
/ / herewith tenders payment for _______ of the Warrant Shares to
the order of Sensory Science Corporation in the amount of
$_________ in accordance with the terms of this Warrant; or
/ / herewith tenders this Warrant for _______ Warrant Shares
pursuant to the Net Issue Exercise provisions of Section
1.1(b) of the Warrant.
The undersigned requests that a certificate (or certificates) for such
Warrant Shares be registered in the name of the undersigned and that such
certificate (or certificates) be delivered to the undersigned's address below.
In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the Warrant Shares are being acquired solely for the account
of the undersigned and not as a nominee for any other party, or for investment,
and that the undersigned will not offer, sell or otherwise dispose of any such
Warrant Shares except under circumstances that will not result in a violation of
the Securities Act of 1933, as amended, or any state securities laws.
Dated: ___________________.
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Signature
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(Print Name)
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(Street Address)
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(City) (State) (Zip Code)
If said number of shares shall not be all the shares purchasable under
the within Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder.
A-1
