Contract
Exhibit 4.3
THIS WARRANT AND THE SHARES PURCHASABLE HEREUNDER HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THIS WARRANT AND THE SHARES PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH
BELOW IN SECTION 6 BELOW CONTAINED IN THAT CERTAIN SONICS, INC. SERIES C PREFERRED STOCK PURCHASE
AGREEMENT, DATED MARCH 14, 2004, WHICH RESTRICTIONS ON TRANSFER ARE INCORPORATED HEREIN BY
REFERENCE AS SET FORTH IN SECTION 6 BELOW.
Warrant No. C-17
|
Dated: Xxxxx 00, 0000 |
This certifies that Xxxxxxx & Company, or assigns (collectively, the “Holder”), for value
received, is entitled to purchase from Sonics, Inc., a Delaware corporation (the “Company”), up to
Two Hundred Thousand (200,000) shares of fully paid and nonassessable shares of the Company’s
Series C Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock” and the shares
of Series C Preferred Stock subject to this Warrant, hereinafter the “Warrant Shares”), at an
exercise price of $1.00 per Warrant Share (the “Stock Purchase Price”) which shall be subject to
adjustment pursuant to Section 4 hereof.
This Warrant shall be exercisable at any time from time to time from and after the date hereof
(such date being referred to herein as the “Initial Exercise Date”) up to and including 5:00 p.m.
(Pacific Time) on the fifth year anniversary of the date hereof (referred to herein as the
“Expiration Date”), upon surrender to the Company at its principal office (or at such other
location as the Company may advise the Holder in writing) of this Warrant properly endorsed with
(i) the Form of Subscription attached hereto duly completed and executed, (ii) payment pursuant to
Section 2 of the aggregate Stock Purchase Price for the number of shares for which this Warrant is
being exercised determined in accordance with the provisions hereof, and (iii) any documents
reasonably requested by the Company to be executed by the Holder as if Holder were an investor in
the Series C Preferred Stock Financing (as defined below), including without limitation, an
investors’ rights agreement, a right of first refusal and co-sale agreement, a voting agreement,
and an investment representation statement, substantially in the form attached hereto as
Schedule 1, thereby agreeing to be bound by all obligations and receive all rights
thereunder. The Stock Purchase Price and the number of shares purchasable hereunder are subject to
adjustment as provided in Section 4 of this Warrant. For purposes of this Warrant, the “Series C
Preferred Stock Financing” shall mean the sale by the Company of shares of its Series C
Preferred Stock pursuant to the Sonics, Inc. Series C Preferred Stock Purchase Agreement dated
1
as
of March 14, 2004 by and among the Company and the investors set forth on the signature pages
thereto (the “Agreement”).
1. Exercise; Issuance of Certificates; Acknowledgement. This Warrant is exercisable
at the option of the holder of record hereof, at any time or from time to time from or after the
Initial Exercise Date up to the Expiration Date for all or any part of the Warrant Shares (but not
for a fraction of a share) which may be purchased hereunder. The Company agrees that the shares of
Series C Preferred Stock purchased under this Warrant shall be and are deemed to be issued to the
Holder hereof as the record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered, properly endorsed, the completed, executed Form of
Subscription delivered and payment made for such shares. Certificates for the shares of the Series
C Preferred Stock so purchased, together with any other securities or property to which the Holder
hereof is entitled upon such exercise, shall be delivered to the Holder hereof by the Company at
the Company’s expense within a reasonable time after the rights represented by this Warrant have
been so exercised. Each certificate so delivered shall be in such denominations of the Warrant
Shares as may be requested by the Holder hereof and shall be registered in the name of such Holder.
In case of a purchase of less than all the Warrant Shares, the Company shall execute and deliver
to Holder within a reasonable time an Acknowledgement in the form attached hereto indicating the
number of Warrant Shares which remain subject to this Warrant, if any.
2. Payment for Shares. The aggregate purchase price for Warrant Shares being
purchased hereunder may be paid either (i) by cash or wire transfer of immediately available funds,
(ii) by surrender of a number of Warrant Shares which have a fair market value equal to the
aggregate purchase price of the Warrant Shares being purchased (“Net Issuance”) as determined
herein, or (iii) any combination of the foregoing. If the Holder elects the Net Issuance method of
payment, the Company shall issue to Holder upon exercise a number of shares of Warrant Shares
determined in accordance with the following formula:
| X= | Y(A-B)
|
| where: X = | the number of Warrant Shares to be issued to the Holder; | |||
| Y = | the number of Warrant Shares with respect to which the Holder is exercising its purchase rights under this Warrant; | |||
| A = | the fair market value of one (1) share of the Warrant Shares on the date of exercise; and | |||
| B = | the Stock Purchase Price. |
No fractional shares arising out of the above formula for determining the number of shares to
be issued to the Holder shall be issued, and the Company shall in lieu thereof make payment to the
Holder of cash in the amount of such fraction multiplied by the fair market value
of one (1) share of the Warrant Shares on the date of exercise. For purposes of the above
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calculation, the fair market value of one (1) share of the Warrant Shares shall mean (a) if the
date of exercise is after the commencement of trading of the Common Stock on a securities exchange
or over-the-counter but prior to the closing of the initial public offering of the Company’s Common
Stock pursuant to a registration statement under the Securities Act of 1933, as amended (the
“IPO”), the price per share to the public set forth on the final prospectus relating to the IPO,
multiplied by the number of shares of Common Stock into which each share of the Warrant Shares is
then convertible, (b) if the Common Stock is then traded on a securities exchange, the average of
the closing prices of such Common Stock on such exchange over the thirty (30) calendar day period
(or portion thereof) ending three (3) days prior to the date of exercise, multiplied by the number
of shares of Common Stock into which each share of the Warrant Shares is then convertible, (c) if
the Common Stock is then regularly traded over-the-counter, the average of the closing sale prices
or secondarily the closing bid of such Common Stock over the thirty (30) calendar day period (or
portion thereof) ending three (3) days prior to the date of exercise, multiplied by the number of
shares of Common Stock into which each share of the Warrant Shares is then convertible, or (d) if
there is no active public market for the Common Stock, the fair market value of one share of the
Warrant Shares as determined in good faith by the Board of Directors of the Company.
3. Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees
that all shares of Series C Preferred Stock which may be issued upon the exercise of the rights
represented by this Warrant (together with all shares of Common Stock issuable upon conversion of
such Series C Preferred Stock) will, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable and free from all preemptive rights of any stockholder and free of all taxes,
liens and charges with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be exercised, the Company
will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise
of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized
but unissued shares of Series C Preferred Stock (together with the number of shares of Common Stock
issuable upon conversion of such Series C Preferred Stock), or other securities and property, when
and as required to provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Stock Purchase Price and Number of Shares. The Stock Purchase Price
and the number of shares purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the occurrence of certain events described in this Section 4.
Upon each adjustment of the Stock Purchase Price, the Holder of this Warrant shall thereafter be
entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of
shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such
adjustment.
4.1 Conversion of Preferred Stock. If all of the outstanding Preferred Stock of the
Company is converted into shares of Common Stock, then this Warrant shall automatically become
exercisable for that number of shares of Common Stock equal to the
number of shares of Common Stock that would have been received if this Warrant had been
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exercised
in full and the shares of Preferred Stock received thereupon had been simultaneously converted into
shares of Common Stock immediately prior to such event, and the Stock Purchase Price shall be
automatically adjusted to equal the number obtained by dividing (i) the aggregate Stock Purchase
Price of the shares of Preferred Stock for which this Warrant was exercisable immediately prior to
such conversion, by (ii) the number of shares of Common Stock for which this Warrant is exercisable
immediately after such conversion
4.2 Subdivisions, Combinations and Dividends. In case the Company shall at any time
subdivide its outstanding shares of Series C Preferred Stock into a greater number of shares or pay
a dividend in Series C Preferred Stock in respect of outstanding shares of Series C Preferred
Stock, the Stock Purchase Price in effect immediately prior to such subdivision or at the record
date of such dividend shall be proportionately reduced, and conversely, in case the outstanding
shares of the Series C Preferred Stock of the Company shall be combined into a smaller number of
shares, the Stock Purchase Price in effect immediately prior to such combination shall be
proportionately increased.
4.3 Reclassification. If any reclassification of the capital stock of the Company
shall be effected in such a way that holders of Series C Preferred Stock shall be entitled to
receive stock, securities, or other assets or property, then, as a condition of such
reclassification, lawful and adequate provisions shall be made whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the Series C Preferred
Stock immediately theretofore purchasable and receivable upon the exercise of the rights
represented hereby) such shares of stock, securities or other assets or property as may be issued
or payable with respect to or in exchange for a number of outstanding shares of such Series C
Preferred Stock equal to the number of shares of such Series C Preferred Stock immediately
theretofore purchasable and receivable upon the exercise of the rights represented hereby. In any
reclassification described above, appropriate provision shall be made with respect to the rights
and interests of the Holder of this Warrant to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Stock Purchase Price and of the number of
shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof.
4.4 Notice of Adjustment. Upon any adjustment of the Stock Purchase Price or any
increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the
Company shall give written notice thereof, by first class mail postage prepaid, addressed to the
registered Holder of this Warrant at the address of such Holder as shown on the books of the
Company. The notice shall be signed by the Company’s chief financial officer and shall state the
Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the
number of shares purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such calculation is based.
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4.5 Other Notices. If at any time:
(1) the Company shall declare any cash dividend upon its Series C Preferred Stock (or Common
Stock issuable upon conversion thereof);
(2) there shall be any capital reorganization or reclassification of the capital stock of the
Company; or consolidation or merger of the Company with, or sale of all or substantially all of its
assets to, another corporation or other business entity;
(3) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the
Company; or
(4) there shall be an IPO;
then, in any one or more of said cases, the Company shall give, by first class mail, postage
prepaid, addressed to the Holder of this Warrant at the address of such Holder as shown on the
books of the Company, (a) at least twenty (20) days prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend or for determining
rights to vote in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or public
offering, at least twenty (20) days prior written notice of the date when the same shall take
place; provided, however, that the Holder shall make a best efforts attempt to respond to such
notice as early as possible after the receipt thereof. Any notice given in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend, the date on which the
holders of Series C Preferred Stock (or Common Stock issuable upon conversion thereof) shall be
entitled thereto. Any notice given in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Series C Preferred Stock (or Common Stock issuable upon conversion
thereof) shall be entitled to exchange their Series C Preferred Stock (or Common Stock issuable
upon conversion thereof) for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up, conversion or
public offering, as the case may be.
5. No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed
as conferring upon the Holder hereof the right to vote or to consent to receive notice as a
stockholder of the Company or any other matters or any rights whatsoever as a stockholder of the
Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the
interest represented hereby or the shares purchasable hereunder until, and only to the extent that,
this Warrant shall have been exercised.
6. Warrants Transferable. Subject to compliance with applicable federal and state
securities laws and the transfer restrictions set forth in the “Agreement” with respect to the
Series C Preferred Stock which shall apply equally to this Warrant and the underlying Warrant
Shares, in connection with which this Warrant was issued, this Warrant and all rights hereunder may
be transferred, in whole or in part, without charge to the holder hereof (except for transfer
taxes), upon the prior written consent of the Company and, thereafter, upon surrender of this
Warrant properly endorsed and in compliance with the provisions of the Agreement. Each taker
5
and
holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when
endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Warrant shall
have been so endorsed, may be treated by the Company, at the Company’s option, and all other
persons dealing with this Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented by this Warrant, or to the transfer hereof on the books
of the Company and notice to the contrary notwithstanding; but until such transfer on such books,
the Company may treat the registered owner hereof as the owner for all purposes.
7. Lost Warrants. 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 destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in
the case of any such mutilation upon surrender and cancellation of such Warrant, the Company, at
its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
8. Modification and Waiver. Any term of this Warrant may be amended and the
observance of any term of this Warrant (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and the Holder. Any
amendment or waiver effected in accordance with this paragraph shall be binding upon the Company
and the Holder.
9. Notices. Except as may be otherwise provided herein, all notices, requests,
waivers and other communications made pursuant to this Warrant shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) the
next business day when sent by facsimile to the number set forth below with confirmation of receipt
verifying successful transmission of the facsimile; (c) three business days after deposit in the
U.S. mail with first class or certified mail receipt requested, postage prepaid and addressed to
the other party at the address set forth below; or (d) the next business day after deposit with a
national overnight delivery service, postage prepaid, addressed to the parties as set forth below
with next business day delivery guaranteed, provided that the sending party receives a confirmation
of delivery from the delivery service provider. A party may change or supplement the addresses
given above, or designate additional addresses, for purposes of this Section 9 by giving the other
party written notice of the new address in the manner set forth above.
10. Titles and Subtitles; Governing Law; Venue. The titles and subtitles used in
this Warrant are used for convenience only and are not to be considered in construing or
interpreting this Warrant. This Warrant is to be construed in accordance with and governed by the
internal laws of the State of California without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the Company and the Holder. All disputes and controversies
arising out of or in connection with this Warrant shall be resolved exclusively by the state and
federal courts located in Santa Xxxxx County in the State of California and each of the Company and
the Holder hereto agrees to submit to the jurisdiction of said courts and agrees that venue shall
lie exclusively with such courts.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers,
thereunto duly authorized as of the date first above written.
| SONICS, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Xxxxx X. Xxxxxx, President | ||||
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FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To:
|
Sonics, Inc. | |
| 0000 Xxxx Xx Xxxxxx Xxxx, Xxxxx 000 | ||
| Xxxxxxxx Xxxx, Xx 00000 |
The undersigned, the holder of a right to purchase shares of Series C Preferred Stock of
Sonics, Inc. (the “Company”) pursuant to that certain Warrant to Purchase Series C Preferred Stock
of Sonics, Inc. (the “Warrant”), dated as of March 14, 2004, hereby irrevocably elects to exercise
the purchase right represented by such Warrant for, and to purchase thereunder,
( )
shares of Series C Preferred Stock of the Company and
herewith makes payment of Dollars ($
) therefor by the
following method:
(Check one of the following):
(check if applicable)
|
The undersigned hereby elects to make payment of Dollars ($ ) therefor in cash. |
|
(check if applicable)
|
The undersigned hereby elects to make payment for the aggregate exercise price of this exercise using the Net Issuance method pursuant to Section 2 of the Warrant. |
The undersigned represents that the aforesaid shares 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 has executed an Investment Representation
Statement attached hereto as Schedule 1.
DATED: |
||||||||||
| [name of Holder] | ||||||||||
| By: | ||||||||||
| Name: | ||||||||||
| Its: | ||||||||||
8
ACKNOWLEDGMENT
To: [name of Holder]
The undersigned hereby acknowledges that as of the date hereof,
( ) shares of Series C Preferred Stock remain subject to the right of purchase in favor
of [name of Holder] pursuant to that certain Warrant to Purchase Series C Preferred Stock of
Sonics, Inc., dated as of March 14, 2004.
DATED: |
||||||||||
| SONICS, INC. | ||||||||||
| By: | ||||||||||
| Name: | ||||||||||
| Its: | ||||||||||
9
Schedule 1
INVESTMENT REPRESENTATION STATEMENT
Purchaser:
|
Xxxxxxx & Company | |
Company:
|
Sonics, Inc. | |
Security:
|
Warrant to Purchase Series C Preferred Stock | |
Amount:
|
200,000 shares of Series C Preferred Stock | |
Date:
|
March 14, 2004 |
In connection with the purchase of the above-listed securities (collectively, the
“Securities”), the undersigned (the “Purchaser”) represents to the Company as
follows:
(a) The Purchaser is aware of the Company’s business affairs and financial condition, and has
acquired sufficient information about the Company to reach an informed and knowledgeable decision
to acquire the Securities. The Purchaser is purchasing the Securities for its own account for
investment purposes only and not with a view to, or for the resale in connection with, any
“distribution” thereof for purposes of the Securities Act of 1933, as amended (the “Act”).
(b) The Purchaser understands that the Securities have not been registered under the Act in
reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of the Purchaser’s investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange Commission (“SEC”),
the statutory basis for such exemption may be unavailable if the Purchaser’s representation was
predicated solely upon a present intention to hold these Securities for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or until an increase or decrease in
the market price of the Securities, or for a period of one year or any other fixed period in the
future.
(c) The Purchaser further understands that the Securities must be held indefinitely unless
subsequently registered under the Act or unless an exemption from registration is otherwise
available. Moreover, the Purchaser understands that the Company is under no obligation to register
the Securities. In addition, the Purchaser understands that the certificate evidencing the
Securities will be imprinted with the legend referred to in the Warrant under which the Securities
are being purchased.
(d) The Purchaser is aware of the provisions of Rule 144, promulgated under the Act, which, in
substance, permit limited public resale of “restricted securities” acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering
subject to the satisfaction of certain conditions, if applicable, including, among other things:
The availability of certain public information about the Company, the resale occurring not less
than one year after the party has purchased and paid for the securities to be sold; the sale being
made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a
market maker (as said term is defined under the Securities Exchange Act of 1934, as
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amended) and the amount of securities being sold during any three-month period not exceeding
the specified limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to sell the Securities there
may be no public market upon which to make such a sale, and that, even if such a public market then
exists, the Company may not be satisfying the current public information requirements of Rule 144,
and that, in such event, the Purchaser may be precluded from selling the Securities under Rule 144
even if the one-year minimum holding period had been satisfied.
(f) The Purchaser further understands that in the event all of the requirements of Rule 144
are not satisfied, registration under the Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than pursuant to Rule 144
will have a substantial burden of proof in establishing that an exemption from registration is
available for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
Purchaser:
|
/s/ Xxxx X. Xxxxxxxx
|
|||
| Managing Director and | ||||
| Chief Financial Officer | ||||
Date:
|
6/15/04 |
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