1
EXHIBIT 10.8
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OR CONVERSION OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
WHILE SUCH A REGISTRATION IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OR CONVERSION OF
THIS WARRANT ARE ENTITLED TO CERTAIN REGISTRATION RIGHTS AND TO CERTAIN
OTHER BENEFITS AND SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN A WARRANT
AND DEBENTURE COMMITMENT DATED MARCH 7, 1997 AND IN A REGISTRATION RIGHTS
AGREEMENT AND A TAG-ALONG, TRANSFER RESTRICTION AND BRING-ALONG AGREEMENT,
EACH DATED AS OF NOVEMBER 28, 1995, AND AS FROM TIME TO TIME AMENDED AND IN
EFFECT. THE COMPANY WILL FURNISH A COPY OF SUCH AGREEMENTS TO THE HOLDER OF
THIS WARRANT WITHOUT CHARGE UPON WRITTEN REQUEST.
NEW ENGLAND AUDIO CO., INC.
COMMON STOCK PURCHASE WARRANT
No. CG-1 March 7, 1997
New England Audio Co., Inc., a Massachusetts corporation (the "COMPANY"),
for value received, hereby certifies that Weston Presidio Offshore Capital C.V.,
or registered assigns, is entitled to purchase from the Company duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock, no par
value (the "COMMON STOCK"), of the Company at the purchase price per share of
$4.24 (the "INITIAL WARRANT PRICE"), at any time or from time to time prior to
5:00 p.m., Boston, Massachusetts time, on June 30, 2002 (the
2
"EXPIRATION DATE"), all subject to the terms, conditions and adjustments set
forth below in this Warrant. This Warrant is one of the Common Stock Purchase
Warrants (the "WARRANTS", such term to include any such warrants issued in
substitution therefor) originally issued pursuant to a Warrant and Debenture
Commitment dated March 7, 1997 (as from time to time in effect, the "WARRANT AND
DEBENTURE COMMITMENT") among the Company, the holder hereof and certain other
original holders of Warrants. This Warrant originally evidences rights to
purchase an aggregate of 4,509 shares of Common Stock, subject to adjustment as
provided herein, on the Original Issue Date (the "ORIGINAL SHARE AMOUNT"). The
number of shares of Common Stock that this Warrant evidences rights to purchase
from time to time shall be increased by the Original Share Amount on March 31,
1997 and on the last day of each month thereafter during which any holder of
Warrants remains obligated to purchase 10% Convertible Subordinated Debentures
due June 30, 2000 issued by the Company (the "DEBENTURES") under the Warrant and
Debenture Commitment; PROVIDED, HOWEVER, that in the event such purchase
obligation is terminated during any month, the increase for such month shall be
prorated based on the number of days during such month that such purchase
obligation remains in effect. Promptly upon the termination of such purchase
obligation the Company shall provide a certificate to the holder hereof stating
the number of shares of Common Stock for which this Warrant is exercisable and
offering to furnish a replacement Warrant bearing such number of shares on its
face.
1. DEFINITIONS.
"ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common Stock issued
(or, pursuant to Section 3.1.3 or 3.1.4, deemed to be issued) by the Company
after the Original Issue Date, other than shares of Common Stock issued or
issuable at any time:
(a) upon the issuance or exercise or conversion of the Warrants in
accordance with their terms;
(b) upon the issuance or conversion of the Debentures in accordance
with their terms;
(c) upon the issuance or exercise or conversion of the warrants
referred to in section 2.2 of the Debentures in accordance with their terms;
(d) and excluded from the definition of "Additional Shares of Common
Stock" in section 8.4.1 (d) of the Certificate of Designation;
(e) upon the issuance or exercise or conversion of Warrants for up to
2% of the Company's outstanding shares of Common Stock on a fully diluted basis
at a nominal exercise price issued by the Company to the sellers in the
Company's acquisition of businesses approved by the Company's Board of Directors
and consummated prior to July 1, 1997; or
-2-
3
(f) by way of dividend or other distribution on shares of capital
stock excluded from the definition of "Additional Shares of Common Stock" by the
foregoing clauses (a) through (e).
"BOOK VALUE" means the Company's consolidated shareholders' equity per
share of Common Stock on a fully diluted basis (assuming the exercise of all
Warrants, the conversion of all Series A Preferred Stock into Common Stock and
the exercise of all other then exercisable options, warrants and other purchase
rights), determined in accordance with generally accepted accounting principles,
as of the end of its fiscal quarter most recently completed prior to the date of
determination.
"BUSINESS DAY" means any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in Boston, Massachusetts or New York, New
York are authorized by law to be closed.
"CERTIFICATE OF DESIGNATION" means the Certificate of Vote of Directors
Establishing a Series of a Class of Stock of New England Audio Co., Inc. filed
by the Company as of November 28, 1995, as from time to time in effect.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMMON STOCK" is defined in the preamble.
"COMPANY" is defined in the preamble, and includes any corporation which
shall succeed to or assume the obligations of the Company hereunder in
compliance with Section 3.
"CONVERTIBLE SECURITIES" means any indebtedness, shares or other securities
convertible into or exchangeable for Common Stock, other than the Series A
Preferred Stock.
"CURRENT MARKET PRICE" means, on any date, the average daily Market Price
during the period of the most recent 20 days, ending on such date, on which the
national securities exchanges were open for trading, except that if no class of
the Common Stock is then listed or admitted to trading on any national
securities exchange or quoted in the over-the-counter market, the Current Market
Price shall be the Market Price on such date. ,
"DEBENTURES" is defined in the preamble.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
-3-
4
"EXPIRATION DATE" is defined in the preamble.
"INITIAL WARRANT PRICE" is defined in the preamble.
"MARKET PRICE" means, on any date, the amount per share of Common Stock
equal to (a) the last sale price of Common Stock, regular way, on such date or,
if no such sale takes place on such date, the average of the closing bid and
asked prices thereof on such date, in each case as officially reported on the
principal national securities exchange on which Common Stock is then listed or
admitted to trading, or Go) if Common Stock is not then listed or admitted to
trading on any national securities exchange but is designated as a national
market system security by the NASD, the last trading price of Common Stock on
such date, or (c) if no trading occurred on such date or if Common Stock is not
so designated, the average of the closing bid and asked prices of Common Stock
on such date as shown by the NASD automated quotation system, or (d) if Common
Stock is not then listed or admitted to trading on any national exchange'. or
quoted in the over-the-counter market, the higher of (i) Book Value or (ii) the
fair value thereof determined in good faith by the Board of Directors of the
Company as of a date which is within 15 days of the date as of which the
determination is to be made.
"NASD" means the National Association of Securities Dealers, Inc.
"Options" means rights, options or warrants to subscribe for, purchase or
otherwise acquire either Common Stock or Convertible Securities.
"ORIGINAL ISSUE DATE" means March 7, 1997.
"ORIGINAL SHARE AMOUNT" is defined in the Preamble.
"OTHER SECURITIES" means any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 3 or otherwise.
"PERSON" means a corporation, an association, a partnership, an
organization, a business trust, a limited liability company, a trust, an
individual, a government or political subdivision thereof or a governmental
agency.
"PREEMPTIVE Group" is defined in Section 10.1 of the Certificate of
Designation.
-4-
5
"PURCHASE AGREEMENT" means the Preferred Stock Purchase Agreement dated as
of November 28, 1995 (as from time to time in effect) among the Company and the
preferred stock purchasers named therein.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated as of November 28, 1995, among the Company and certain of its
stockholders, as from time to time in effect.
"SECURITIES ACT" means the Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"SERIES A PREFERRED STOCK" means the Company's Series A Redeemable
Convertible Preferred Stock, no par value, issued pursuant to the Purchase
Agreement.
"WARRANT AND DEBENTURE COMMITMENT" is defined in the preamble.
"WARRANT PRICE" is defined in Section 3.1.
"WARRANT SHARES" means the shares of Common Stock or Other Securities
issuable upon exercise or conversion of this Warrant.
"WARRANTS" is defined in the preamble.
2. EXERCISE OR CONVERSION OF WARRANT.
2.1. MANNER OF EXERCISE OR CONVERSION; PAYMENT.
2.1.1. EXERCISE. This Warrant may be exercised by the holder hereof,
in whole or in part, during normal business hours on any Business Day on or
prior to the Expiration Date, by surrender of this Warrant to the Company
at its office maintained pursuant to Section 6.2(a), accompanied by a
subscription in substantially the form attached to this Warrant duly
executed by such holder and accompanied by payment, in cash or by check
payable to the order of the Company, in the amount obtained by multiplying
(a) the number of shares of Common Stock (without giving effect to any
adjustment thereof) designated in such subscription by (b) the Initial
Warrant Price, and such holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully paid and nonassessable
Warrant Shares determined as provided in Section 3.
-5-
6
2.1.2. CONVERSION. This Warrant may be converted by the holder hereof,
in whole or in part, into Warrant Shares, during normal business hours on
any Business Day on or prior to the Expiration Date by surrender of this
Warrant to the Company at its office maintained pursuant to Section 6.2(a),
accompanied by a conversion notice in substantially the form attached to
this Warrant duly executed by such holder, and such holder shall thereupon
be entitled to receive a number of duly authorized, validly issued, fully
paid and nonassessable Warrant Shares equal to:
(a) an amount equal to:
(i) an amount equal to (A) the number of Warrant Shares
determined as provided in Section 3 which such holder
would be entitled to receive upon exercise of this
Warrant for the number of shares of Common Stock
designated in such conversion notice MULTIPLIED BY (B)
the Current Market Price of each such Warrant Share so
receivable upon such exercise
MINUS
(ii) an amount equal to (A) the number of shares of Common
Stock (without giving effect to any adjustment thereof)
designated in such conversion notice MULTIPLIED BY (B)
the Initial Warrant Price
DIVIDED BY
(b) such Current Market Price of each such Warrant Share.
For all purposes of this Warrant (other than this Section 2.1), any
reference herein to the exercise of this Warrant shall be deemed to include
a reference to the conversion of this Warrant into Warrant Shares in
accordance with the terms of this Section 2.1.2.
2.2. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall be deemed
to have been effected immediately prior to the close of business on the Business
Day on which this Warrant shall have been surrendered to the Company as provided
in Section 2.1, and at such time the Person in whose name any certificate for
Warrant Shares shall be issuable upon such exercise as provided in Section 2.3
shall be deemed to have become the holder of record thereof.
2.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable after each
exercise of
-6-
7
this Warrant, in whole or in part, and in any event within five Business Days
thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the holder hereof or, subject to Section 5, as such holder (upon payment by
such holder of any applicable transfer taxes) may direct:
(a) a certificate for the number of duly authorized, validly
issued, fully paid and nonassessable Warrant Shares to which such
holder shall be entitled upon such exercise PLUS, in lieu of any
fractional share to which such holder would otherwise be entitled, cash
in an amount equal to the same fraction of the Market Price per share
on the Business Day immediately preceding the date of such exercise;
and
(b) in case such exercise is in part only, a new Warrant of like
tenor, dated the date hereof and calling in the aggregate on the face
thereof for the number of shares of Common Stock equal (without giving
effect to any adjustment thereof) to the number of such shares called
for on the face of this Warrant minus the number of such shares
designated by the holder upon such exercise as provided in Section 2.1.
2.4. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the time of each
exercise of this Warrant, upon the request of the holder hereof, acknowledge in
writing its continuing obligation to afford to such holder all rights (including
any rights pursuant to the Registration Rights Agreement with respect to the
Warrant Shares issued upon such exercise) to which such holder shall continue to
be entitled after such exercise in accordance with the terms of this Warrant;
PROVIDED, HOWEVER, that if the holder of this Warrant shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford such rights to such holder.
3. ADJUSTMENT OF WARRANT SHARES AND WARRANT PRICE.
3.1. ADJUSTMENT OF WARRANT SHARES AND WARRANT PRICE DUE TO ADDITIONAL
SHARES. The number of Warrant Shares which the holder of this Warrant shall be
entitled to receive upon the exercise hereof shall be determined by multiplying
the number of shares of Common Stock which would otherwise (but for the
provisions of this Section 3.1) be issuable upon such exercise, as designated by
the holder hereof pursuant to Section 2.1, by the fraction of which (a) the
numerator is the Initial Warrant Price and (b) the denominator is the Warrant
Price in effect on the date of such exercise. The "WARRANT PRICE" shall
initially be the Initial Warrant Price, but shall be adjusted and readjusted
from time to time as provided in this Section 3.1 and, as so adjusted or
readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by this Section 3.1.
3.1.1. NO ADJUSTMENT OF WARRANT PRICE. No adjustment in the Warrant
Price shall be made in respect of the issuance of Additional Shares of
Common Stock unless the consideration per share for an Additional Share of
Common Stock issued or deemed
-7-
8
to be issued by the Company is less than the applicable Warrant Price in
effect on the date of, and immediately prior to, such issue.
3.1.2. ADJUSTMENT OF WARRANT PRICE UPON ISSUANCE OF ADDITIONAL SHARES
OF COMMON STOCK. In the event the Company shall issue Additional Shares of
Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Section 3.1.4) for a consideration per share less than
the applicable Warrant Price in effect on the date of and immediately
prior to such issue, then the applicable Warrant Price shall be recomputed,
concurrently with such issue (calculated to the nearest one hundredth of a
cent) by dividing (a) an amount equal to the sum of (i) the number of
shares of Common Stock outstanding immediately prior to such issue
multiplied by the then effective Warrant Price and (ii) the consideration,
if any, deemed received by the Company upon such issue by (b) the total
number of shares of Common Stock deemed to be outstanding immediately after
such issue; and provided that, for purposes of this Section 3.1.2, all
shares of Common Stock outstanding and issuable upon conversion of
outstanding Options, Convertible Securities and the Series A Preferred
Stock shall be deemed to be outstanding. In no event will the Warrant Price
be adjusted as the result of any issuance of any Additional Shares of
Common Stock for any amount higher than the Warrant Price in effect
immediately prior to such issuance.
3.1.3. ADJUSTMENTS FOR SUBDIVISIONS, STOCK DIVIDENDS, COMBINATIONS OR
CONSOLIDATION OF COMMON STOCK. In the event the outstanding shares of
Common Stock shall be increased by way of stock issued as a dividend for no
consideration or subdivided (by stock split or otherwise) into a greater
number of shares of Common Stock, the Warrant Price then in effect shall,
concurrently with the effectiveness of such increase or subdivision, be
proportionately decreased. In the event the outstanding shares of Common
Stock shall be combined or consolidated, by reclassification or otherwise,
into a lesser number of shares of Common Stock, the Warrant Price then in
effect shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
3.1.4. DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK - OPTIONS AND
CONVERTIBLE SECURITIES. In the event the Company at any time after the
Original Issue Date shall issue any Options or Convertible Securities other
than such Options or Convertible Securities which are exchangeable,
issuable, exercisable or convertible into Common Stock which is excluded
from the definition of Additional Common Stock, or shall fix a record date
for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number
of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for a subsequent adjustment of such
number) of Common Stock issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be
-8-
9
deemed to be Additional Shares of Common Stock issued as of the time of
such issue or, in case such a record date shall have been fixed, as of the
close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 3.1.5) of such
Additional Shares of Common Stock would be less than the applicable Warrant
Price in effect on the date of, and immediately prior to, such issue, or
such record date, as the case may be, and PROVIDED FURTHER that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(a) no further adjustment in the applicable Warrant Price shall
be made upon the subsequent issue of shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities or upon the subsequent issue of such Convertible Securities
or Options;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Company, or any increase
or decrease in the number of shares of Common Stock issuable, upon the
exercise, conversion or exchange thereof, the applicable Warrant Price
computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments
based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar
as it affects such Options or the rights of conversion or exchange
under such Convertible Securities; and
(c) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall
not have been exercised, the applicable Warrant Price computed upon
the original issue thereof (or upon the occurrence of a record date
with respect thereto), and any subsequent adjustments based thereon
shall, upon such expiration, be recomputed as if such unexercised
portion of such Options or rights of conversion or exchange under such
Convertible Securities had not been issued.
3.1.5. DETERMINATION OF CONSIDERATION. For purposes of this Section
3.1, the consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(a) CASH AND PROPERTY: Such consideration shall:
(i) insofar as it consists of cash, be computed at the aggregate
amount of net cash proceeds received by the Company excluding unpaid
amounts payable for accrued interest or accrued dividends;
-9-
10
(ii) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors of the Company; and
(iii) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the
Company for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (i) and
(ii) above, which is allocated to the Additional Shares of Common
Stock as determined in good faith by the Board of Directors.
(b) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per share
received by the Company for Additional Shares of Common Stock deemed to
have been issued pursuant to Section 3.1.4, relating to Options and
Convertible Securities, shall be determined by dividing
(i) the total amount, if any, received or receivable by the
Company as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent
adjustment of such consideration but subject to later readjustment
pursuant to Section 3.1.4) payable to the Company upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities by
(ii) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number but
subject to later readjustment pursuant to Section 3.1.4) issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities.
3.1.6. OTHER DILUTIVE EVENTS. In case any event shall occur as to
which the other provisions of this Section 3.1 are not strictly applicable,
but the failure to make any adjustment in the Warrant Price would not
fairly protect the rights represented by this Warrant in accordance with
the intention of this Section 3, then, upon request of the holders of a
majority of the Warrants, the Board of Directors of the Company shall
appoint a firm of independent public accountants of recognized national
standing
-10-
11
(which may be the regular auditors of the Company) to give their opinion as
to the adjustment, if any, on a basis consistent with the intention of this
Section 3, necessary to preserve without dilution the rights represented by
the Warrants. Upon receipt of such opinion, the Company will promptly
furnish a copy thereof to the holders of the Warrants and the Warrant Price
shall be adjusted in accordance therewith. The fees and expenses of such
accountants shall be paid by the Company; PROVIDED, HOWEVER, that if such
accountants opine that no adjustment is necessary, such fees and expenses
will be paid by the holders of the Warrants.
3.2. SUBSEQUENT EVENTS. In the event of any recapitalization, consolidation
or merger of the Company or its successor, the Warrants shall be exercisable for
such shares or other interests as the Warrants would have been entitled if the
Warrants had been exercised for Common Stock immediately prior to such event.
4. COVENANTS.
4.1. NO IMPAIRMENT. The Company will not seek to avoid the observance or
performance of any of the terms to be observed or performed under this Warrant
by the Company, but will at all times in good faith assist in carrying out all
the provisions of this Warrant.
4.2. RESERVATION OF SHARES. So long as any Warrants shall remain
outstanding, the Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized capital stock, for the purpose of
issuance upon exercise of the Warrants, the full number of shares of Common
Stock then issuable upon exercise of all outstanding Warrants. If the Company's
Common Stock shall be listed on any national stock exchange, the Company at its
expense shall include in its listing application all of the shares of Common
Stock reserved for issuance upon exercise of the Warrants (subject to issuance
or notice of issuance to the exchange) and will similarly procure the listing of
any further Common Stock reserved for issuance upon exercise of the Warrants at
any subsequent time as a result of adjustments in the outstanding Common Stock
or otherwise.
4.3. VALIDITY OF SHARES. The Company will from time to time take all such
action as may be required to assure that all shares of Common Stock which may be
issued upon exercise of this Warrant will, upon issuance, be legally and validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issuance thereof. Without limiting the generality of the
foregoing, the Company will from time to time take all such action as may be
required to assure that the par value per share, if any, of the Common Stock is
at all times equal to or less than the lowest quotient obtained by dividing the
then current exercise price of this Warrant by the number of shares of Common
Stock into which this Warrant can, from time to time, be exercised.
-11-
12
4.4. NOTICE OF CERTAIN EVENTS. If at any time:
(a) the Company shall declare any dividend or distribution payable to
the holders of its Common Stock;
(b) the Company shall offer for subscription pro rata to the holders
of Common Stock any additional shares of stock of any class or any other
rights;
(c) there shall be any recapitalization 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 business
organization; or
(d) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company as a whole or substantially as a whole in a
single transaction or a series of related transactions;
then, in any one or more of such cases, the Company shall give the registered
holder of this Warrant written notice, by registered mail, of the date on which
a record shall be taken for such dividend, distribution or subscription rights
or for determining stockholders entitled to vote upon such recapitalization,
consolidation, merger, sale, dissolution, liquidation or winding up and of the
date when any such transaction shall take place, as the case may be. Such notice
shall also specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution or subscription rights, or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such recapitalization, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. Such written notice
shall be given 20 days prior to the record date with respect thereto.
5. RESTRICTIONS ON TRANSFER.
Each certificate for Warrant Shares issued upon the exercise of any
Warrant, each certificate issued upon the direct or indirect transfer of any
Warrant Shares and each Warrant issued upon direct or indirect transfer or in
substitution for any Warrant pursuant to Section 6 shall be transferable only
upon satisfaction of the conditions specified in section 7 of the Warrant and
Debenture Commitment and shall be stamped or otherwise imprinted with legends in
substantially the form set forth on the face of this Warrant or otherwise
required by section 7 of the Warrant and Debenture Commitment.
The holder understands and agrees that: (1) there are substantial
restrictions on the transferability of this Warrant; (2) this Warrant has not
been registered under the Securities Act and it may not be sold, pledged,
transferred or otherwise disposed of unless it is so registered or an exemption
from such registration is available and unless any such proposed
-12-
13
sale, pledge, transfer or disposition is effected in compliance with state
securities laws; (3) this Warrant may only be registered under the Securities
Act by the Company; (4) there is no trading market for this Warrant; (5) the
Warrant has been issued to the holder in reliance upon an exemption from the
registration requirements of the Securities Act afforded to private offerings;
and (6) in light of the foregoing, the holder may not be able to liquidate its
investment in this Warrant at any given time, and the holder must be prepared to
bear that economic risk.
6. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS.
6.1. OWNERSHIP OF WARRANTS. The Company may treat the person in whose name
any Warrant is registered on the register kept at the office of the Company
maintained pursuant to Section 6.2(a) as the owner and holder thereof for all
purposes, notwithstanding any notice to the contrary, except that, if and when
any Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer thereof as the owner of such Warrant for all
purposes, notwithstanding any notice to the contrary. Subject to Section 5, a
Warrant, if properly assigned, may be exercised by a new holder without a new
Warrant first having been issued.
6.2. OFFICE: TRANSFER AND EXCHANGE OF WARRANTS.
(a) The Company will maintain an office (which may be an agency
maintained at a bank) in the United States of America where notices,
presentations and demands in respect of this Warrant may be made upon it.
Such office shall be maintained at 00 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 or such location as the Company shall otherwise notify the holders of
the Warrants.
(b) The Company shall cause to be kept at its office maintained
pursuant to Section 6.2(a) a register for the registration and transfer of
the Warrants. The names and addresses of holders of Warrants, the transfers
thereof and the names and addresses of transferees of Warrants shall be
registered in such register. Subject to Section 6.2(a), the Person in whose
name any Warrant shall be so registered shall be deemed and treated as the
owner and holder thereof for all purposes of this Warrant, and the Company
shall not be affected by any notice or knowledge to the contrary.
(c) Upon the surrender of any Warrant, properly endorsed, for
registration of transfer or for exchange at the office of the Company
maintained pursuant to Section 6.2(a), the Company at its expense will
(subject to compliance with Section 5, if applicable) execute and deliver
to or upon the order of the holder thereof a new Warrant of like tenor, in
the name of such holder or as such holder (upon payment by such holder of
any applicable transfer taxes) may direct, calling in the aggregate on the
-13-
14
face thereof for the number of shares of Common Stock called for on the
face of the Warrant so surrendered.
6.3. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant
held by a Person other than a Purchaser or any institutional investor, upon
delivery of an indemnity bond in such reasonable amount as the Company may
determine (or, in the case of a security held by the Investors or any
institutional holder or by the Investors or such institutional holder's nominee,
of an unsecured indemnity agreement from the Investors or such other holder
reasonably satisfactory to the Company), or, in the case of any such mutilation,
upon surrender of such Warrant for cancellation at the office of the Company
maintained pursuant to Section 6.2(a), the Company at its expense will execute
and deliver, in lieu thereof, a new Warrant of like tenor and dated the date
hereof.
7. REMEDIES. The Company stipulates that the remedies at law of the holder of
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
8. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant
shall be construed as conferring upon the holder hereof any rights as a
stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
9. NOTICES. Any notice or other communication in connection with this Warrant
shall be deemed to be delivered if in writing addressed as provided below and if
either (a) actually delivered at said address, (b) in the case of a letter,
seven business days shall have elapsed after the same shall have been deposited
in the United States mails, postage prepaid and registered or certified, return
receipt requested, or two business days shall have elapsed after the same shall
have been deposited with an overnight courier (for overnight delivery) of
national recognition, (c) in the case of a telecopy within the United States,
upon confirmation of receipt of such telecopy (which confirmation may consist
of a telecopy machine printout showing successful transmission), if such
telecopy is followed by a copy of the same being deposited within one business
day of such telecopy with an overnight courier (for overnight delivery) or (d)
transmitted to any address outside of the United States, by telecopy and
confirmed by overnight or two-day courier:
If to the Company, to it at 00 Xxxxxx Xxxx, Xxxxxx, XX 00000, telecopy:
(000) 000-0000, telephone: (000) 000-0000, with a copy to Goulston & Storrs, 000
Xxxxxxxx Xxx.,
-00-
00
Xxxxxx, XX 00000, attention: Xxxx Xxxxxxxx or at such other address as the
Company shall have specified by notice delivered to the holder hereof.
If to the holder thereof, to the holders' addresses set forth on Exhibit 1
to the Purchase Agreement, or at such other address as the Investors shall have
specified by notice delivered to the Company, in each case with a copy to WPC.
If to any other holder of record of this Warrant, to it at its address set
forth in the registers of the Company.
10. MISCELLANEOUS. The section headings in this Warrant are for convenience of
reference only and shall not constitute a part hereof. This Warrant and any term
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. This Warrant shall be construed and enforced
in accordance with and governed by the laws (other than the conflict of laws
rules) of The Commonwealth of Massachusetts.
-15-
16
This Warrant is hereby executed on behalf of the Company officer under its
corporate seal as of the date first written above.
NEW ENGLAND AUDIO CO., INC.
By /s/ Xxxxxxx X. Xxxxx
-------------------------
Title: President
17
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To NEW ENGLAND AUDIO CO., INC.
The undersigned registered holder of the enclosed Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, __________ (1)
shares of the Common Stock and herewith makes payment of $ _______________,
therefore, and requests that the certificates for such shares be issued in the
name of, and delivered to __________________, whose address is _________________
____________.
Dated:
--------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
--------------------------------------
(Street Address)
--------------------------------------
(City) (State) (Zip Code)
----------
(1) Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which this
Warrant is being exercised), in either case without making any adjustment for
Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of a partial exercise, a new Warrant
will be issued and delivered, representing the unexercised portion of the
Warrant, to the holder surrendering the Warrant.
-i-
18
FORM OF CONVERSION NOTICE
[To be executed only upon conversion of Warrant]
To NEW ENGLAND AUDIO CO., INC.
The undersigned registered holder of the enclosed Warrant hereby
irrevocably converts such Warrant with respect to ___________(1) shares of the
Common Stock which such holder would be entitled to receive upon the exercise
hereof, and requests that the certificates for such shares be issued in the name
of, and delivered to ____________________________, whose address
is_____________________________
Dated:
--------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
--------------------------------------
(Street Address)
--------------------------------------
(City) (State) (Zip Code)
----------
(1) Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial conversion, the portion thereof as to which this
Warrant is being converted), in either case without making any adjustment for
Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of a partial conversion, a new
Warrant will be issued and delivered, representing the unconverted portion of
the Warrant, to the holder surrendering the Warrant.
-i-
19
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant that
complies with Section 5 of the Warrant]
For value received, the undersigned registered holder of the attached
Warrant hereby sells, assigns and transfers unto the right
represented by such Warrant to purchase ____________(1) shares of Common Stock
of NEW ENGLAND AUDIO CO., INC. to which such Warrant relates, and appoints
______________________________Attorney to make such transfer on the books of NEW
ENGLAND AUDIO CO., INC. maintained for such purpose, with full power of
substitution in the premises.
Dated:
--------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
--------------------------------------
(Street Address)
--------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
--------------------------
--------------------------
(1) Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial transfer, the portion thereof being transferred),
in either case without making any adjustment for Additional Shares of Common
Stock or any other stock or other securities or property or cash which, pursuant
to the adjustment provisions of this Warrant, may be delivered upon exercise. In
the case of a partial transfer, a new Warrant will be issued and delivered,
representing the untransferred portion of the Warrant, to the holder
surrendering the Warrant.
-i-
20
SCHEDULE TO EXHIBIT 10.8
FORM OF COMMON STOCK PURCHASE WARRANTS DATED MARCH 7, 1997
All Common Stock Purchase Warrants issued by the Company on March 7, 1997
are substantially identical in all material respects except as to the Warrant
Holder thereunder and the number of Common Stock shares of the Company for which
each individual Common Stock Purchase Warrant is exercisable. Such information
is set forth below:
Number Of
---------
Warrant Holder Warrant Shares
-------------- --------------
1. Weston Presidio Offshore Capital C.V. 18,036
2. Advent Direct Investment Program Limited Partnership 7,052
3. Global Private Equity II Limited Partnership 18,720
4. Natio Vie Developpement II, FCPR 5,156
5. BNP Venture Holding Corp. 5,156
6. Xxxxxxx Xxxxxxxx 128
7. Xxxxxxx Xxxxxxxxx 928
8. Xxxxxxx Xxxxxxxxx 476
9. Xxxxxxx Xxxxxxxxx 476
10. Xxxxx Xxxxxx 476
======
Total Shares subject to Warrants: 56,604
-------------------------------
