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EXHIBIT 10.3
NEITHER THIS WARRANT NOR THE SECURITIES FOR WHICH IT IS EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES
LAWS, AND NO TRANSFER OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON ITS
EXERCISE MAY BE MADE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH LAWS OR THE AVAILABILITY OF EXEMPTIONS FROM THE REGISTRATION PROVISIONS
THEREOF. MOREOVER, THIS WARRANT AND THE SECURITIES FOR WHICH IT IS EXERCISABLE
ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND CERTAIN OTHER RESTRICTIONS SET FORTH
IN A TAG-ALONG, TRANSFER RESTRICTION AND BRING-ALONG AGREEMENT DATED AS OF
NOVEMBER 28, 1995, AS AMENDED (WHICH AGREEMENT IS ON FILE WITH THE COMPANY'S
SECRETARY).
NEW ENGLAND AUDIO CO. INC.
May 30, 1997 Certificate No. 1
STOCK PURCHASE WARRANT
319,900 Shares of Common Stock
This is to certify that, for value received, PNC CAPITAL CORP (the "Initial
Holder"), its registered successors and assigns, is entitled upon the due
exercise hereof to purchase (subject to adjustment as provided in the Purchase
Agreement) 319,900 shares of the Common Stock, no par value (such stock,
together with such other securities or properties as may be issued upon the
exercise hereof, being referred to herein as the "Stock"), of New England Audio
Co., Inc., a Massachusetts corporation (the "Company"), for the price of $.001
per share (the "Exercise Price") and to exercise the other rights, powers and
privileges provided for herein, all upon the terms and subject to the conditions
specified herein.
1. CERTAIN DEFINITIONS. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in that certain Warrant
Purchase Agreement dated as of May 30, 1997 between the Company, the Initial
Holder and certain other parties (the "Purchase Agreement") unless the context
otherwise requires.
2. EXERCISE. This Warrant may be exercised by the registered Holder hereof
at any time during the period commencing on the date hereof and ending at 5:00
p.m., Boston, Massachusetts time on the Expiration Date specified in Paragraph 9
by surrender of this Warrant at the Company's principal offices at 00 Xxxxxx
Xxxx,
0
Xxxxxx, Xxxxxxxxxxxxx 00000 (or such other address as the Company may advise the
Holder by notice given in the manner provided in the Purchase Agreement), with
the form of election to subscribe attached hereto as ANNEX A duly executed and
upon tender to the Company of the Exercise Price. Upon the date the Company
receives all of the foregoing from the Holder this Warrant shall be deemed to
have been exercised and the Holder exercising the same to have become a holder
of record of shares of Stock purchased hereunder for all purposes and
certificates for such shares shall be delivered to such Holder or its transferee
within a reasonable time (not exceeding ten business days) after this Warrant
shall have been exercised. If an exercise of this Warrant is for less than all
of the Stock then, concurrently with its delivery, of such certificates, the
Company shall deliver to such Holder (or, so long as such Holder has also
complied with Paragraph 6, its transferee) a new warrant or warrants which shall
be of like tenor and date as this Warrant and shall represent in the aggregate
the right to subscribe for and purchase the remaining number of shares which may
be subscribed for and purchased hereunder.
3. PAYMENT OF EXERCISE PRICE. Upon any exercise of this Warrant the
Exercise Price may be paid, in the sole discretion of the Holder, by (a)
tendering the same to the Company in cash, (b) setting-off the same against any
debt owed by the Company to the Holder or (c) tendering to the Company such
number of shares of Stock issuable upon the exercise of this Warrant as have a
value equal to the Exercise Price. If the Holder shall choose option (b) or (c)
above then, in lieu of tendering the Exercise Price upon the exercise this
Warrant, it shall tender to the Company a notice specifying the manner in which
it has elected to pay the Exercise Price.
4. TAXES. If any tax (other than income tax) is payable by the Holder by
reason of the issuance of any certificates representing Stock, such tax shall be
paid by the Company; provided, that the Company shall not be required to pay any
tax which may be payable in respect of the issuance of any such certificate in a
name other than that of the registered Holder of this Warrant, and the Company
shall not be required to issue any such certificate in a name other than such
Holder's unless and until any tax payable by reason of such issuance has been
paid.
5. WARRANT REGISTER. The Company shall at all times while any portion of
this Warrant remains outstanding and exercisable keep and maintain at its
principal office a register (the "Warrant Register") in which the registration,
transfer and exchange of this Warrant shall be recorded. The Company shall not
at any time, except upon the dissolution, liquidation or winding up of the
Company, close such register so as to result in preventing or delaying the
exercise, transfer or exchange of this Warrant. If at any time the Company shall
appoint an agent (the "Warrant Agent") to maintain such register, the Company
shall promptly give notice in the manner provided in the Purchase Agreement to
the registered Holder hereof of the name of such Warrant Agent and of the place
or places at which this Warrant may be presented for transfer, exchange or
exercise. The terms of the agreement between the Company and any
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Warrant Agent at any time in effect will be in conformity with the terms of this
Warrant and the Purchase Agreement
6. TRANSFER. Subject to compliance with applicable securities laws and
with the restrictions on transfer set forth in the Tag-Along, Transfer
Restriction and Bring-Along Agreement among the Company and certain of its
shareholders, as amended, this Warrant and all rights hereunder are transferable
on the books of the Company by the registered Holder hereof in person or by duly
authorized attorney upon surrender of this Warrant at the address set forth in
Paragraph 2, together with the form of transfer authorization attached hereto as
ANNEX B duly executed. Absent any such transfer, the Company may deem and treat
the registered Holder of this Warrant at any time as the absolute owner hereof
for all purposes and shall not be affected by any notice to the contrary.
7. EXCHANGE. This Warrant is exchangeable, upon the surrender hereof by
the Holder at the address set forth in Paragraph 2 together with the form of
exchange authorization attached hereto as ANNEX C duly executed, for new
warrants in such. denominations as the Holder shall designate at the time of
surrender for exchange (but not for less than 10% of the shares of Stock for
which this Warrant is originally exercisable), which new warrants shall be of
like tenor and date and shall represent in the aggregate the right to subscribe
for and purchase the number of shares which may be subscribed for and purchased
hereunder.
8. LOST, STOLEN, MUTILATED, OR DESTROYED WARRANTS. If this Warrant shall
become lost, stolen, mutilated or destroyed the Company shall issue a new
warrant of like denomination, tenor and date as this Warrant upon its receipt
from the Holder of reasonably satisfactory evidence of such event and assurances
that the Holder will indemnify the Company on account of any loss incurred by
the Company which is occasioned by such event Any such new warrant shall
constitute an original contractual obligation of the Company whether or not the
allegedly lost, stolen, mutilated or destroyed warrant shall be at any time
enforceable by anyone.
9. EXPIRATION. This Warrant shall expire and be of no further force and
effect on the date (the "Expiration Date") which is the earlier to occur of (a)
the date when the Company has fully complied with Paragraph 2 hereof, in the
event of a complete exercise hereof or (b) the earlier to occur of (i) the tenth
anniversary of the date hereof or (ii) the fourth anniversary of the date on
which Senior Subordinate Promissory Notes issued under the Note Purchase
Agreement have been paid in full.
10. MANDATORY EXERCISE. Notwithstanding any other provision hereof, the
Holder shall, upon the request of the Company, fully exercise this Warrant
concurrently with the closing of a Qualified Public Offering.
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11. WARRANT PURCHASE AGREEMENT. The terms of the Purchase Agreement, as
they relate to this Warrant, are incorporated by reference in this Warrant as
fully as if the same were set forth herein.
12. APPLICABLE LAW. The validity, interpretation and performance of this
Warrant shall be governed by the laws of the Commonwealth of Massachusetts.
13. SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the Company and the Holder.
14. NOTICES. All notices and other correspondence which is required or may
be given hereunder shall be given in the manner and to the addresses specified
in the Purchase Agreement.
WITNESS the due execution of this Stock Purchase Warrant as of the date
first written above with the intent to be legally bound.
NEW ENGLAND AUDIO CO., INC.
By: Xxxxxxx X. Xxxxx
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Title: President
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ANNEX A
to Warrant
[SUBSCRIPTION FORM TO BE EXECUTED UPON EXERCISE OF THE WARRANT]
The undersigned registered holder of the within Warrant hereby
(1) subscribes for ___________________ shares which the undersigned is entitled
to purchase under the terms of the within Warrant, (2) makes the full cash
payment therefor called for by the within Warrant, and (3) directs that the
shares issuable upon exercise of said Warrant be issued as follows:
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(Name)
Signature:
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Dated:
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ANNEX B
to Warrant
[TO BE EXECUTED TO EFFECT A TRANSFER OF THE WARRANT]
FOR VALUE RECEIVED _____________________________________ hereby sells,
assigns, and transfers unto ___________________________________________________
the right to purchase _________________ shares evidenced by the within Warrant,
and does hereby irrevocably constitute and appoint ________________________ to
transfer such right on the books of Company, with full power of substitution.
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(Name)
Signature:
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Dated:
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ANNEX C
to Warrant
[TO BE EXECUTED TO EFFECT AN EXCHANGE OF THE WARRANT]
The undersigned registered holder of the within Warrant hereby directs the
Company to exchange said Warrant for like warrants in the following
denominations: ____________________________.
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(Name)
Signature:
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Dated:
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