Exhibit 10.3

 

RESONANT INC.

 

THE WARRANT EVIDENCED HEREBY AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED OR SOLD WITHOUT REGISTRATION UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE UNDER SUCH ACT OR THE RULES OR REGULATIONS PROMULGATED THEREUNDER.

 

Expiration Date:

July 21, 2017

Certificate No: E-1

 

WARRANT TO PURCHASE

 

42,000

 

Shares of Common Stock

 

Resonant Inc., a Delaware corporation (the “Company”), for value received,
hereby certifies that MZHCI, LLC, a MZ Group Company, (the “Holder”), is
entitled to purchase from the Company up to and including 42,000 (the “Number of
Shares”) duly authorized, validly issued, fully paid and nonassessable shares
(the “Shares”) of the Company’s Common Stock, $0.001 par value per share (the
“Common Stock”), on the terms set forth herein at an exercise price of Eight
Dollars Thirty-One Cents ($8.31) per share (the “Purchase Price”).  The number
of Shares and the Purchase Price may be adjusted from time to time as described
in this Warrant.

 

1.                                      Exercise.

 

1.1                               Time for Exercise.  This Warrant may be
exercised in whole or in part at any time, and from time to time, during the
period commencing on July 21, 2015 (the “Vesting Date”) and expiring at
5:00 p.m. Pacific time on July 21, 2017 (the “Expiration Date”). 
Notwithstanding the foregoing, this Warrant will not become exercisable and will
be void in the event of early termination by Company of the Investor Relations
Consulting Agreement with Holder dated and effective as of July 21, 2014.

 

1.2                               Stockholders Agreement.  [INTENTIONALLY
OMITTED]

 

1.3                               Manner of Exercise.  This Warrant may be
exercised by delivering it to the Company with the attached exercise form duly
completed and signed, specifying (i) the number of Shares as to which the
Warrant is being exercised at that time (the “Exercise Number”), and
(ii) whether the exercise is being made by “purchase” or “exchange,” and
representing and warranting to the Company that the statements set forth in
Section 7 hereof are true and correct with respect to the Holder as of the date
of exercise.

 

1.3.1                     Purchase.  If the Holder elects the purchase option,
the Holder shall simultaneously deliver to the Company cash, a certified check
or wire transfer of immediately available funds in an amount equal to the
Exercise Number multiplied by the Purchase Price, and the Holder shall be
entitled to receive the full Exercise Number of Shares.

 

1.3.2                     Exchange.  If the Holder elects the exchange option,
the Holder shall be entitled (without cash payment) to receive that number of
Shares having an aggregate Market Value

 

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(determined as provided below) on the date of exercise equal to the difference
between the Market Value of the Exercise Number of Shares and the aggregate
Purchase Price thereof.

 

1.3.3                     As used herein, “Market Value” for any security on any
given date means (i) the average closing price for the prior ten (10) trading
days for such security on the principal stock exchange on which such security is
traded or (ii) if not so traded, the closing (or, if no closing price is
available, the average of the bid and asked prices) for such period on NASDAQ if
such security is listed on the NASDAQ or (iii) if not listed on any exchange or
quoted on NASDAQ, such value as may be determined (without regard to illiquidity
or minority status) in good faith by the Company’s Board of Directors, which
determination shall be conclusively binding on the parties, except that, at the
request of the Holder, the fair price shall be determined by an investment
banking firm reasonably acceptable to the Company, whose fees will be paid by
the Holder unless the Market Price so determined exceeds one hundred and ten
percent (110%) of that set by the Board.

 

1.4                               Effect of Exercise.  The Company shall deliver
promptly (but in any case within ten business days) after any exercise to the
Holder (i) duly executed certificates in the name or names specified in the
exercise notice representing the aggregate number of Shares issuable upon such
exercise, and (ii) if this Warrant is exercised only in part, a new Warrant of
like tenor representing the balance of the Number of Shares.  Such certificates
shall be deemed to have been issued, and the person receiving them shall be
deemed to be a holder of record of such Shares, as of the close of business on
the date the actions required in Section 1.3 shall have been completed or, if on
that date the stock transfer books of the Company are closed, as of the next
business day.

 

2.                                      Transfer of Warrant and Shares.

 

2.1                               Transfer Restrictions.  Neither this Warrant
nor the securities issuable upon its exercise may be sold, transferred or
pledged unless the Company shall have been supplied with reasonably satisfactory
evidence that such transfer is not in violation of the Securities Act of 1933,
as amended, and any applicable state securities laws.  The Company may place a
legend to that effect on this Warrant, any replacement Warrant and each
certificate representing Shares issuable upon exercise of this Warrant. 
NOTWITHSTANDING THE FOREGOING, THIS WARRANT IS NOT TRANSFERRABLE BY THE HOLDER.

 

2.2                               Manner of Transfer.  Upon delivery of this
Warrant to the Company with the attached assignment form duly completed and
signed, the Company will promptly (but in any case within ten business days)
execute and deliver to each transferee and, if applicable, the Holder, Warrants
of like tenor evidencing the rights (i) of the transferee(s) to purchase the
Number of Shares specified for each in the assignment forms, and (ii) of the
Holder to purchase any untransferred portion, which in the aggregate shall equal
the Number of Shares of the original Warrant.  If this Warrant is properly
assigned in compliance with this Section 2, it may be exercised by an assignee
without having a new Warrant issued.

 

2.3                               Loss, Destruction of Warrant Certificates. 
Upon receipt of (i) evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant and (ii) except in the case of
mutilation, an indemnity or security reasonably satisfactory to the Company (the
original Holder’s or institutional Holder’s indemnity agreed to be
satisfactory), the Company will promptly (but in any case within ten business
days) execute and deliver a replacement Warrant of like tenor representing the
right to purchase the same Number of Shares.

 

3.                                      Cost of Issuances.  The Company shall
pay all expenses, transfer taxes and other charges payable in connection with
the preparation, issuance and delivery of unit certificates or replacement
Warrants, except for any transfer tax or other charge imposed as a result of
(i) any issuance of stock

 

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certificates in any name other than the name of the Holder upon exercise of the
Warrant or (ii) any transfer of the Warrant.  The Company shall not be required
to issue or deliver any stock certificate or Warrant until it receives
reasonably satisfactory evidence that any such tax or other charge has been paid
by the Holder.

 

4.                                      Adjustments.  If any of the following
events occur at any time hereafter during the term of this Warrant, then the
Purchase Price and the Number of Shares immediately prior to such event shall be
changed as described in order to prevent dilution:

 

4.1                               Stock Splits and Reverse Splits.  If at any
time the outstanding shares of Common Stock are subdivided into a greater number
of shares, then the Purchase Price will be reduced proportionately and the
number of Shares will be increased proportionately.  Conversely, if at any time
the outstanding shares of Common Stock are consolidated into a smaller number of
shares, then the Purchase Price will be increased proportionately and the Number
of Shares will be reduced proportionately.

 

4.2                               Distributions.  In the event the Company
declares a distribution upon the Common Stock, whether in cash, property or
securities, at the time of subsequent exercise of this Warrant, the Company
shall deliver both (i) the Number of Shares for which exercise is made plus
(ii) such distribution as would have been previously distributed to the Holder
if such exercise had been made on the date hereof.  If the Company shall declare
a distribution payable in cash on its Common Stock and shall at substantially
the same time offer to its stockholders a right to purchase new shares from the
proceeds of such distribution, or for an amount substantially equal to the
distribution, the amount of shares so offered shall, for the purpose of this
Warrant, be deemed to have been issued as a distribution with respect to such
share.

 

4.3                               Effect of Reorganization and Asset Sales.  If
any (i) reorganization or reclassification of the Common Stock,
(ii) consolidation or merger of the Company with or into another entity,
(iii) sale of all or substantially all of its operating assets to another person
or entity, or (iv) sale of the Company substantially as a going concern followed
by a liquidation of the Company (any such occurrence shall be an “Event”), is
effected in such a way that holders of Common Stock (either directly or upon
conversion into another class of equity) are entitled to receive securities
and/or assets as a result of their ownership of Common Stock, then upon exercise
of this Warrant the Holder will have the right to receive the securities or
assets which they would have received if such rights had been fully exercised as
of the record date for such Event.  The Company will not affect any Event unless
prior to or simultaneously with its consummation the successor entity resulting
from the consolidation or merger (if other than the Company), or the entity
purchasing the Company’s assets, assumes the performance of the Company’s
obligations under this Warrant (as appropriately adjusted to reflect such
consolidation, merger or sale such that the Holder’s rights under this Warrant
remain, as nearly as practicable, unchanged) by a binding written instrument.

 

4.4                               Other Securities Adjustments.  If as a result
of this Section 4, a Holder is entitled to receive any securities other than
Common Stock upon exercise of this Warrant, the number and purchase price of
such securities shall thereafter be adjusted from time to time in the same
manner as provided pursuant to this Section 4 for Common Stock.  To the extent
that a right receivable on exercise of this Warrant has lapsed or been lost
prior to the date of exercise, on exercise the Company shall pay in cash or in
Common Stock based on its Market Value on the date of exercise an amount equal
to the Market Value of the right which lapsed or was lost, determined as of the
time which such right lapsed or was lost.  The allocation of purchase price
between various securities shall be made in writing by the

 

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Board of Directors of the Company in good faith at the time of the event by
which the Holder becomes entitled to receive new securities, and a copy sent to
the Holder.

 

4.5                               Notices.

 

4.5.1                     Notice of Adjustments.  When any adjustment is
required to be made under this Section 4, the Company shall promptly
(i) determine such adjustments, (ii) prepare and retain on file a statement
describing in reasonable detail the method used in arriving at the adjustment,
and (iii) cause a copy of such statement, together with any agreement required
by Section 4.3, to be mailed to the Holder within ten (10) days after the date
on which the circumstances giving rise to such adjustment occurred.

 

4.5.2                     Notice of Events.  If at any time (i) the Company
declares any distribution on the Common Stock, (ii) any Event is expected to
occur, or (iii) there is a voluntary or involuntary dissolution, liquidation or
winding up of the Company, then the Company shall give the Holder at least
thirty (30) but not more than ninety (90) days written notice of the date on
which the books of the Company will close or upon which a record will be taken
with regard to such occurrence.  Such notice will also specify the date as of
which the holders of Common Stock will participate in the distribution or will
be entitled to exchange their shares for securities or other property.  The
notice may state that the record date is subject to the effectiveness of a
registration statement under the Securities Act or to a favorable vote or
determination of equity holders or of any governmental agency.

 

4.6                               Computations and Adjustments.  Upon each
computation of an adjustment under this Section 4, the Purchase Price shall be
computed to the next lowest cent and the number of Shares shall be calculated to
the next highest whole unit.  However, the fractional amount shall be used in
calculating any future adjustments.  No fractional shares of Common Stock shall
be issued in connection with the exercise of this Warrant, but the Company
shall, in the case of the final exercise under this Warrant, make a cash payment
for any fractional shares based on the value (determined without discount for
illiquidity or minority status) as may be determined in good faith by the
Company’s Board of Directors, which determination shall be conclusively binding
on the parties.  Notwithstanding any changes in the Purchase Price or the Number
of Shares, this Warrant, and any Warrants issued in replacement or upon transfer
thereof, may continue to state the initial Purchase Price and the initial Number
of Shares.  Alternatively, the Company may elect to issue a new Warrant or
Warrants of like tenor for the additional shares purchasable hereunder or, upon
surrender of the existing Warrant, to issue a replacement Warrant evidencing the
aggregate Number of Shares to which the Holder is entitled after such
adjustments.

 

4.7                               Exercise Before Payment Date.  In the event
that this Warrant is exercised after the record date for any event requiring an
adjustment, but prior to the actual event, the Company may elect to defer
issuing to the Holder any payment or additional securities required by such
adjustment until the actual event occurs; provided, however, that the Company
shall deliver a “due bill” or other appropriate instrument to the Holder
transferable to the same extent as the shares issuable on exercise evidencing
the Holder’s right to receive such additional payment or securities upon the
occurrence of the event requiring such adjustment.

 

5.                                      Covenants.  The Company agrees that:

 

5.1                               Reservation of Shares.  During the period in
which this Warrant may be exercised, the Company will reserve sufficient
authorized but unissued securities (and, if applicable, property) to enable it
to satisfy its obligations on exercise of this Warrant.  If at any time the
Company’s authorized securities shall not be sufficient to allow the exercise of
this Warrant, the Company shall take

 

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such corporate action as may be necessary to increase its authorized but
unissued securities to be sufficient for such purpose;

 

5.2                               No Liens, etc.  All securities that may be
issued upon exercise of this Warrant will, upon issuance, be validly issued,
fully paid, nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, and shall be listed on any exchanges or authorized
for trading on any automated systems on which that class of securities is listed
or authorized for trading;

 

5.3                               No Diminution of Value.  The Company will not
take any action to terminate this Warrant or to diminish it in value;

 

5.4                               Furnish Information.  The Company will
promptly deliver to the Holder copies of all financial statements, reports,
proxy statements and other information which the Company shall have sent to its
stockholders generally; and

 

5.5                               Stock and Warrant Transfer Books.  Except upon
dissolution, liquidation or winding up or for ordinary holidays and weekends,
the Company will not at any time close its stock or warrant transfer books so as
to result in preventing or delaying the exercise or transfer of this Warrant.

 

6.                                      Status of Holder.

 

6.1                               Not a Stockholder.  Except as otherwise
provided in this Warrant, unless the Holder exercises this Warrant in writing,
the Holder shall not be entitled to any rights (i) as a stockholder of the
Company with respect to the shares as to which the Warrant is exercisable
including, without limitation, the right to vote or receive dividends or other
distributions, or (ii) to receive any notice of any proceedings of the Company.

 

6.2                               Limitation of Liability.  Unless the Holder
exercises this Warrant in writing, the Holder’s rights and privileges hereunder
shall not give rise to any liability for the Purchase Price, whether to the
Company or its creditors.

 

7.                                      Representations and Warranties of the
Holder.  The Holder represents and warrants to the Company as follows:

 

7.1                               Purchase for Own Account.  This Warrant and
the securities to be acquired upon exercise of this Warrant by the Holder will
be acquired for investment for the Holder’s account, not as a nominee or agent,
and not with a view to the public resale or distribution in violation of the
Securities Act of 1933, as amended.

 

7.2                               Disclosure of Information.  The Holder has
received or has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the
acquisition of this Warrant and its underlying securities.  The Holder further
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of this Warrant and its
underlying securities and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to the Holder
or to which the Holder has access.

 

7.3                               Investment Experience.  The Holder understands
that the purchase of this Warrant and its underlying securities involves
substantial risk.  The Holder has experience as an investor in securities of
companies in the development stage and acknowledges that the Holder can bear the
economic risk of such Holder’s investment in this Warrant and its underlying
securities and has such knowledge and experience in financial or business
matters that the Holder is capable of evaluating the merits and risks of its
investment in this Warrant and its underlying securities and/or has a
preexisting

 

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personal or business relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that enables the
Holder to be aware of the character, business acumen and financial circumstances
of such persons.

 

7.4                               Accredited Investor Status.  The Holder is an
“accredited investor” within the meaning of Regulation D promulgated under the
1933 Act.

 

7.5                               The 1933 Act.  The Holder understands that
this Warrant and the underlying securities issuable upon exercise or conversion
hereof have not been registered under the 1933 Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of the Holder’s investment intent as expressed herein.  The Holder
understands that this Warrant and underlying securities issued upon any exercise
or conversion hereof must be held indefinitely unless subsequently registered
under the 1933 Act and qualified under applicable state securities laws, or
unless exemption from such registration and qualification are otherwise
available.

 

8.                                      General Provisions.

 

8.1                               Complete Agreement; Modifications.  This
Warrant and any documents referred to herein or executed contemporaneously
herewith constitute the parties’ entire agreement with respect to the subject
matter hereof and supersede all agreements, representations, warranties,
statements, promises and understandings, whether oral or written, with respect
to the subject matter hereof.  This Warrant may not be amended, altered or
modified except by a writing signed by the parties.

 

8.2                               Additional Documents.  Each party hereto
agrees to execute any and all further documents and writings and to perform such
other actions which may be or become necessary or expedient to effectuate and
carry out this Warrant.

 

8.3                               Notices.  All notices under this Warrant shall
be in writing and shall be delivered by personal service, electronic mail,
facsimile or certified mail (if certified mail is not available, then by first
class mail), postage prepaid, to such address as may be designated from time to
time by the relevant party, and which shall initially be:

 

To the Company:

Resonant Inc.

 

110 Castilian Drive, Suite 100

 

Santa Barbara, CA 93117

 

Attn: Terry Lingren, Chief Executive Officer

 

Email: tlingren@resonant.com

 

 

To the Holder:

MZHCI, LLC

 

5055 Avenida Encinas, Suite 130

 

Carlsbad, CA 92008

 

Attn: Ted Haberfield, President MZ - North America

 

Email: thaberfield@mzgroup.us

 

Any notice sent by certified mail shall be deemed to have been given three
(3) days after the date on which it is mailed.  All other notices shall be
deemed given when received.  No objection may be made to the manner of delivery
of any notice actually received in writing by an authorized agent of a party.

 

8.4                               No Third-Party Benefits; Successors and
Assigns.  None of the provisions of this Warrant shall be for the benefit of, or
enforceable by, any third-party beneficiary.  Except as provided herein to the
contrary, this Warrant shall be binding upon and inure to the benefit of the
parties, their

 

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respective successors and permitted assigns.  The Holder may assign its rights
and obligations under this Warrant to any third party if done so in compliance
with the requirements of Section 2.  The Company may only assign its rights and
obligations under this Warrant in connection with a merger, consolidation or
sale of substantially all of its operating assets to the extent expressly
permitted by, and in compliance with all the requirements of, Section 4.3.

 

8.5                               Governing Law; Venue; Jurisdiction; Waiver of
Jury Trial.  This Warrant has been negotiated and entered into in the State of
California, concerns a California business and all questions with respect to the
Warrant and the rights and liabilities of the parties will be governed by the
laws of California, regardless of the choice of law provisions of California or
any other jurisdiction.  Any and all disputes between the parties which may
arise from or relate to this Warrant not covered by arbitration will be heard
and determined exclusively before an appropriate federal or state court located
in Los Angeles, California.  Each party (i) irrevocably consents to the
exclusive jurisdiction of the Los Angeles Superior Court and the Federal
District Court for the Central District of California (or their successor
courts) for all purposes in connection with any litigation that arises from or
relates to this Warrant, (ii) agrees that any litigation arising from or
relating to this Warrant shall be instituted and prosecuted only in such courts,
(iii) waives any rights it may have to personal service of summons, complaint,
or other process in connection therewith, and (iv) agrees that service may be
made by certified mail addressed to such party sent to the addresses designated
from time to time in accordance with Section 8.3.  The parties hereby waive
their respective rights to trial by jury of any cause of action, claim,
counterclaim or cross-complaint in any action, proceeding and/or hearing on any
matter arising from or relating to this Warrant.

 

8.6                               Waivers Strictly Construed.  With regard to
any power, remedy or right provided herein or otherwise available to any party
hereunder (i) no waiver or extension of time shall be effective unless expressly
contained in a writing signed by the waiving party, and (ii) no alteration,
modification or impairment shall be implied by reason of any previous waiver,
extension of time, delay or omission in exercise, or other indulgence.

 

8.7                               Severability.  The validity, legality or
enforceability of the remainder of this Warrant shall not be affected even if
one or more of its provisions shall be held to be invalid, illegal or
unenforceable in any respect.

 

8.8                               Attorneys’ Fees.  Should any litigation or
arbitration be commenced (including any proceedings in a bankruptcy court)
between the parties hereto or their representatives concerning any provision of
this Warrant or the rights and duties of any person or entity hereunder, the
party or parties prevailing in such proceeding shall be entitled, in addition to
such other relief as may be granted, to the attorneys’ fees and court costs
incurred by reason of such litigation or arbitration.

 

*** [NEXT PAGE IS SIGNATURE PAGE] ***

 

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SIGNATURE PAGE TO WARRANT

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed on
August 12, 2014.

 

“Holder”

 

MZHCI, LLC
a MZ Group Company

“Company”

 

RESONANT INC.,
a Delaware corporation

 

 

/s/ Ted Haberfield

 

/s/ Terry Lingren

Authorized Signature

 

Authorized Signature

 

 

 

Ted Haberfield

 

Terry Lingren

Print Name

 

Print Name

 

 

 

President – MZ North America

 

Chief Executive Officer

Title

 

Title

 

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ASSIGNMENT FORM

 

(To Be Executed Upon Transfer of Warrant)

 

FOR VALUE RECEIVED,                                                             
hereby sells, assigns and transfers to the transferee named below [the rights to
purchase        of the number of Shares under] this Warrant, together with all
rights, title and interest therein.  [The rights to purchase the remaining
number of Shares shall remain the property of the undersigned.]  Such transferee
hereby represents and warrants to the Company that the statements set forth in
Section 7 of the Warrant are true and correct with respect to such transferee as
of the date hereof as if such transferee were the “Holder” for purposes thereof.

 

 

[NAME OF HOLDER]

 

 

 

 

 

Dated:

 

 

By:

 

 

 

Signature

 

 

 

 

Name:

 

 

 

(Please Print)

 

 

 

 

Title:

 

 

 

 

 

Address:

 

 

 

 

 

 

 

TRANSFEREE:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

(Please Print)

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

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EXERCISE FORM

 

(To Be Executed Upon Exercise of Warrant)

 

The undersigned hereby exercises the Warrant with regard to
                           shares of Common Stock and herewith [makes payment of
the purchase price in full] [or requests that the Company exchange the Warrant
as provided in Section 1.3.2 of the Warrant].  The undersigned requests that the
certificate(s) for such Shares [and the Warrant for the unexercised portion of
this Warrant] be issued [to the Holder] [in the name set forth below]. The
undersigned further hereby represents and warrants to the Company that the
statements set forth in Section 7 of the Warrant are true and correct with
respect to the undersigned as of the date hereof.

 

 

 

[NAME OF HOLDER]

 

 

 

 

 

Dated:

 

 

By:

 

 

 

 

Signature

 

 

 

 

 

 

 

Name:

 

 

 

 

(Please Print)

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

Address:

 

 

 

 

 

TRANSFEREE:

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

(Please Print)

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

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