WARRANT AGREEMENT
between
audiohighway.com
and
------------------------------------
Dated as of , 1998
---------
This Agreement, dated as of ________, 1998, is between
audiohighway.com, a California corporation (the "Company") and
__________________________, a ___________ _________, (the "Warrant Agent").
The Company, at or about the time that it is entering into this
Agreement, proposes to issue and sell to public investors up to 2,300,000
Units ("Units"). Each Unit consists of one share of Common Stock of the
Company ("Common Stock") and one Warrant (collectively, the "Warrants"), each
Warrant exercisable to purchase one share of Common Stock for $____, upon the
terms and conditions and subject to adjustment in certain circumstances, all
as set forth in this Agreement.
The Company proposes to issue to the Representative of the
Underwriters in the public offering of Units referred to above warrants to
purchase up to 150,000 additional Units.
The Company wishes to retain the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with
the issuance, transfer, exchange and replacement of the certificates
evidencing the Warrants to be issued under this Agreement (the "Warrant
Certificates") and the exercise of the Warrants;
The Company and the Warrant Agent wish to enter into this Agreement
to set forth the terms and conditions of the Warrants and the rights of the
holders thereof ("Warrantholders") and to set forth the respective rights and
obligations of the Company and the Warrant Agent. Each Warrantholder is an
intended beneficiary of this Agreement with respect to the rights of
Warrantholders herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. APPOINTMENT OF WARRANT AGENT
The Company appoints the Warrant Agent to act as agent for the
Company in accordance with the instructions in this Agreement and the Warrant
Agent accepts such appointment.
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Section 2. DATE, DENOMINATION AND EXECUTION OF WARRANT CERTIFICATES
The Warrant Certificates (and the Form of Election to Purchase and
the Form of Assignment to be printed on the reverse thereof) shall be in
registered form only and shall be substantially of the tenor and purport
recited in Exhibit A hereto, and may have such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law, or with any rule or
regulation made pursuant thereto, or with any rule or regulation of any stock
exchange on which the Common Stock or the Warrants may be listed or any
automated quotation system, or to conform to usage. Each Warrant Certificate
shall entitle the registered holder thereof, subject to the provisions of
this Agreement and of the Warrant Certificate, to purchase, on or before the
close of business on ________, 2003 (the "Expiration Date"), one fully paid
and non-assessable share of Common Stock for each Warrant evidenced by such
Warrant Certificate, subject to adjustments as provided in Sections 6 hereof,
for $____ (the "Exercise Price"). Each Warrant Certificate issued as a part
of a Unit offered to the public as described in the recitals, above, shall be
dated ________, 1998; each other Warrant Certificate shall be dated the date
on which the Warrant Agent receives valid issuance instructions from the
Company or a transferring holder of a Warrant Certificate or, if such
instructions specify another date, such other date.
For purposes of this Agreement, the term "close of business" on any
given date shall mean 5:00 p.m., Eastern time, on such date; provided,
however, that if such date is not a business day, it shall mean 5:00 p.m.,
Eastern time, on the next succeeding business day. For purposes of this
Agreement, the term "business day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in New York, New York are
authorized or obligated by law to be closed.
Each Warrant Certificate shall be executed on behalf of the Company
by the Chairman of the Board or its President or a Vice President, either
manually or by facsimile signature printed thereon, and have affixed thereto
the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. Each Warrant Certificate shall be manually
countersigned by the Warrant Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any Warrant Certificate shall cease to be such officer of the Company
before countersignature by the Warrant Agent and issue and delivery thereof
by the Company, such Warrant Certificate, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificate had not ceased to be
such officer of the Company.
Section 3. SUBSEQUENT ISSUE OF WARRANT CERTIFICATES
Subsequent to their original issuance, no Warrant Certificates
shall be reissued except (i) Warrant Certificates issued upon transfer
thereof in accordance with Section 4 hereof, (ii) Warrant Certificates issued
upon any combination, split-up or exchange of Warrant Certificates pursuant
to Section 4 hereof, (iii) Warrant Certificates issued in replacement of
mutilated, destroyed, lost or stolen Warrant Certificates pursuant to Section
5 hereof, (iv) Warrant Certificates issued upon the partial exercise of
Warrant Certificates pursuant to Section 7 hereof, and (v) Warrant
Certificates issued to reflect any adjustment or change in the Exercise Price
or the number or kind of shares purchasable thereunder pursuant to Section 22
hereof. The Warrant Agent is hereby irrevocably authorized to countersign
and deliver, in accordance with the provisions of said Sections 4, 5, 7 and
22, the new Warrant Certificates required for purposes thereof, and the
Company, whenever required by the Warrant Agent, will supply the Warrant
Agent with Warrant Certificates duly executed on behalf of the Company for
such purposes.
Section 4. TRANSFERS AND EXCHANGES OF WARRANT CERTIFICATES
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The Warrant Agent will keep or cause to be kept books for
registration of ownership and transfer of the Warrant Certificates issued
hereunder. Such registers shall show the names and addresses of the
respective holders of the Warrant Certificates and the number of Warrants
evidenced by each such Warrant Certificate.
The Warrant Agent shall, from time to time, register the transfer
of any outstanding Warrants upon the books to be maintained by the Warrant
Agent for that purpose, upon surrender of the Warrant Certificate evidencing
such Warrants, with the Form of Assignment duly filled in and executed with
such signature guaranteed by a banking institution or NASD member and such
supporting documentation as the Warrant Agent or the Company may reasonably
require, to the Warrant Agent at its stock transfer office in _____________,
______________ at any time on or before the Expiration Date, and upon payment
to the Warrant Agent for the account of the Company of an amount equal to any
applicable transfer tax. Payment of the amount of such tax may be made in
cash, or by certified or official bank check, payable in lawful money of the
United States of America to the order of the Company.
Upon receipt of a Warrant Certificate, with the Form of Assignment
duly filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Warrant Agent shall promptly cancel the
surrendered Warrant Certificate and countersign and deliver to the transferee
a new Warrant Certificate for the number of full Warrants transferred to such
transferee; PROVIDED, HOWEVER, that in case the registered holder of any
Warrant Certificate shall elect to transfer fewer than all of the Warrants
evidenced by such Warrant Certificate, the Warrant Agent in addition shall
promptly countersign and deliver to such registered holder a new Warrant
Certificate or Certificates for the number of full Warrants not so
transferred.
Any Warrant Certificate or Certificates may be exchanged at the
option of the holder thereof for another Warrant Certificate or Certificates
of different denominations, of like tenor and representing in the aggregate
the same number of Warrants, upon surrender of such Warrant Certificate or
Certificates, with the Form of Assignment duly filled in and executed, to the
Warrant Agent, at any time or from time to time after the close of business
on the date hereof and prior to the close of business on the Expiration Date.
The Warrant Agent shall promptly cancel the surrendered Warrant Certificate
and deliver the new Warrant Certificate pursuant to the provisions of this
Section.
Section 5. MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES
Upon receipt by the Company and the Warrant Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of any Warrant Certificate, and in the case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
them of all reasonable expenses incidental thereto, and, in the case of
mutilation, upon surrender and cancellation of the Warrant Certificate, the
Warrant Agent shall countersign and deliver a new Warrant Certificate of like
tenor for the same number of Warrants.
Section 6. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE
PRICE
The number and kind of securities or other property purchasable
upon exercise of a Warrant shall be subject to adjustment from time to time
upon the occurrence, after the date hereof, of any of the following events:
A. In case the Company shall (1) pay a dividend in, or make a
distribution of, shares of capital stock on its outstanding Common Stock, (2)
subdivide its outstanding shares of Common Stock into a greater number of
such shares or (3) combine its outstanding shares of Common Stock into a
smaller number of such shares, the total number of shares of Common Stock
purchasable upon the exercise of each Warrant outstanding immediately prior
thereto shall be adjusted so that the holder of any Warrant Certificate
thereafter surrendered for exercise shall be entitled to receive at the same
aggregate Exercise Price the number of shares of capital stock (of one or
more
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classes) which such holder would have owned or have been entitled to
receive immediately following the happening of any of the events described
above had such Warrant been exercised in full immediately prior to the record
date with respect to such event. Any adjustment made pursuant to this
Subsection shall, in the case of a stock dividend or distribution, become
effective as of the record date therefor and, in the case of a subdivision or
combination, be made as of the effective date thereof. If, as a result of an
adjustment made pursuant to this Subsection, the holder of any Warrant
Certificate thereafter surrendered for exercise shall become entitled to
receive shares of two or more classes of capital stock of the Company, the
Board of Directors of the Company (whose determination shall be conclusive
and shall be evidenced by a Board resolution filed with the Warrant Agent)
shall determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock.
B. In the event of a capital reorganization or a reclassification of
the Common Stock (except as provided in Subsection A. above or Subsection E.
below), any Warrantholder, upon exercise of Warrants, shall be entitled to
receive, in substitution for the Common Stock to which he would have become
entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that he would have been entitled to receive
at the same aggregate Exercise Price upon such reorganization or
reclassification if such Warrants had been exercised immediately prior to the
record date with respect to such event; and in any such case, appropriate
provision (as determined by the Board of Directors of the Company, whose
determination shall be conclusive and shall be evidenced by a certified Board
resolution filed with the Warrant Agent) shall be made for the application of
this Section 6 with respect to the rights and interests thereafter of the
Warrantholders (including but not limited to the allocation of the Exercise
Price between or among shares of classes of capital stock), to the end that
this Section 6 (including the adjustments of the number of shares of Common
Stock or other securities purchasable and the Exercise Price thereof) shall
thereafter be reflected, as nearly as reasonably practicable, in all
subsequent exercises of the Warrants for any shares or securities or other
property (or cash) thereafter deliverable upon the exercise of the Warrants.
C. Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant is adjusted as provided in this
Section 6, the Company will promptly file with the Warrant Agent a
certificate signed by a Chairman or co-Chairman of the Board or the President
or a Vice President of the Company and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company setting
forth the number and kind of securities or other property purchasable upon
exercise of a Warrant, as so adjusted, stating that such adjustments in the
number or kind of shares or other securities or property conform to the
requirements of this Section 6, and setting forth a brief statement of the
facts accounting for such adjustments. Promptly after receipt of such
certificate, the Company, or the Warrant Agent at the Company's request, will
deliver, by first-class, postage prepaid mail, a brief summary thereof (to be
supplied by the Company) to the registered holders of the outstanding Warrant
Certificates; PROVIDED, HOWEVER, that failure to file or to give any notice
required under this Subsection, or any defect therein, shall not affect the
legality or validity of any such adjustments under this Section 6; and
PROVIDED, FURTHER, that, where appropriate, such notice may be given in
advance and included as part of the notice required to be given pursuant to
Section 12 hereof.
D. In case of any consolidation of the Company with, or merger of the
Company into, another corporation (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Common
Stock), or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, the
corporation formed by such consolidation or merger or the corporation which
shall have acquired such assets, as the case may be, shall execute and
deliver to the Warrant Agent a supplemental warrant agreement providing that
the holder of each Warrant then outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, solely the kind and amount of shares of stock and other securities
and property (or cash) receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company
for which such Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental warrant agreement
shall provide for adjustments which shall be as nearly equivalent as may be
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practicable to the adjustments provided in this Section. The above provision
of this Subsection shall similarly apply to successive consolidations,
mergers, sales or transfers.
The Warrant Agent shall not be under any responsibility to
determine the correctness of any provision contained in any such supplemental
warrant agreement relating to either the kind or amount of shares of stock or
securities or property (or cash) purchasable by holders of Warrant
Certificates upon the exercise of their Warrants after any such
consolidation, merger, sale or transfer or of any adjustment to be made with
respect thereto, but subject to the provisions of Section 20 hereof, may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, a certificate of a firm of independent
certified public accountants (who may be the accountants regularly employed
by the Company) with respect thereto.
E. Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind
of shares as are stated in the similar Warrant Certificates initially
issuable pursuant to this Warrant Agreement.
F. The Company may retain a firm of independent public accountants of
recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee
of said Board, and not disapproved by the Warrant Agent, to make any
computation required under this Section, and a certificate signed by such
firm shall, in the absence of fraud or gross negligence, be conclusive
evidence of the correctness of any computation made under this Section.
G. For the purpose of this Section, the term "Common Stock" shall mean
(i) the Common Stock or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time as a result of an
adjustment made pursuant to this Section, the holder of any Warrant
thereafter surrendered for exercise shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in this Section, and all other provisions of this
Agreement, with respect to the Common Stock, shall apply on like terms to any
such other shares.
H. The Company may, from time to time and to the extent permitted by
law, reduce the exercise price of the Warrants by any amount for a period of
not less than 20 days. If the Company so reduces the exercise price of the
Warrants, it will give not less than 15 days' notice of such decrease, which
notice may be in the form of a press release, and shall take such other steps
as may be required under applicable law in connection with any offers or
sales of securities at the reduced price.
Section 7. EXERCISE AND REDEMPTION OF WARRANTS
Unless the Warrants have been redeemed as provided in this Section
7, the registered holder of any Warrant Certificate may exercise the Warrants
evidenced thereby, in whole at any time or in part from time to time at or
prior to the close of business, on the Expiration Date, subject to the
provisions of Section 9, at which time the Warrant Certificates shall be and
become wholly void and of no value. Warrants may be exercised by their
holders or redeemed by the Company as follows:
A. Exercise of Warrants shall be accomplished upon surrender of the
Warrant Certificate evidencing such Warrants, with the Form of Election to
Purchase on the reverse side thereof duly filled in and executed, to the
Warrant Agent at its stock transfer office in _____________, ______________,
together with payment to the Company of the Exercise Price (as of the date of
such surrender) of the Warrants then being exercised and an amount equal to
any applicable transfer tax and, if requested by the Company, any other taxes
or governmental charges which the Company may be required by law to collect
in respect of such exercise. Payment of the
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Exercise Price and other amounts may be made by wire transfer of good funds,
or by certified or bank cashier's check, payable in lawful money of the
United States of America to the order of the Company. No adjustment shall be
made for any cash dividends, whether paid or declared, on any securities
issuable upon exercise of a Warrant.
B. Upon receipt of a Warrant Certificate, with the Form of Election to
Purchase duly filled in and executed, accompanied by payment of the Exercise
Price of the Warrants being exercised (and of an amount equal to any
applicable taxes or government charges as aforesaid), the Warrant Agent shall
promptly request from the Transfer Agent with respect to the securities to be
issued and deliver to or upon the order of the registered holder of such
Warrant Certificate, in such name or names as such registered holder may
designate, a certificate or certificates for the number of full shares of the
securities to be purchased, together with cash made available by the Company
pursuant to Section 8 hereof in respect of any fraction of a share of such
securities otherwise issuable upon such exercise. If the Warrant is then
exercisable to purchase property other than securities, the Warrant Agent
shall take appropriate steps to cause such property to be delivered to or
upon the order of the registered holder of such Warrant Certificate. In
addition, if it is required by law and upon instruction by the Company, the
Warrant Agent will deliver to each Warrantholder a prospectus which complies
with the provisions of Section 9 of the Securities Act of 1933 and the
Company agrees to supply Warrant Agent with sufficient number of prospectuses
to effectuate that purpose.
C. In case the registered holder of any Warrant Certificate shall
exercise fewer than all of the Warrants evidenced by such Warrant
Certificate, the Warrant Agent shall promptly countersign and deliver to the
registered holder of such Warrant Certificate, or to his duly authorized
assigns, a new Warrant Certificate or Certificates evidencing the number of
Warrants that were not so exercised.
D. Each person in whose name any certificate for securities is issued
upon the exercise of Warrants shall for all purposes be deemed to have become
the holder of record of the securities represented thereby as of, and such
certificate shall be dated, the date upon which the Warrant Certificate was
duly surrendered in proper form and payment of the Exercise Price (and of any
applicable taxes or other governmental charges) was made; PROVIDED, HOWEVER,
that if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares as of, and the certificate for such
shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the
Expiration Date) and the Warrant Agent shall be under no duty to deliver the
certificate for such shares until such date. The Company covenants and
agrees that it shall not cause its stock transfer books to be closed for a
period of more than 20 consecutive business days except upon consolidation,
merger, sale of all or substantially all of its assets, dissolution or
liquidation or as otherwise provided by law.
E. The Warrants outstanding at the time of a redemption may be
redeemed at the option of the Company, in whole or in part on a pro-rata
basis, at any time if, at the time notice of such redemption is given by the
Company as provided in Paragraph F, below, the Daily Price has exceeded
$_____ for the twenty consecutive trading days immediately preceding the date
of such notice, at a price equal to $0.25 per Warrant (the "Redemption
Price"). For the purpose of the foregoing sentence, the term "Daily Price"
shall mean, for any relevant day, the closing bid price on that day as
reported by the principal exchange or quotation system on which prices for
the Common Stock are reported. On the redemption date the holders of record
of redeemed Warrants shall be entitled to payment of the Redemption Price
upon surrender of such redeemed Warrants to the Company at the principal
office of the Warrant Agent in _____________, ______________.
F. Notice of redemption of Warrants shall be given at least 30 days
prior to the redemption date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Warrant Agent and to
all of the holders of record of Warrants at their respective addresses
appearing on the books or transfer records of the Company or such other
address designated in writing by the holder of record to the Warrant Agent
not less than 40 days prior to the redemption date.
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G. From and after the redemption date, all rights of the
Warrantholders (except the right to receive the Redemption Price) shall
terminate, but only if (a) no later than one day prior to the redemption date
the Company shall have irrevocably deposited with the Warrant Agent as paying
agent a sufficient amount to pay on the redemption date the Redemption Price
for all Warrants called for redemption and (b) the notice of redemption shall
have stated the name and address of the Warrant Agent and the intention of
the Company to deposit such amount with the Warrant Agent no later than one
day prior to the redemption date.
H. The Warrant Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Warrant Agent for the redemption of
Warrants to which the holders of record of such redeemed Warrants who shall
have surrendered their Warrants are entitled.
I. Any amounts deposited with the Warrant Agent that are not required
for redemption of Warrants may be withdrawn by the Company. Any amounts
deposited with the Warrant Agent that shall be unclaimed after six months
after the redemption date may be withdrawn by the Company, and thereafter the
holders of the Warrants called for redemption for which such funds were
deposited shall look solely to the Company for payment. The Company shall be
entitled to the interest, if any, on funds deposited with the Warrant Agent
and the holders of redeemed Warrants shall have no right to any such interest.
J. If the Company fails to make a sufficient deposit with the Warrant
Agent as provided above, the holder of any Warrants called for redemption may
at the option of the holder (a) by notice to the Company declare the notice
of redemption a nullity as to such holder, or (b) maintain an action against
the Company for the Redemption Price. If the holder brings such an action,
the Company will pay reasonable attorneys' fees of the holder. If the holder
fails to bring an action against the Company for the Redemption Price within
60 days after the redemption date, the holder shall be deemed to have elected
to declare the notice of redemption to be a nullity as to such holder and
such notice shall be without any force or effect as to such holder. Except
as otherwise specifically provided in this Paragraph J, a notice of
redemption, once mailed by the Company as provided in Paragraph F shall be
irrevocable.
Section 8. FRACTIONAL INTERESTS
The Company shall not be required to issue any Warrant Certificate
evidencing a fraction of a Warrant or to issue fractions of shares of
securities on the exercise of the Warrants. If any fraction (calculated to
the nearest one-hundredth) of a Warrant or a share of securities would,
except for the provisions of this Section, be issuable on the exercise of any
Warrant, the Company shall, at its option, either purchase such fraction for
an amount in cash equal to the current value of such fraction computed on the
basis of the closing market price (as quoted on NASDAQ) on the trading day
immediately preceding the day upon which such Warrant Certificate was
surrendered for exercise in accordance with Section 7 hereof or issue the
required fractional Warrant or share. By accepting a Warrant Certificate,
the holder thereof expressly waives any right to receive a Warrant
Certificate evidencing any fraction of a Warrant or to receive any fractional
share of securities upon exercise of a Warrant, except as expressly provided
in this Section 8.
Section 9. RESERVATION OF EQUITY SECURITIES
The Company covenants that it will at all times reserve and keep
available, free from any pre-emptive rights, out of its authorized and
unissued equity securities, solely for the purpose of issue upon exercise of
the Warrants, such number of shares of equity securities of the Company as
shall then be issuable upon the exercise of all outstanding Warrants ("Equity
Securities"). The Company covenants that all Equity Securities which shall
be so issuable shall, upon such issue, be duly authorized, validly issued,
fully paid and non-assessable.
The Company covenants that if any equity securities, required to be
reserved for the purpose of issue upon exercise of the Warrants hereunder,
require registration with or approval of any governmental authority
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under any federal or state law before such shares may be issued upon exercise
of Warrants, the Company will use all commercially reasonable efforts to
cause such securities to be duly registered, or approved, as the case may be,
and, to the extent practicable, take all such action in anticipation of and
prior to the exercise of the Warrants, including, without limitation, filing
any and all post-effective amendments to the Company's Registration Statement
on Form SB-2 (Registration No. 333-50721) necessary to permit a public
offering of the securities underlying the Warrants at any and all times
during the term of this Agreement, PROVIDED, HOWEVER, that in no event shall
such securities be issued, and the Company is authorized to refuse to honor
the exercise of any Warrant, if such exercise would result in the opinion of
the Company's Board of Directors, upon advice of counsel, in the violation of
any law; and PROVIDED FURTHER that, in the case of a Warrant exercisable
solely for securities listed on a securities exchange or for which there are
at least two independent market makers, in lieu of obtaining such
registration or approval, the Company may elect to redeem Warrants submitted
to the Warrant Agent for exercise for a price equal to the difference between
the aggregate low asked price, or closing price, as the case may be, of the
securities for which such Warrant is exercisable on the date of such
submission and the Exercise Price of such Warrants; in the event of such
redemption, the Company will pay to the holder of such Warrants the
above-described redemption price in cash within 10 business days after
receipt of notice from the Warrant Agent that such Warrants have been
submitted for exercise.
Section 10. REDUCTION OF CONVERSION PRICE BELOW PAR VALUE
Before taking any action that would cause an adjustment pursuant to
Section 6 hereof reducing the portion of the Exercise Price required to
purchase one share of capital stock below the then par value (if any) of a
share of such capital stock, the Company will use its best efforts to take
any corporate action which, in the opinion of its counsel, may be necessary
in order that the Company may validly and legally issue fully paid and
non-assessable shares of such capital stock.
Section 11. PAYMENT OF TAXES
The Company covenants and agrees that it will pay when due and
payable any and all federal and state documentary stamp and other original
issue taxes which may be payable in respect of the original issuance of the
Warrant Certificates, or any shares of Common Stock or other securities upon
the exercise of Warrants. The Company shall not, however, be required (i) to
pay any tax which may be payable in respect of any transfer involved in the
transfer and delivery of Warrant Certificates or the issuance or delivery of
certificates for Common Stock or other securities in a name other than that
of the registered holder of the Warrant Certificate surrendered for purchase
or (ii) to issue or deliver any certificate for shares of Common Stock or
other securities upon the exercise of any Warrant Certificate until any such
tax shall have been paid, all such tax being payable by the holder of such
Warrant Certificate at the time of surrender.
Section 12. NOTICE OF CERTAIN CORPORATE ACTION
In case the Company after the date hereof shall propose (i) to
offer to the holders of Common Stock, generally, rights to subscribe to or
purchase any additional shares of any class of its capital stock, any
evidences of its indebtedness or assets, or any other rights or options or
(ii) to effect any reclassification of Common Stock (other than a
reclassification involving merely the subdivision or combination of
outstanding shares of Common Stock) or any capital reorganization, or any
consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or any sale,
transfer or other disposition of its property and assets substantially as an
entirety, or the liquidation, voluntary or involuntary dissolution or
winding-up of the Company, then, in each such case, the Company shall file
with the Warrant Agent and the Company, or the Warrant Agent on its behalf,
shall mail (by first-class, postage prepaid mail) to all registered holders
of the Warrant Certificates notice of such proposed action, which notice
shall specify the date on which the books of the Company shall close or a
record be taken for such offer of rights or options, or the date on which
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such reclassification, reorganization, consolidation, merger, sale, transfer,
other disposition, liquidation, voluntary or involuntary dissolution or
winding-up shall take place or commence, as the case may be, and which shall
also specify any record date for determination of holders of Common Stock
entitled to vote thereon or participate therein and shall set forth such
facts with respect thereto as shall be reasonably necessary to indicate any
adjustments in the Exercise Price and the number or kind of shares or other
securities purchasable upon exercise of Warrants which will be required as a
result of such action. Such notice shall be filed and mailed in the case of
any action covered by clause (i) above, at least ten days prior to the record
date for determining holders of the Common Stock for purposes of such action
or, if a record is not to be taken, the date as of which the holders of
shares of Common Stock of record are to be entitled to such offering; and, in
the case of any action covered by clause (ii) above, at least 20 days prior
to the earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation,
voluntary or involuntary dissolution or winding-up is expected to become
effective and the date on which it is expected that holders of shares of
Common Stock of record on such date shall be entitled to exchange their
shares for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, sale, transfer,
other disposition, liquidation, voluntary or involuntary dissolution or
winding-up.
Failure to give any such notice or any defect therein shall not
affect the legality or validity of any transaction listed in this Section 12.
Section 13. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANT CERTIFICATES, ETC.
The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay to the Company all moneys
received by the Warrant Agent for the purchase of securities or other
property through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its stock
transfer office. Copies of this Agreement may be obtained upon written
request addressed to the Warrant Agent at its stock transfer office in
_____________, ______________.
Section 14. WARRANTHOLDER NOT DEEMED A STOCKHOLDER
No Warrantholder, as such, shall be entitled to vote, receive
dividends or be deemed the holder of Common Stock or any other securities of
the Company which may at any time be issuable on the exercise of the Warrants
represented thereby for any purpose whatever, nor shall anything contained
herein or in any Warrant Certificate be construed to confer upon any
Warrantholder, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise), or to receive notice
of meetings or other actions affecting stockholders (except as provided in
Section 12 hereof), or to receive dividend or subscription rights, or
otherwise, until such Warrant Certificate shall have been exercised in
accordance with the provisions hereof and the receipt of the Exercise Price
and any other amounts payable upon such exercise by the Warrant Agent.
Section 15. RIGHT OF ACTION
All rights of action in respect to this Agreement are vested in the
respective registered holders of the Warrant Certificates; and any registered
holder of any Warrant Certificate, without the consent of the Warrant Agent
or of any other holder of a Warrant Certificate, may, in his own behalf for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise in
9
respect of, his right to exercise the Warrants evidenced by such Warrant
Certificate, for the purchase of shares of the Common Stock in the manner
provided in the Warrant Certificate and in this Agreement.
Section 16. AGREEMENT OF HOLDERS OF WARRANT CERTIFICATES
Every holder of a Warrant Certificate by accepting the same
consents and agrees with the Company, the Warrant Agent and with every other
holder of a Warrant Certificate that:
A. the Warrant Certificates are transferable on the registry books of
the Warrant Agent only upon the terms and conditions set forth in this
Agreement; and
B. the Company and the Warrant Agent may deem and treat the person in
whose name the Warrant Certificate is registered as the absolute owner of the
Warrant (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company or the Warrant Agent) for all purposes
whatever and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary.
Section 17. CANCELLATION OF WARRANT CERTIFICATES
In the event that the Company shall purchase or otherwise acquire
any Warrant Certificate or Certificates after the issuance thereof, such
Warrant Certificate or Certificates shall thereupon be delivered to the
Warrant Agent and be canceled by it and retired. The Warrant Agent shall
also cancel any Warrant Certificate delivered to it for exercise, in whole or
in part, or delivered to it for transfer, split-up, combination or exchange.
Warrant Certificates so canceled shall be delivered by the Warrant Agent to
the Company from time to time, or disposed of in accordance with the
instructions of the Company.
Section 18. CONCERNING THE WARRANT AGENT
The Company agrees to pay to the Warrant Agent from time to time,
on demand of the Warrant Agent, reasonable compensation for all services
rendered by it hereunder and also its reasonable expenses, including counsel
fees, and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Warrant Agent for, and to hold it
harmless against, any loss, liability or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Warrant Agent,
arising out of or in connection with the acceptance and administration of
this Agreement.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT
Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of
any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a
successor warrant agent under the provisions of Section 21 hereof. In case
at the time such successor to the Warrant Agent shall succeed to the agency
created by this Agreement, any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent and deliver such
Warrant Certificates so countersigned; and in case at that time any of the
Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor Warrant Agent;
and in all
10
such cases such Warrant Certificates shall have the full force provided in
the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
Section 20. DUTIES OF WARRANT AGENT
The Warrant Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Warrant Certificates, by their acceptance thereof,
shall be bound:
A. The Warrant Agent may consult with counsel satisfactory to it (who
may be counsel for the Company or the Warrant Agent's in-house counsel), and
the opinion of such counsel shall be full and complete authorization and
protection to the Warrant Agent as to any action taken, suffered or omitted
by it in good faith and in accordance with such opinion; PROVIDED, HOWEVER,
that the Warrant Agent shall have exercised reasonable care in the selection
of such counsel. Fees and expenses of such counsel, to the extent reasonable,
shall be paid by the Company.
B. Whenever in the performance of its duties under this Agreement, the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a Chairman or co-Chairman of the Board
or the President or a Vice President or the Secretary of the Company and
delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
C. The Warrant Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
D. The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Warrant Certificates (except its countersignature on the Warrant Certificates
and such statements or recitals as describe the Warrant Agent or action taken
or to be taken by it) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
E. The Warrant Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant
Certificate; nor shall it be responsible for the making of any change in the
number of shares of Common Stock for which a Warrant is exercisable required
under the provisions of Section 6 or responsible for the manner, method or
amount of any such change or the ascertaining of the existence of facts that
would require any such adjustment or change (except with respect to the
exercise of Warrant Certificates after actual notice of any adjustment of the
Exercise Price); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Common Stock to be issued pursuant to this Agreement or any
11
Warrant Certificate or as to whether any shares of Common Stock will, when
issued, be validly issued, fully paid and non-assessable.
F. The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred. All rights of
action under this Agreement or under any of the Warrants may be enforced by
the Warrant Agent without the possession of any of the Warrants or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery of judgment shall be
for the ratable benefit of the registered holders of the Warrant
Certificates, as their respective rights or interests may appear.
G. The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any other legal
entity.
H. The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from a
Chairman or co-Chairman of the Board or President or a Vice President or the
Secretary or the Controller of the Company, and to apply to such officers for
advice or instructions in connection with the Warrant Agent's duties, and it
shall not be liable for any action taken or suffered or omitted by it in good
faith in accordance with instructions of any such officer.
I. The Warrant Agent will not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
J. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys, agents or employees and the Warrant Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys, agents or employees or for any loss to the Company
resulting from such neglect or misconduct; PROVIDED, HOWEVER, that reasonable
care shall have been exercised in the selection and continued employment of
such attorneys, agents and employees.
K. The Warrant Agent will not incur any liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken,
or any failure to take action, in reliance on any notice, resolution, waiver,
consent, order, certificate, or other paper, document or instrument
reasonably believed by the Warrant Agent to be genuine and to have been
signed, sent or presented by the proper party or parties.
L. The Warrant Agent will act hereunder solely as agent of the Company
in a ministerial capacity, and its duties will be determined solely by the
provisions hereof. The Warrant Agent will not be liable for anything which
it may do or refrain from doing in connection with this Agreement except for
its own negligence, bad faith or willful conduct.
Section 21. CHANGE OF WARRANT AGENT
The Warrant Agent may resign and be discharged from its duties
under this Agreement upon 30 days' prior notice in writing mailed, by
registered or certified mail, to the Company. The Company may remove the
Warrant Agent or any successor warrant agent upon 30 days' prior notice in
writing, mailed to the Warrant Agent or successor warrant agent, as the case
may be, by registered or certified mail. If the Warrant Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the
12
Warrant Agent and shall, within 15 days following such appointment, give
notice thereof in writing to each registered holder of the Warrant
Certificates. If the Company shall fail to make such appointment within a
period of 15 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent, then the Company agrees to perform the duties of
the Warrant Agent hereunder until a successor Warrant Agent is appointed.
After appointment and execution of a copy of this Agreement in effect at that
time, the successor Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor Warrant Agent, within a reasonable
time, any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
Failure to give any notice provided for in this Section, however, or any
defect therein shall not affect the legality or validity of the resignation
or removal of the Warrant Agent or the appointment of the successor warrant
agent, as the case may be.
Section 22. ISSUANCE OF NEW WARRANT CERTIFICATES
Notwithstanding any of the provisions of this Agreement or the
several Warrant Certificates to the contrary, the Company may, at its option,
issue new Warrant Certificates in such form as may be approved by its Board
of Directors to reflect any adjustment or change in the Exercise Price or the
number or kind of shares purchasable under the several Warrant Certificates
made in accordance with the provisions of this Agreement.
Section 23. NOTICES
Notice or demand pursuant to this Agreement to be given or made on
the Company by the Warrant Agent or by the registered holder of any Warrant
Certificate shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed
in writing by the Company with the Warrant Agent) as follows:
audiohighway.com
20600 Mariani Avenue
Cupertino, California 95014
Subject to the provisions of Section 21, any notice pursuant to
this Agreement to be given or made by the Company or by the holder of any
Warrant Certificate to or on the Warrant Agent shall be sufficiently given or
made if sent by first-class or registered mail, postage prepaid, addressed
(until another address is filed in
13
writing by the Warrant Agent with the Company) as follows:
-----------------------------
-----------------------------
-----------------------------
Attention: Corporate Trust Department
Any notice or demand authorized to be given or made to the
registered holder of any Warrant Certificate under this Agreement shall be
sufficiently given or made if sent by first-class or registered mail, postage
prepaid, to the last address of such holder as it shall appear on the
registers maintained by the Warrant Agent.
Section 24. MODIFICATION OF AGREEMENT
The Warrant Agent may, without the consent or concurrence of the
Warrantholders, by supplemental agreement or otherwise, concur with the
Company in making any changes or corrections in this Agreement that the
Warrant Agent shall have been advised by counsel (who may be counsel for the
Company) are necessary or desirable to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or
manifest error herein contained, or to make any other provisions in regard to
matters or questions arising hereunder and which shall not be inconsistent
with the provisions of the Warrant Certificates and which shall not adversely
affect the interests of the Warrantholders. As of the date hereof, this
Agreement contains the entire and only agreement, understanding,
representation, condition, warranty or covenant between the parties hereto
with respect to the matters herein, supersedes any and all other agreements
between the parties hereto relating to such matters, and may be modified or
amended only by a written agreement signed by both parties hereto pursuant to
the authority granted by the first sentence of this Section.
Section 25. SUCCESSORS
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 26. CALIFORNIA CONTRACT
This Agreement and each Warrant Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of California and
for all purposes shall be construed in accordance with the laws of said State.
Section 27. TERMINATION
This Agreement shall terminate as of the close of business on the
Expiration Date, or such earlier date upon which all Warrants shall have been
exercised or redeemed, except that the Warrant Agent shall account to the
Company as to all Warrants outstanding and all cash held by it as of the
close of business on the Expiration Date.
Section 28. BENEFITS OF THIS AGREEMENT
Nothing in this Agreement or in the Warrant Certificates shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent, and their respective successors and assigns hereunder and the
registered holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this
14
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent, their respective successors and assigns
hereunder and the registered holders of the Warrant Certificates.
Section 29. DESCRIPTIVE HEADINGS
The descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
Section 30. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each
of which shall be an original, but such counterparts shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
15
be duly executed, all as of the day and year first above written.
audiohighway.com
By:
-------------------------
Title:
------------------
By:
-------------------------
Title:
16
EXHIBIT A
VOID AFTER 5 P.M. PACIFIC TIME ON _______, 2003
WARRANTS TO PURCHASE COMMON STOCK
W_____ _________ Warrants
audiohighway.com
CUSIP ___________
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Warrants
("Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from audiohighway.com, a corporation incorporated under the laws of
the State of California ("Company"), subject to the terms and conditions set
forth hereinafter and in the Warrant Agreement hereinafter more fully
described (the "Warrant Agreement") referred to, at any time on or before the
close of business on ___________, 2003 or, if such Warrant is redeemed as
provided in the Warrant Agreement, at any time prior to the effective time of
such redemption (the "Expiration Date"), one fully paid and non-assessable
share of Common Stock Stock of the Company ("Common Stock") upon presentation
and surrender of this Warrant Certificate, with the instructions for the
registration and delivery of Common Stock filled in, at the stock transfer
office in __________,____________, of ________________________, Warrant Agent
of the Company ("Warrant Agent") or of its successor warrant agent or, if
there be no successor warrant agent, at the corporate offices of the Company,
and upon payment of the Exercise Price (as defined in the Warrant Agreement)
and any applicable taxes paid either in cash, or by certified or official
bank check, payable in lawful money of the United States of America to the
order of the Company. Each Warrant initially entitles the holder to purchase
one share of Common Stock for $7.50. The number and kind of securities or
other property for which the Warrants are exercisable are subject to further
adjustment in certain events, such as mergers, splits, stock dividends,
recapitalizations and the like, to prevent dilution. The Company may redeem
any or all outstanding and unexercised Warrants at any time if the Daily
Price has exceeded $____ for twenty consecutive trading days immediately
preceeding the date of notice of such redemption, upon 30 days notice, at a
price equal to $0.25 per Warrant. For the purpose of the foregoing sentence,
the term "Daily Price" shall mean, for any relevant day, the closing bid
price on that day as reported by the principal exchange or quotation system
on which prices for the Common Stock are reported. All Warrants not
theretofore exercised or redeemed will expire on ________, 2003.
This Warrant Certificate is subject to all of the terms, provisions
and conditions of the Warrant Agreement, dated as of ________, 1998 ("Warrant
Agreement"), between the Company and the Warrant Agent, to all of which
terms, provisions and conditions the registered holder of this Warrant
Certificate consents by acceptance hereof. The Warrant Agreement is
incorporated herein by reference and made a part hereof and reference is made
to the Warrant Agreement for a full description of the rights, limitations of
rights, obligations, duties and immunities of the Warrant Agent, the Company
and the holders of the Warrant Certificates. Copies of the Warrant Agreement
are available for inspection at the stock transfer office of the Warrant
Agent or may be obtained upon written request addressed to the Company at 1
Deer Park Drive, Suite 1, Monmouth Junction, California 08852, Attention:
Controller.
i
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but shall make adjustment therefor in cash on the
basis of the current market value of any fractional interest as provided in
the Warrant Agreement.
In certain cases, the sale of securities by the Company upon
exercise of Warrants would violate the securities laws of the United States,
certain states thereof or other jurisdictions. The Company has agreed to use
its best efforts to cause a registration statement to continue to be
effective during the term of the Warrants with respect to such sales under
the Securities Act of 1933, and to take such action under the laws of various
states as may be required to cause the sale of securities upon exercise to be
lawful. However, the Company will not be required to honor the exercise of
Warrants if, in the opinion of the Board of Directors, upon advice of
counsel, the sale of securities upon such exercise would be unlawful. In
certain cases, the Company may, but is not required to, purchase Warrants
submitted for exercise for a cash price equal to the difference between the
market price of the securities obtainable upon such exercise and the exercise
price of such Warrants.
This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the
absence of any successor warrant agent, at the corporate offices of the
Company, may be exchanged for another Warrant Certificate or Certificates
evidencing in the aggregate the same number of Warrants as the Warrant
Certificate or Certificates so surrendered. If the Warrants evidenced by
this Warrant Certificate shall be exercised in part, the holder hereof shall
be entitled to receive upon surrender hereof another Warrant Certificate or
Certificates evidencing the number of Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled
to vote, receive dividends or be deemed the holder of Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose whatever, nor shall anything contained in the
Warrant Agreement or herein be construed to confer upon the holder of this
Warrant Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof or give or withhold consent
to any corporate action (whether upon any matter submitted to stockholders at
any meeting thereof, or give or withhold consent to any merger,
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, conveyance or
otherwise) or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Warrant Agreement) or to receive
dividends or subscription rights or otherwise until the Warrants evidenced by
this Warrant Certificate shall have been exercised and the Common Stock
purchasable upon the exercise thereof shall have become deliverable as
provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise
within any period during which the transfer books for the Company's Common
Stock or other class of stock purchasable upon the exercise of the Warrants
evidenced by this Warrant Certificate are closed for any purpose, the Company
shall not be required to make delivery of certificates for shares purchasable
upon such transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same
consents and agrees with the Company, the Warrant Agent, and with every other
holder of a Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of
the Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner
hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company or the Warrant Agent) for all purposes
whatever and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary.
ii
The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise
of Warrants evidenced by this Warrant Certificate until any tax which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant
to the Warrant Agreement shall have been paid, such tax being payable by the
holder of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
WITNESS the facsimile signatures of the proper officers of the
Company and its corporate seal.
Dated:
audiohighway.com
By:
----------------------
Chief Executive Officer
Attest:
-------------------------
Secretary
Countersigned
- ----------------------------------------
By:
-------------------------
Authorized Officer
iii