Exhibit 4.3
THIS WARRANT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
AND IS NOT TRANSFERABLE
EXCEPT AS PROVIDED HEREIN
audiohighway.com
PURCHASE WARRANT
Issued To:
PAULSON INVESTMENT COMPANY, INC.
Exercisable To Purchase
200,000 Units
of
audiohighway.com
Void after , 2003
This is to certify that, for value received and subject to the terms and
conditions set forth below, the Warrantholder (hereinafter defined) is
entitled to purchase, and the Company promises and agrees to sell and issue
to the Warrantholder, at any time on or after __________, 1999 and on or
before __________, 2003, up to 200,000 Units (hereinafter defined) at the
Exercise Price (hereinafter defined).
This Warrant Certificate is issued subject to the following terms and
conditions:
1. DEFINITIONS OF CERTAIN TERMS. Except as may be otherwise clearly
required by the context, the following terms have the following meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Cashless Exercise" means an exercise of Warrants in which, in lieu
of payment of the Exercise Price, the Holder elects to receive a lesser
number of Securities such that the value of the Securities that such Holder
would otherwise have been entitled to receive but has agreed not to receive,
as determined by the closing price of such Securities on the date of exercise
or, if such date is not a trading day, on the next prior trading day, is
equal to the Exercise Price with respect to such exercise. A Holder may only
elect a Cashless Exercise if the Securities issuable by the Company on such
exercise are publicly traded securities.
(c) "Closing Date" means the date on which the Offering is closed.
(d) "Commission" means the Securities and Exchange Commission.
(e) "Common Stock" means the common stock, no par value, of the Company.
(f) "Company" means audiohighway.com, a California corporation.
(g) "Company's Expenses" means any and all expenses payable by the
Company or the Warrantholder in connection with an offering described in
Section 6 hereof, except Warrantholder's Expenses.
(h) "Effective Date" means the date on which the Registration Statement
is declared effective by the Commission.
(i) "Exercise Price" means the price at which the Warrantholder may
purchase one Unit upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof. The initial Exercise Price is $____ per
Unit.
(j) "Offering" means the public offering of Units made pursuant to the
Registration Statement.
(k) "Participating Underwriter" means any underwriter participating in
the sale of the Securities pursuant to a registration under Section 6 of this
Warrant Certificate.
(l) "Registration Statement" means the Company's registration statement
(File No. 333-_____) as amended on the Closing Date.
(m) "Rules and Regulations" means the rules and regulations of the
Commission adopted under the Act.
(n) "Securities" means the securities obtained or obtainable upon
exercise of the Warrant or securities obtained or obtainable upon exercise,
exchange, or conversion of such securities.
(o) "Unit" means one share of Common Stock and one Unit Warrant.
(p) "Unit Warrant" means a warrant to purchase one share of Common Stock
issued pursuant to the Warrant Agreement.
(q) "Warrant Agreement" means that certain Warrant Agreement, dated as
of ________, 1998, by and between the Company and ______________________.
(r) "Warrant Certificate" means a certificate evidencing the Warrant.
(s) "Warrantholder" means a record holder of the Warrant or
Securities. The initial Warrantholder is Paulson Investment Company, Inc.
(t) "Warrantholder's Expenses" means the sum of (i) the aggregate
amount of cash payments made to an underwriter, underwriting syndicate, or
agent in connection with an offering described in Section 6 hereof multiplied
by a fraction the numerator of which is the aggregate sales price of the
Securities sold by such underwriter, underwriting syndicate, or agent in such
offering and the denominator of which is the aggregate sales price of all of
the securities sold by such underwriter, underwriting syndicate, or agent in
such offering and (ii) all out-of-pocket expenses of the Warrantholder,
except for the fees and disbursements of one firm retained as legal counsel
for the Warrantholder that will be paid by the Company.
(u) "Warrant" means the warrant evidenced by this certificate, any
similar certificate issued in connection with the Offering, or any
certificate obtained upon transfer or partial exercise of the Warrant
evidenced by any such certificate.
2. EXERCISE OF WARRANTS. All or any part of the Warrant may be
exercised commencing on the first anniversary of the Effective Date and
ending at 5 p.m. Pacific Time on the fifth anniversary of the Effective Date
by surrendering this Warrant Certificate, together with appropriate
instructions, duly executed by the Warrantholder or by its duly authorized
attorney, at the office of the Company, 20600 Mariani Avenue, Cupertino,
California 95014, or at such other office or agency as the Company may
designate. The date on which such instructions are received by the Company
shall be the date of exercise. If the Holder has elected a Cashless
Exercise, such instructions shall so state. Upon receipt of notice of
exercise, the Company shall immediately instruct its transfer agent to
prepare certificates for the
Securities to be received by the Warrantholder upon completion of the Warrant
exercise. When such certificates are prepared, the Company shall notify the
Warrantholder and deliver such certificates to the Warrantholder or as per
the Warrantholder's instructions immediately upon payment in full by the
Warrantholder, in lawful money of the United States, of the Exercise Price
payable with respect to the Securities being purchased, if any. If the
Warrantholder shall represent and warrant that all applicable registration
and prospectus delivery requirements for their sale have been complied with
upon sale of the Securities received upon exercise of the Warrant, such
certificates shall not bear a legend with respect to the Securities Act of
1933.
If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver
to the Warrantholder a new Warrant Certificate (dated the date hereof), in
form and tenor similar to this Warrant Certificate, evidencing that portion
of the Warrant not exercised. The Securities to be obtained on exercise of
the Warrant will be deemed to have been issued, and any person exercising the
Warrants will be deemed to have become a holder of record of those
Securities, as of the date of the payment of the Exercise Price.
3. ADJUSTMENTS IN CERTAIN EVENTS. The number, class, and price of the
Securities are subject to adjustment from time to time upon the happening of
certain events as follows:
(a) If the outstanding shares of the Company's Common Stock are divided
into a greater number of shares or a dividend in stock is paid on the Common
Stock, the number of shares of Common Stock for which the Warrant is then
partially exercisable will be proportionately increased and the Exercise
Price will be proportionately reduced; and, conversely, if the outstanding
shares of Common Stock are combined into a smaller number of shares of Common
Stock, the number of shares of Common Stock for which the Warrant is then
exercisable will be proportionately reduced and the Exercise Price will be
proportionately increased. The increases and reductions provided for in this
subsection 3(a) will be made with the intent and, as nearly as practicable,
the effect that neither the percentage of the total equity of the Company
obtainable on exercise of the Warrants nor the price payable for such
percentage upon such exercise will be affected by any event described in this
subsection 3(a).
(b) In case of any change in the Common Stock through merger,
consolidation, reclassification, reorganization, partial or complete
liquidation, purchase of substantially all the assets of the Company, or
other change in the capital structure of the Company, then, as a condition of
such change, lawful and adequate provision will be made so that the holder of
this Warrant Certificate will have the right thereafter to receive upon the
exercise of the Warrant the kind and amount of shares of stock or other
securities or property to which he would have been entitled if, immediately
prior to such event, he had held the number of shares of Common Stock
obtainable upon the exercise of the Warrant. In any such case, appropriate
adjustment will be made in the application of the provisions set forth herein
with respect to the rights and interest thereafter of the Warrantholder, to
the end that the provisions set forth herein will thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the exercise of the Warrant. The
Company will not permit any change in its capital structure to occur
unless the issuer of the shares of stock or other securities to be received
by the holder of this Warrant Certificate, if not the Company, agrees to be
bound by and comply with the provisions of this Warrant Certificate.
(c) When any adjustment is required to be made in the number of shares
of Common Stock, other securities, or the property purchasable upon exercise
of the Warrant, the Company will promptly determine the new number of such
shares or other securities or property purchasable upon exercise of the
Warrant and (i) prepare and retain on file a statement describing in
reasonable detail the method used in arriving at the new number of such
shares or other securities or property purchasable upon exercise of the
Warrant and (ii) cause a copy of such statement to be mailed to the
Warrantholder within thirty (30) days after the date of the event giving rise
to the adjustment.
(d) No fractional shares of Common Stock or other securities will be
issued in connection with the exercise of the Warrant, but the Company will
pay, in lieu of fractional shares, a cash payment therefor on the basis of
the mean between the bid and asked prices of the Common Stock in the
over-the-counter market or the closing price on a national securities
exchange on the day immediately prior to exercise.
(e) If securities of the Company or securities of any subsidiary of the
Company are distributed pro rata to holders of Common Stock, such number of
securities will be distributed to the Warrantholder or his assignee upon
exercise of his rights hereunder as such Warrantholder or assignee would have
been entitled to if this Warrant Certificate had been exercised prior to the
record date for such distribution. The provisions with respect to adjustment
of the Common Stock provided in this Section 3 will also apply to the
securities to which the Warrantholder or his assignee is entitled under this
subsection 3(e).
(f) Notwithstanding anything herein to the contrary, there will be no
adjustment made hereunder on account of the sale of the Common Stock or other
Securities purchasable upon exercise of the Warrant.
4. RESERVATION OF SECURITIES. The Company agrees that the number of
shares of Common Stock or other Securities sufficient to provide for the
exercise of the Warrant upon the basis set forth above will at all times
during the term of the Warrant be reserved for exercise.
5. VALIDITY OF SECURITIES. All Securities delivered upon the exercise
of the Warrant will be duly and validly issued in accordance with their
terms, and the Company will pay all documentary and transfer taxes, if any,
in respect of the original issuance thereof upon exercise of the Warrant.
6. REGISTRATION OF SECURITIES ISSUABLE ON EXERCISE OF WARRANT
CERTIFICATE.
(a) The Company will register the Securities with the Commission
pursuant to the Act so as to allow the unrestricted sale of the Securities to
the public from time to time commencing on the first anniversary of the
Effective Date and ending at 5:00 p.m. Pacific Time on the fifth anniversary
of the Effective Date (the "Registration Period"). The Company will also
file such applications and other documents necessary to permit the sale of
the Securities to the public during the Registration Period in those states
in which the Units were qualified for sale in the Offering or such other
states as the Company and the Warrantholder agree to. In order to comply
with the provisions of this Section 6(a), the Company is not required to file
more than one registration statement. No registration right of any kind,
"piggyback" or otherwise, will last longer than five years from the Effective
Date.
(b) The Company will pay all of the Company's Expenses and each
Warrantholder will pay its pro rata share of the Warrantholder's Expenses
relating to the registration, offer, and sale of the Securities.
(c) Except as specifically provided herein, the manner and conduct of
the registration, including the contents of the registration, will be
entirely in the control and at the discretion of the Company. The Company
will file such post-effective amendments and supplements as may be necessary
to maintain the currency of the registration statement during the period of
its use. In addition, if the Warrantholder participating in the registration
is advised by counsel that the registration statement, in their opinion, is
deficient in any material respect, the Company will use its best efforts to
cause the registration statement to be amended to eliminate the concerns
raised.
(d) The Company will furnish to the Warrantholder the number of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably
request in order to facilitate the disposition of Securities owned by it.
(e) The Company will, at the request of Warrantholders holding at least
50 percent of the then outstanding Warrants, (i) furnish an opinion of the
counsel representing the Company for the purposes of the registration
pursuant to this Section 6, addressed to the Warrantholders and any
Participating Underwriter, (ii) furnish an appropriate letter from the
independent public accountants of the Company, addressed to the
Warrantholders and any Participating Underwriter, and (iii) make
representations and warranties to the Warrantholders and any Participating
Underwriter. A request pursuant to this subsection (e) may be made on three
occasions. The documents required to be delivered pursuant to this
subsection (e) will be dated within ten days of the request and will be, in
form and substance, equivalent to similar documents furnished to the
underwriters in connection with the Offering, with such changes as may be
appropriate in light of changed circumstances.
7. INDEMNIFICATION IN CONNECTION WITH REGISTRATION.
(a) If any of the Securities are registered, the Company will indemnify
and hold harmless each selling Warrantholder, any person who controls any
selling Warrantholder
within the meaning of the Act, and any Participating Underwriter against any
losses, claims, damages, or liabilities, joint or several, to which any
Warrantholder, controlling person, or Participating Underwriter may be
subject under the Act or otherwise; and it will reimburse each Warrantholder,
each controlling person, and each Participating Underwriter for any legal or
other expenses reasonably incurred by the Warrantholder, controlling person,
or Participating Underwriter in connection with investigating or defending
any such loss, claim, damage, liability, or action, insofar as such losses,
claims, damages, or liabilities, joint or several (or actions in respect
thereof), arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date
thereof, in any such registration statement or any preliminary prospectus or
final prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, HOWEVER, that the Company will not be
liable in any case to the extent that any loss, claim, damage, or liability
arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any registration statement,
preliminary prospectus, final prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information
furnished by a Warrantholder for use in the preparation thereof. The
indemnity agreement contained in this subparagraph (a) will not apply to
amounts paid to any claimant in settlement of any suit or claim unless such
payment is first approved by the Company, such approval not to be
unreasonably withheld.
(b) Each selling Warrantholder, as a condition of the Company's
registration obligation, will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed any registration
statement or other filing or any amendment or supplement thereto, and any
person who controls the Company within the meaning of the Act, against any
losses, claims, damages, or liabilities to which the Company or any such
director, officer, or controlling person may become subject under the Act or
otherwise, and will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, or action, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in said registration
statement, any preliminary or final prospectus, or other filing, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission was made in said registration statement,
preliminary or final prospectus, or other filing, or amendment or supplement,
in reliance upon and in conformity with written information furnished by such
Warrantholder for use in the preparation thereof; PROVIDED, HOWEVER, that the
indemnity agreement contained in this subparagraph (b) will not apply to
amounts paid to any claimant in settlement of any suit or claim unless such
payment is first approved by the Warrantholder, such approval not to be
unreasonably withheld.
(c) Promptly after receipt by an indemnified party under subparagraphs
(a) or (b) above of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, notify the indemnifying party of the commencement
thereof; but the omission to notify the indemnifying party will not relieve
it from any liability that it may have to any indemnified party otherwise
than under subparagraphs (a) and (b).
(d) If any such action is brought against any indemnified party and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party; and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation.
8. RESTRICTIONS ON TRANSFER. This Warrant Certificate and the Warrant
may not be sold, transferred, assigned or hypothecated for a one-year period
after the Effective Date except to underwriters of the Offering or to
individuals who are either a partner or an officer of such an underwriter or
by will or by operation of law. The Warrant may be divided or combined, upon
request to the Company by the Warrantholder, into a certificate or
certificates evidencing the same aggregate number of Warrants.
9. NO RIGHTS AS A SHAREHOLDER. Except as otherwise provided herein, the
Warrantholder will not, by virtue of ownership of the Warrant, be entitled to
any rights of a shareholder of the Company but will, upon written request to
the Company, be entitled to receive such quarterly or annual reports as the
Company distributes to its shareholders.
10. NOTICE. Any notices required or permitted to be given hereunder
will be in writing and may be served personally or by mail; and if served
will be addressed as follows:
If to the Company:
audiohighway.com
20600 Mariani Avenue
Cupertino, California 95014
Attn: Treasurer
If to the Warrantholder:
at the address furnished
by the Warrantholder to the
Company for the purpose of
notice.
Any notice so given by mail will be deemed effectively given 48 hours
after mailing when deposited in the United States mail, registered or
certified mail, return receipt requested, postage prepaid and addressed as
specified above. Any party may by written notice to the other specify a
different address for notice purposes.
11. APPLICABLE LAW. This Warrant Certificate will be governed by and
construed in accordance with the laws of the State of Oregon, without
reference to conflict of laws principles thereunder. All disputes relating
to this Warrant Certificate shall be tried before the courts of Oregon
located in Multnomah County, Oregon to the exclusion of all other courts that
might have jurisdiction.
Dated as of , 1998
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audiohighway.com
By:
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President
Agreed and Accepted as of , 1998
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PAULSON INVESTMENT COMPANY, INC.
By:
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Lorraine Maxfield
Senior Vice President -- Research