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EXHIBIT 4.1
TRANSFER OF THIS WARRANT IS PROHIBITED, EXCEPT AS PROVIDED IN SECTION 2. THE
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED, OR UNDER THE LAWS OF ANY STATE, AND THUS MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER
SUCH LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
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Warrant No. 4 Warrant to Purchase 233,333
Warrant Shares (subject to
adjustment)
TAKEOUTMUSIC.COM HOLDINGS CORP.
a Washington corporation
takeoutmusic.com Holdings Corp., a Washington corporation (the "Company"), for
value received, hereby grants to Steven A. Rothstein IRA Rollover CIBC World
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Market Corp. as Custodian (the "Holder"), the right, subject to the terms and
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conditions set forth herein, to purchase from the Company, at any time and from
time to time, up to Two Hundred Thirty-Three Thousand Three Hundred Thirty-Three
(233,333) duly authorized, validly issued, fully paid and non-assessable shares
(the "Warrant Shares") of the common stock, par value $.01 per share, of the
Company (the "Common Stock"), at a per share exercise price of fifty-one and
three-quarter cents ($0.5175) subject to adjustment as provided in Section 3
hereof (the "Exercise Price"). This Warrant shall terminate if not exercised in
full on or prior to October 15, 2000. The number and character of the securities
purchasable upon exercise of such rights of purchase, and the Exercise Price,
are subject to adjustment as provided herein. The term "Warrant" as used herein
shall include this Warrant, any Warrant or Warrants issued in substitution for
or replacement of this Warrant, or any Warrant or Warrants into which this
Warrant may be divided or exchanged. The term "Warrant Shares" shall mean the
Common Stock issuable upon exercise of this Warrant.
1. METHOD OF EXERCISE; PAYMENT OF EXERCISE PRICE
(a) Subject to the other terms and conditions of this Warrant, the
purchase rights evidenced by this Warrant may be exercised in
whole or in part, from time to time, subject to the conditions
set forth above, by the Holder's presentation of this Warrant to
the Company at its principal offices, accompanied by a duly
executed Notice of Exercise, in the form attached hereto as
Exhibit I and by this reference incorporated herein, and by
payment of the aggregate Exercise Price in the manner specified
in Section 1(b) hereof, for the number of Warrant Shares
specified in the Notice of Exercise.
(b) The aggregate Exercise Price for the number of Warrant Shares
specified in any Notice of Exercise may be paid in cash by
certified check or bank cashier's check or
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wire transfer of immediately available funds. Alternatively, this
Warrant may be exercised by surrendering this Warrant in exchange
for the number of Warrant Shares equal to the product of (x) the
number of shares of Common Stock as to which this Warrant is
being exercised, multiplied by (y) a fraction, the numerator of
which is the Market Price (as defined below) of one share of
Common Stock minus the Exercise Price of one Warrant Share and
the denominator of which is the Market Price per share of Common
Stock. Solely for the purposes of this Section 1 Market Price
shall be calculated either (i) on the date on which the form of
election attached hereto is deemed to have been sent to the
Company pursuant to this Section 1 ("Notice Date") or (ii) as the
average of the Market Price for each of the five trading days
immediately preceding the Notice Date, whichever of (i) or (ii)
results in a greater Market Price. As used herein, the phrase
"Market Price" at any date shall be deemed to be the last
reported sale price, or, in case no such reported sale takes
place on such day, the average of the last reported sale prices
for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock
is not listed or admitted to trading on any national securities
exchange, the average closing sale price as furnished by the NASD
through The Nasdaq Stock Market, Inc. ("Nasdaq") or by the OTC
Electronic Bulletin Board or similar organization if Nasdaq is no
longer reporting such information, or if the Common Stock is not
publicly quoted, as determined in good faith by resolution of the
Board of Directors of the Company, based on the best information
available to it.
(c) In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the Warrant Shares so
purchased shall be dated the date of such exercise and delivered
to the Holder hereof within a reasonable time, not exceeding
fifteen (15) days after such exercise. If this Warrant is
exercised in part only, as soon as is practicable after the
presentation and surrender of this Warrant to the Company for
exercise, the Company shall execute and deliver to the Holder a
new Warrant, containing the same terms and conditions as this
Warrant, evidencing the right of the Holder to purchase the
number of Warrant Shares as to which this Warrant has not been
exercised. Upon receipt of this Warrant by the Company at its
principal offices accompanied by the items required for exercise
specified in subsection (a) above, the Holder shall be deemed to
be the holder of record of the Warrant Shares issuable upon such
exercise and a shareholder of the Company, notwithstanding that
the stock transfer books of the Company may then be closed or
that certificates representing such Warrant Shares may not then
be actually delivered to the Holder.
2. TRANSFERABILITY, EXCHANGE OR LOSS OF WARRANT
(a) Except as provided herein, the Warrants shall not be
transferable, in whole or in part. The Warrants may be
transferred to any person receiving the Warrants from the Holder
at the Holder's death pursuant to a will or trust or the laws of
intestate succession.
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(b) This Warrant, alone or with any other Warrant owned by the same
Holder containing substantially the same terms and conditions, is
exchangeable at the option of the Holder but at the Company's
sole expense, at any time prior to its expiration either by its
terms or by its exercise in full, upon presentation and surrender
to the Company at its principal offices, for another Warrant or
other Warrants, of different denominations but containing the
same terms and conditions as this Warrant, entitling the Holder
to purchase the same aggregate number of Warrant Shares that were
purchasable pursuant to the Warrant or Warrants presented and
surrendered. At the time of presentation and surrender by the
Holder to the Company, the Holder shall also deliver to the
Company a written notice, signed by the Holder, specifying the
denominations in which new Warrants are to be issued to the
Holder.
(c) The Company shall execute and deliver to the Holder a new Warrant
containing the same terms and conditions as this Warrant upon
receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant,
provided that: (i) in the case of loss, theft or destruction, the
Company receives from the Holder a reasonably satisfactory
indemnification; and (ii) in the case of mutilation, the Company
receives from the Holder a reasonably satisfactory form of
indemnity and the Holder presents and surrenders this Warrant to
the Company for cancellation. Any new Warrant executed and
delivered shall constitute an additional contractual obligation
on the part of the Company regardless of whether the Warrant that
was lost, stolen, destroyed, or mutilated is enforceable by
anyone at any time.
(d) The Company will, at the time of or at any time after each
exercise of this Warrant, upon the request of the Holder hereof
or of any Warrant Shares issued upon such exercise, acknowledge
in writing its continuing obligation to afford to such Holder all
rights to which such Holder shall continue to be entitled after
such exercise in accordance with the terms of this Warrant,
provided, that if any such Holder shall fail to make any such
request, the failure shall not affect the continuing obligation
of the Company to afford such rights to such Holder.
3. ADJUSTMENTS OF EXERCISE PRICE
(a) Except as provided herein, upon the occurrence of any of the
events specified in this Section 3, the Exercise Price in effect
at the time of such event and the number of Warrant Shares then
purchasable pursuant to this Warrant at that time shall be
proportionately adjusted as provided herein.
(b) If the number of shares of Common Stock outstanding at any time
after the date hereof is increased by a stock dividend payable in
shares of Common Stock or by a subdivision or split-up of shares
of Common Stock, then, on the date such payment is made or such
change is effective, the Exercise Price shall be appropriately
decreased so that the number of Warrant Shares issuable on the
exercise of this Warrant shall be increased in proportion to such
increase of outstanding shares.
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(c) If the number of shares of Common Stock outstanding at any time
after the date hereof is decreased by a combination of the
outstanding shares of Common Stock, then, on the effective date
of such combination, the Exercise Price shall be appropriately
increased so that the number of Warrant Shares issuable on the
exercise of this Warrant shall be decreased in proportion to such
decrease of outstanding shares.
(d) All calculations under this Section 3 shall be made to the
nearest one hundredth (1/100) cent or to the nearest one
hundredth (1/100) of a share, as the case may be. In no event
shall the Exercise Price be reduced to less than $.01.
(e) No adjustment in the Exercise Price need be made if such
adjustment would result in a change in the Exercise Price of less
than $0.01. Any adjustment of less than $0.01 which is not made
shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, on a cumulative
basis, amounts to an adjustment of $0.01 or more in the Exercise
Price.
(f) Upon the occurrence of each adjustment or readjustment of the
Exercise Price pursuant to this Section 3, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the
Holder hereof a certificate of an Officer of the Company setting
forth such adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is based. The
Company shall, upon written request at any time of any Holder
hereof, furnish or cause to be furnished to such Holder a like
certificate setting forth (i) such adjustments and readjustments,
(ii) the Exercise Price at the time in effect, and (iii) the
number of Warrant Shares and the amount, if any, of other
property which at the time would be received upon the exercise of
this Warrant.
(g) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend
(other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property or to receive
any right, the Company shall mail to the Holder hereof at least
ten (10) days prior to such record date, a notice specifying the
date on which any such record is to be taken for the purpose of
such dividend or distribution or right, and the amount and
character of such dividend, distribution or right.
(h) For purposes of this Section 3, equity securities owned or held
at any relevant time by or for the account of the Company in its
treasury shall not be deemed to be outstanding for purposes of
the calculations and adjustments described.
4. STOCK FULLY PAID; RESERVATION OF WARRANT STOCK
The Company covenants and agrees that all Warrant Shares that may be issued upon
the exercise of this Warrant will, upon issuance, be fully paid and
non-assessable and free from all taxes, liens and
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charges with respect to issuance. The Company further covenants and agrees that
during the period within which this Warrant may be exercised, the Company will
at all times have authorized and reserved for the purpose of the issue upon
exercise of the rights evidenced by this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.
5. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933
(a) This Warrant is non-transferable. The Warrant Shares, and all
other equity securities issued or issuable upon exercise of this
Warrant, may not be offered, sold or transferred, in whole or in
part, in the absence of an effective registration statement under
the Securities Act of 1933, as amended (the "Act"), and all
applicable state securities statutes, or an opinion of counsel
acceptable to the Company to the effect that such registration is
not required.
(b) The Company shall cause the following legends to be set forth on
each certificate representing the Warrant Shares issuable upon
exercise of this Warrant:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD, PLEDGED, ASSIGNED, OR OTHERWISE
TRANSFERRED UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (B) IN COMPLIANCE WITH RULE 144 UNDER THE
SECURITIES ACT, OR (C) THE COMPANY HAS BEEN FURNISHED WITH AN OPINION
OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT NO REGISTRATION
IS REQUIRED IN CONNECTION WITH SUCH SALE, ASSIGNMENT OR TRANSFER OR
THAT AN EXEMPTION TO SUCH REGISTRATION IS AVAILABLE."
6. FRACTIONAL SHARES
No fractional shares of Warrant Shares or scrip representing fractional shares
of Warrant Shares shall be issued upon the exercise of all or any part of this
Warrant. With respect to any fraction of a unit or any security called for upon
any exercise of this Warrant, the Company shall pay to the Holder an amount in
money equal to that fraction multiplied by the then Current Market Price. For
purposes of this Agreement, the term "Current Market Price" shall mean the
average for the 20 consecutive trading days immediately preceding the date in
question of the daily per share closing prices of the Common Stock as reported
by the OTC Bulletin Board or the Nasdaq SmallCap Market or the principal
securities exchange on which it is listed, as the case made be. The closing
price referred to above shall be the last reported sale price or, if no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case as reported by the OTC Bulletin Board of the
Nasdaq SmallCap Market or the principal securities exchange on which it is
listed, as the case may be.
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7. RIGHTS OF THE HOLDER
Prior to the exercise hereof, the Holder shall not be entitled to any rights as
a shareholder of the Company by reason of this Warrant, either at law or equity.
8. NOTICES
Except as may be otherwise expressly provided herein, any notice, consent, or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been given: (i) five business days after the
date sent by United States certified mail, return receipt requested, with proper
postage thereon; (ii) one day after sent if sent by overnight courier of
national cognition; or (iii) when transmitted or delivered, if sent by facsimile
or personally delivered (as the case may be), and shall be addressed as follows:
(a) if to the Company, at 381 Broadway Suite 201, New York, New York
10013, and
(b) if to the Holder, at 2737 Illinois Road, Wilmette, Illinois 60091
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
9. APPLICABLE LAW
Washington law shall govern the interpretation, construction, and enforcement of
this Warrant and all transactions and agreements contemplated hereby,
notwithstanding any state's choice of law rules to the contrary.
10. MISCELLANEOUS PROVISIONS
(a) Subject to the terms and conditions contained herein, this
Warrant shall be binding on the Company and its successors and
shall inure to the benefit of the original Holder, its successors
and assigns and all holders of Warrant Shares.
(b) This Warrant may not be modified or terminated, nor may any
performance or condition hereof be waived in whole or in part
except by an agreement in writing signed by the party against
whom enforcement of such modification, termination, or waiver is
sought.
(c) If any provision of this Warrant is held by a court of competent
jurisdiction to be invalid, illegal or unenforceable, such
provision shall be severed, enforced to the extent possible, or
modified in such a way as to make it enforceable, and the
invalidity, illegality or unenforceability thereof shall not
affect the remainder of this Warrant.
(d) Paragraph headings used in this Warrant are for convenience only
and shall not be taken or construed to define or limit any of the
terms of this Warrant. Unless otherwise
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provided herein, or unless the context otherwise requires, the
use of the singular shall include the plural and the use of any
gender shall include all genders.
ISSUED and executed as of the 4th day of February, 2000.
TAKEOUTMUSIC.COM HOLDINGS CORP.
By:________________________
Name:
Title:
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EXHIBIT I
NOTICE OF EXERCISE
(To be executed by a Holder desiring to exercise the right to purchase Warrant
Shares pursuant to the Warrant.)
TAKEOUTMUSIC.COM HOLDINGS CORP.
The undersigned Holder of the Warrant hereby:
1. irrevocably elects to exercise the Warrant to the extent of purchasing
__________ Warrant Shares;
2. makes payment in full of the aggregate Exercise Price for those Warrant
Shares in the amount of $________________ by certified check or wire
transfer of immediately available funds;
3. requests, if the number of Warrant Shares purchased are not all the Warrant
Shares purchasable pursuant to the Warrant, that a new Warrant of like
tenor for the remaining Warrant Shares purchasable pursuant to the Warrant
be issued and delivered to the undersigned at the address indicated below.
Dated: Holder:
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By:
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Its:
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Address:
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