Exhibit 4(ii)
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Agreement") is made and entered into as of this
____ day of ___________, 2001, by and between SOUNDWORKS INTERNATIONAL, INC. a
corporation organized and existing under the laws of the State of Nevada
("Company"), and THE FIDELITY TRANSFER COMPANY, as warrant agent ("Warrant
Agent").
WHEREAS, the Company proposes to offer and sell a maximum of 1,500,000
Units ("Units") containing 1,500,000 shares of common stock ("Common Stock"),
$.001 par value per share and 1,500,000 redeemable Common Stock purchase
warrants ("Warrants") exercisable for an aggregate of 1,500,000 shares of Common
Stock, together with all of the Common Stock and Warrants comprising all such
Units and the shares of Common Stock issuable upon exercise of the warrants,
pursuant to a Registration Statement on Form SB-2 (the "Prospectus"), File
Number 333-53220, filed with the Securities and Exchange Commission; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, registration of transfer, exchange and exercise of the
Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent
to act as agent for the Company in accordance with the instructions hereinafter
set forth in this Agreement, and the Warrant Agent hereby accepts such
appointment.
2. Form of Warrants. The text and the terms of the Warrants, and the form of
election to purchase shares of Common Stock appearing on the reverse side
thereof shall be substantially as set forth in Exhibit A attached hereto and
made a part hereof. The Warrants shall be executed on behalf of the Company by
the manual or facsimile signature of the president or a vice president of the
Company and by the manual or facsimile signature of the secretary or assistant
secretary of the Company under its corporate seal, affixed or in facsimile.
The Warrants shall be dated by the Warrant Agent as of the initial date of
issuance thereof, and upon transfer or exchange, the Warrant shall be dated as
of such subsequent issuance date.
3. Registration and Countersignature. The Warrant Agent shall maintain books for
the transfer and registration of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective registered holders, and upon subsequent issuance, such
Warrants shall be registered in the names of the respective succeeding
registered holders. The Warrants shall be countersigned by the Warrant Agent (or
by any successor to the Warrant Agent then acting as warrant agent under this
Agreement) and shall not be valid for any purpose unless so countersigned.
Warrants may be so countersigned,
however, by the Warrant Agent (or by its successor as warrant agent) and be
delivered by the Warrant Agent, notwithstanding that the persons whose manual or
facsimile signature appears thereon as proper officers of the Company shall have
ceased to be such officers at the time of such countersignature or delivery.
Until a Warrant is transferred on the books of the Warrant Agent, the Company
and the Warrant Agent may treat any registered holder of Warrants as the
absolute owner thereof for all purposes, notwithstanding any notice to the
contrary.
4. Registration of Transfers and Exchanges. The Warrant Agent shall transfer any
outstanding Warrants on the books to be maintained by the Warrant Agent for that
purpose, upon surrender thereof for transfer, properly endorsed or accompanied
by appropriate instructions for transfer with proper documentary stamps affixed
thereto, if requested. Upon any such transfer, a new Warrant shall be issued to
the transferee, and the surrendered Warrant shall be canceled by the Warrant
Agent. Warrants so canceled shall be delivered by the Warrant Agent to the
Company from time to time. Warrants may be exchanged at the option of the holder
thereof when surrendered at the office of the Warrant Agent, for another
Warrant, or other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock. The Warrant Agent is hereby irrevocably authorized to countersign
and deliver the Warrants in accordance with the provisions of this Paragraph 4,
and the Company, whenever required by the Warrant Agent, will supply the Warrant
Agent with Warrants duly executed on behalf of the Company for such purpose.
5. Exercise of Warrants. Subject to the provisions of this Agreement, each
registered holder of Warrants shall have the right, which right may be exercised
as in such Warrants expressed, during the five year period commencing thirty
days from the date of the Company's Prospectus dated _________ ____, 2001
("Prospectus") to purchase from the Company, and the Company shall issue and
sell to such registered holder of Warrants, the number of fully paid and
non-assessable shares of Common Stock specified in such Warrants, upon surrender
to the Company at the office of the Warrant Agent, with the form of election to
purchase on the reverse side thereof duly completed and signed, and upon payment
to the Warrant Agent for the account of the Company of the Exercise Price, as
hereinafter defined, for the number of shares of Common Stock in respect of
which such Warrants are then exercised. Payment of such Exercise Price may be
made in cash or by certified check, bank draft, or postal or express money
order, payable in United States dollars, to the order of the Company. Subject to
the provisions of Paragraph 8 hereof, upon such surrender of Warrants and
payment of the Exercise Price as aforesaid, the Company, acting through the
Warrant Agent, shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the registered holder of such Warrants
and in such name or names as such registered holder may designate, a certificate
or certificates for the full number of shares of Common Stock so purchased upon
the exercise of such Warrants. Such certificates shall be deemed to have been
issued, and any person so designated to be named therein shall be deemed to have
become a holder of record of such Common Stock, as of the date of surrender of
such Warrants and payment of the Exercise Price, as aforesaid; provided,
however, that if, at the date of surrender of such Warrants and the payment of
such Exercise Price, the transfer books for the Common Stock purchasable upon
the exercise of such Warrants shall be closed, the certificates for the shares
in respect of which such Warrants are then exercised shall be issuable as of the
date on which such books shall next be opened, and until such date the Company
shall be under no duty to deliver any certificate for
such shares; provided further, however, that the transfer books aforesaid,
unless otherwise required by law, shall not be closed at any one time for a
period longer than 20 days. The right of purchase represented by the Warrants
shall be exercisable, at the election of the registered holders thereof, either
as an entirety or, from time to time, for part of the shares specified therein,
and in the event that any Warrant is exercised in respect of less than all of
the shares specified therein at any time prior to the date of expiration of the
Warrants, a new Warrant or Warrants will be issued for the remaining number of
Common Stock specified in the Warrant so surrendered, and the Warrant Agent is
hereby irrevocably authorized to countersign and to deliver the required new
Warrants pursuant to the provisions of this Paragraph 5 and of Paragraph 3 of
this Agreement, and the Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrants duly executed on behalf of the Company
for such purposes.
Notwithstanding anything contained herein to the contrary, no Warrant may
be exercised if the issuance of Common Stock in connection therewith would
constitute a violation of the registration provisions of federal or state
securities laws.
The Company will use its best efforts to file and keep effective a current
prospectus which will permit the purchase and sale of the Warrants and the
Common Stock underlying the Warrants. In addition, the Company will use its best
efforts to qualify for sale the Warrants and the Common Stock underlying the
Warrants in those states in which the Warrants and the Common Stock are to be
offered.
Upon thirty (30) days' prior written notice to all holders of the
Warrants, the Company shall have the right to reduce the exercise price and/or
extend the term of the Warrants in compliance with the requirements of Rule
13e-4 to the extent applicable.
The "Exercise Price" of the Warrants shall mean the exercise price
specified in the Warrants until the occurrence of a recapitalization or
reclassification that, pursuant to the provisions hereof, shall require an
increase or decrease in the exercise price of the Warrants, and thereafter shall
mean said price as adjusted from time to time in accordance with the provisions
hereof. No such adjustment shall be made unless such adjustment would change the
then purchase price per share by Ten Cents ($.10) or more; provided, however,
that all adjustments not so made shall be deferred and made when the aggregate
thereof would change the then purchase price per share by Ten Cents ($.10) or
more. No adjustment made pursuant to any provision hereof shall have the effect
of increasing the total consideration payable upon exercise of any of the
Warrants.
6. Adjustments in Certain Cases. In case the Company shall at any time prior to
the exercise or termination of any of the Warrants effect a recapitalization or
reclassification of such character that its Common Stock shall be changed into
or become exchangeable for a larger or smaller number of shares, then, upon the
effective date thereof, the number of shares of Common Stock that the holders of
the Warrants shall be entitled to purchase upon exercise thereof shall be
increased or decreased, as the case may be, in direct proportion to the increase
or decrease in such number of shares of Common Stock by reason of such
recapitalization or reclassification on, and the purchase price per share of
such recapitalized or reclassified Common Stock shall, in
the case of an increase in the number of shares, be proportionately decreased
and, in the case of a decrease in the number of shares, be proportionately
increased.
In case the Company shall at any time prior to the exercise or termination
of any of the Warrants distribute to holders of its Common Stock cash, evidences
of indebtedness, or other securities or assets, other than as dividends or
distributions payable out of current or accumulated earnings, then, in any such
case, the holders of the Warrants shall be entitled to receive, upon exercise
thereof, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
that such holder would have been entitled to receive with respect to the Common
Stock as a result of the happening of such event, had the Warrants been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (without giving effect to any restriction upon such
exercise).
In case the Company shall at any time prior to the exercise or termination
of any of the Warrants consolidate or merge with any other corporation or
transfer all or substantially all of its assets to any other corporation
preparatory to a dissolution, then the Company shall, as a condition precedent
to such transaction, cause effective provision to be made so that the holders of
the Warrants, upon the exercise thereof after the effective date of such
transaction, shall be entitled to receive the kind and amount of shares,
evidences of indebtedness, and/or other property receivable on such transaction
by a holder of the number of shares of Common Stock as to which the Warrants
were exercisable immediately prior to such transaction (without giving effect to
any restriction upon such exercise); and, in any such case, appropriate
provision shall be made with respect to the rights and interests of the holders
thereof to the effect that the provisions of the Warrants shall thereafter be
applicable (as nearly as may be practicable) with respect to any shares,
evidences of indebtedness, or other securities or assets thereafter deliverable
upon exercise of the Warrants.
Whenever the number of shares of Common Stock or other types of securities
or assets purchasable upon exercise of any of the Warrants shall be adjusted as
provided herein, the Company shall forthwith obtain and file with its corporate
records a certificate or letter from a firm of independent public accountants of
recognized standing, which may include the Company's then independent auditing
firm setting forth the computation and the adjusted number of shares of Common
Stock or other securities or assets purchasable hereunder resulting from such
adjustments, and a copy of such certificate or letter shall be mailed to each of
the registered holders of the Warrants. Any such certificate or letter shall be
conclusive evidence as to the correctness of the adjustment or adjustments
referred to therein and shall be available for inspection by the holders of the
Warrants on any day during normal business hours.
In the event that at any time as a result of an adjustment made pursuant
hereto the holders of the Warrants shall become entitled to purchase upon
exercise thereof shares, evidences of indebtedness, or other securities or
assets (other than Common Stock, then, wherever appropriate, all references
herein to Common Stock shall be deemed to refer to and include such shares,
evidences of indebtedness, or other securities or assets, and thereafter the
number of such shares, evidences of indebtedness, or other securities or assets
shall be subject to adjustment
from time to time in a manner and upon terms as nearly equivalent as practicable
to the provisions hereof.
7. Redemption. The Warrants may be redeemed at the option of the Company, at a
redemption price of $.05 per Warrant (subject to adjustment as set forth herein)
at any time commencing six (6) months from the date of the Prospectus upon not
less than thirty (30) days prior written notice, subject to exercise by the
Warrant holder, if the closing price of the Company's Common Stock, as reported
by the principal exchange on which the Common Stock is traded, or, if the
Company's Common Stock is not traded on an exchange, the closing bid price as
reported by the National Quotation Bureau, Inc., as the case may be, equals or
exceeds $2.40 per share for thirty (30) consecutive trading days. However, the
Company may not redeem the Warrants at any time that a current registration
statement under the Securities Act of 1933 covering the shares of Common Stock
issuable upon exercise of the Warrants is not then in effect. On and after the
date fixed for redemption, the Registered Holder shall have no rights with
respect to the Warrants except to receive the $.05 per Warrant upon surrender of
this Warrant Certificate.
8. Payment of Taxes. The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of securities upon the exercise of the
Warrants; provided, however, that the Company shall not be required to pay any
tax or taxes that may be payable in respect of any transfer involved in the
issue or delivery of any securities in a name other than that of the registered
holder of Warrants in respect of which such securities are issued and, in such
case, neither the Company nor the Warrant Agent shall be required to issue or
deliver any certificate representing such securities or any Warrant until the
person requesting the same has paid to the Company or the Warrant Agent the
amount of such tax or has established to the Company's satisfaction that such
tax has been paid.
9. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Warrant Agent may countersign and
deliver in exchange and substitution for and upon cancellation of the mutilated
Warrant or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent right or
interest, but only upon receipt of evidence satisfactory to the Warrant Agent of
such loss, theft or destruction of such Warrants and indemnity, if requested,
also satisfactory to them. Applicants for such substitute Warrants shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe.
10. Reservation of Common Stock. Prior to the issuance of any Warrants, there
shall have been reserved, and the Company shall at all times keep reserved out
of the authorized and unissued Common Stock, a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase represented by
the Warrants, and the transfer agent for the Common Stock and every subsequent
transfer for any of the Company's Common Stock issuable upon the exercise of any
of the rights of purchase aforesaid are hereby irrevocably authorized and
directed at all times to reserve such number of authorized and unissued Common
Stock as shall be requisite for such purpose. The Company agrees that all Common
Stock issued upon exercise of the Warrants shall be, at the time of delivery of
the certificates representing such Common Stock, validly issued and outstanding,
fully paid and non-assessable. The Company
will keep a copy of this Agreement on file with the transfer agent for the
Common Stock and with every subsequent transfer agent for the Company's Common
Stock issuable upon the exercise of the right of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such transfer agent stock certificates required to honor
outstanding Warrants that have been exercised. The Company will supply such
transfer agent with duly executed stock certificates for such purpose. All
Warrants surrendered in the exercise of the rights thereby evidenced shall be
canceled by the Warrant Agent and shall thereafter be delivered to the Company,
and such canceled Warrants shall constitute sufficient evidence of the number of
shares of Common Stock that have been issued upon the exercise of such Warrants.
All Warrants surrendered for transfer, exchange or partial exercise shall be
canceled by the Warrant Agent and delivered to the Company. Promptly after the
date of expiration of the Warrants, the Warrant Agent shall certify to the
Company the total aggregate amount of Warrants then outstanding and, thereafter,
no Common Stock shall be subject to reservation in respect of such Warrants.
11. Disposition of Proceeds on Exercise of Warrants. Upon the exercise of the
Warrants, the Warrant Agent shall promptly deposit the payment into an escrow
account established by mutual agreement of the Company and the Warrant Agent at
a federally insured commercial bank. All funds deposited in the escrow account
will be disbursed on a weekly basis to the Company once they have been
determined by the Warrant Agent to be collected funds. Once the funds are
determined to be collected, the Warrant Agent shall cause the share
certificate(s) representing the exercised Warrants to be issued.
12. Merger or Consolidation or Change of Name of Warrant Agent. Any corporation
or company that may succeed to the business of the Warrant Agent by merger or
consolidation or otherwise to which the Warrant Agent shall be a party, or any
corporation or company or otherwise succeeding to the 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, however, that such corporation would be eligible for
appointment as a successor Warrant Agent under the provision of Paragraph 14 of
this Agreement. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement or in case at any time the name
of the Warrant Agent shall be changed, and any of the Warrants 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
Warrants so countersigned; and in case at the time any of the Warrants shall not
have been countersigned, the successor to the Warrant Agent may countersign such
Warrants, either in the name of the predecessor Warrant Agent or in the name of
the successor Warrant Agent; and in all such cases, such Warrants shall have the
full force provided in the Warrants 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 Warrants shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignature under its prior name and
deliver Warrants so countersigned; and if at that time any of the Warrants shall
not have been countersigned, the Warrant Agent may countersign such Warrants
either in its prior name or in its changed name; and in all such cases, such
Warrants shall have the full force provided in the Warrants and this Agreement.
13. Duties of the Warrant Agent.
(a) The Warrant Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company shall be bound:
(i) The statements contained herein and in the Warrants shall be
taken as statements of the Company, and the Warrant Agent assumes no
responsibility for the correctness of any of the same, except such as described
by the Warrant Agent or action or actions taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution of the
Warrants, except as herein otherwise provided.
(ii) The Warrant Agent shall not be responsible or any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Warrants to be complied with by the Company.
(iii) 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.
(iv) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company), and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or advice of such counsel,
provided the Warrant Agent shall have exercised reasonable care in the selection
and continued employment of such counsel.
(v) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant for any action taken in reliance
upon any notice, resolution, waiver, consent, order, certificate or other paper,
document or instrument reasonably believed by it to have been signed, sent or
presented by the proper party or parties.
(vi) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement; to reimburse the Warrant Agent for all expenses, taxes,
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement; and to indemnify the Warrant
Agent and save it harmless from and against any and all liabilities, including
judgments, costs and reasonable attorneys' fees for anything done or omitted by
the Warrant Agent in the execution of this Agreement, except as a result of the
Warrant Agent's negligence or bad faith.
(vii) The Warrant Agent shall be under no obligation to institute
any action, suit or legal proceeding, or to take any other action likely to
involve expense, unless the Company or one or more registered holders of
Warrants shall furnish the Warrant Agent with reasonable security and indemnity.
All rights of action under this Agreement or under any of the Warrants or in 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
benefit of the registered holders of the Warrants, as their respective rights or
interests may appear.
(viii) The Warrant Agent and any shareholder, director, officer,
partner 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 the 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.
(ix) The Warrant Agent shall act hereunder solely as agent, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not be liable for anything that it may do or refrain from doing in
connection with this Agreement, except for its own negligence or bad faith.
(x) The Warrant Agent shall keep copies of this Agreement available
for inspection by holders of the Warrants during normal business hours at its
principal office in Washington.
14. Change of Warrant Agent. The Warrant Agent may resign and be discharged from
its duties under this Agreement by giving notice in writing to the Company and
by giving notice by mail to holders of the Warrants at their addresses as such
addresses appear on the Warrant register of such resignation, specifying a date
when such resignation shall take effect, which date shall not be less than 30
days after the mailing of said notice. The Warrant Agent may be removed at the
discretion of the Company by like notice to the Warrant Agent from the Company
and by like mailing of notice to the holders of the Warrants. If the Warrant
Agent shall resign or be removed or otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after such removal, or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by the registered holder of a
Warrant (who shall, with such notice, submit his Warrant for inspection by the
Company), then the registered holder of any Warrant may apply to any court of
competent jurisdiction for the appointment of a successor to the Warrant Agent.
After appointment, any 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 any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance
act or deed necessary for the purpose. Not later than the effective date of any
such appointment, the Company shall give notice thereof to the predecessor
Warrant Agent and each transfer agent for the Common Stock, and shall forthwith
give notice to the holders of the Warrants in the manner prescribed in this
section. Failure to file or mail any notice provided for in this Section 14,
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 any successor
Warrant Agent, as the case may be.
15. Identity of Transfer Agent. Forthwith upon the appointment of any transfer
agent other than the Warrant Agent for the Common Stock of the Company issuable
upon the exercise of the rights of purchase represented by the Warrants, the
Company will file with the Warrant Agent a statement setting forth the name and
address of such transfer agent.
16. Notices. Any notice pursuant to this Agreement to be given or made by the
Warrant Agent or by the registered holder of any Warrant to the Company shall be
deemed to have been sufficiently given or made if sent by certified mail, return
receipt requested, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:
To the Company: SoundWorks International, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx 00000
To the Warrant Agent:
The Fidelity Transfer Company
0000 Xxxxx Xxxx Xxxxxx ( Xxxxx 000),
Xxxx Xxxx Xxxx, Xxxx 00000
Any notice pursuant to this Agreement to be given or made by the Company or by
the registered holder of any Warrant to the Warrant Agent shall be deemed to
have been sufficiently given or made if sent by certified mail, return receipt
requested, postage prepaid, addressed (until another address is filed in writing
by the Warrant Agent with the Company) to the Warrant Agent as set forth above.
17. Standard of Conduct. Notwithstanding any implication to the contrary
elsewhere herein, whenever the Company or the Warrant Agent are required or
permitted to make any judgment or to take any action, no such judgment or action
shall be made or taken in bad faith or in any arbitrary or capricious fashion.
18. Supplements and Amendments. The Company and the Warrant Agent may, from time
to time, supplement or amend this Agreement without the approval of any of the
holders of the Warrants in order to cure any ambiguity or to correct or
supplement any provision contained herein that may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder that the Company and the Warrant Agent
may deem necessary or desirable, that shall not be inconsistent with the
provisions of the Warrants, and that shall not materially adversely affect the
rights of the holders of the Warrants.
19. Successors. All of the covenants and provisions hereof 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.
20. Merger or Consolidation of the Company. The Company will not merge or
consolidate with or into any other corporation, unless the corporation resulting
from such merger or consolidation (if not the Company) shall expressly assume,
by supplemental agreement satisfactory in form to the Warrant Agent and executed
and delivered to the Warrant Agent, the due and punctual performance and
observance of each and every covenant and condition of this Agreement to be
performed and observed by the Company.
21. Nevada Contract. This Agreement and each Warrant issued hereunder shall be
deemed to be a contract made under the laws of the State of Nevada and for all
purposes shall be construed in accordance with the laws of said state.
22. Benefits of this Agreement. Nothing in this Agreement shall be construed to
give any person or corporation, other than the Company, the Warrant Agent and
the registered holders of the Warrants, any legal or equitable right, remedy or
claim under this Agreement, but this Agreement shall be for the sole and
exclusive benefit of the Company and the Warrant Agent and their respective
successors and of the holders of the Warrant certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
SOUNDWORKS INTERNATIONAL, INC.
By:_____________________________________
Name: __________________________________
Its: ___________________________________
ATTEST:
_________________________
THE FIDELITY TRANSFER COMPANY
By:_____________________________________
Name: __________________________________
Its: ___________________________________
ATTEST:
_________________________
[FORM OF FACE OF WARRANT CERTIFICATE]
No.___ _______ Warrants
VOID AFTER ____________, 2006
WARRANT CERTIFICATE FOR PURCHASE
OF COMMON STOCK
SOUNDWORKS INTERNATIONAL, INC.
This certifies that FOR VALUE RECEIVED, _____________________ or
registered assigns (the "Registered Holder") is the owner of the number of
Common Stock Redeemable Warrants ("Warrants") specified above. Each Warrant
represented hereby entitles the Registered Holder to purchase, subject to the
terms and conditions set forth in this Warrant Certificate and the Warrant
Agreement of even date herewith (the "Warrant Agreement"), one fully paid and
nonassessable share of Common Stock, par value $.001 per share ("Common Stock"),
of SOUNDWORKS INTERNATIONAL, INC., a Nevada corporation (the "Company") at any
time commencing _______________, 2001, and expiring on the Expiration Date (as
hereinafter defined), upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse side hereof duly executed,
at the corporate office of The Fidelity Transfer Company, as Warrant Agent, or
its successor (the "Warrant Agent"), accompanied by payment of $1.20 per share
(subject to adjustment) (the "Purchase Price") in the lawful money of the United
States of America in cash or by official bank or certified check made payable to
the Company. No fractional shares of Common Stock will be issued.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement by and among the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
The term "Expiration Date" shall mean 5:00 p.m. (Washington Time) on
_______, 2006, or such earlier date as the Warrants shall be redeemed. If such
date shall in the State of Washington be a holiday or a day on which banks are
authorized to close, then the Expiration
Date shall mean 5:00 p.m. (Washington time) the next following day which in the
State of Washington is not a holiday or a day on which banks are authorized to
be closed.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of the Warrants represented hereby unless a registration statement
under the Securities Act of 1933, as amended, with respect to such securities is
effective. The Company has covenanted and agreed that it will file a
registration statement and will use its best efforts to cause the same to become
effective and to keep such registration statement current while any of the
Warrants are outstanding. The Warrants represented hereby shall not be
exercisable by a Registered Holder in any state where such exercise would be
unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment, with the appropriate transfer fee
per certificate in addition to any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this Warrant Certificate
at such office, a new Warrant Certificate or Warrant Certificates representing
an equal aggregate number of Warrants will be issued to the transferee in
exchange therefor, subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
The Warrants represented hereby may be redeemed at the option of the
Company, commencing six (6) months following the effective date of the Company's
registration statement on Form SB-2 filed with the Securities and Exchange
Commission at a redemption price of $.05 per Warrant, upon thirty (30) days'
prior written notice, if (i) the average closing price of the Common Stock, as
reported on the American Stock Exchange, the principle exchange on which the
Common Stock is traded, the American Stock Exchange, as the case may be, equals
or exceeds $2.40 per share for any thirty (30) consecutive trading days ending
within thirty (30) days prior to the date of the notice of redemption. On and
after the date fixed for redemption, the Registered Holder shall have no rights
with respect to the Warrants represented hereby except to receive the $.05 per
Warrant upon surrender of this Warrant Certificate. Upon thirty (30) days' prior
written notice to all holders of the Warrants and subject to the consent of the
Company's lead underwriter or representative, the Company shall have the right
to reduce the exercise price and/or extend the term of the Warrants in
compliance with the requirements of Rule 13e-4 to the extent applicable.
Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon
made by anyone other than a duly authorized officer of the Company or the
Warrant Agent) for all purposes and shall not be affected by any notice to the
contrary.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of Nevada.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by one of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
SOUNDWORKS INTERNATIONAL, INC.
Dated________________, 2001 By:_____________________________________
Name: __________________________________
Title: _________________________________
[corporate seal]
Countersigned:
THE FIDELITY TRANSFER COMPANY
as Warrant Agent
By:____________________________
Authorized Officer
[FORM OF REVERSE OF WARRANT CERTIFICATE]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
________ Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
(Please print or type name and address)
and be delivered to
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
(Please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated: ____________________ X_______________________________________
Signature
________________________________________
________________________________________
Address
________________________________________
Taxpayer Identification Number
________________________________________
Signature Guaranteed
________________________________________
THE SIGNATURE TO THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN
UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
MEMBER OF THE MEDALLION STAMP PROGRAM.
