WINSONIC DIGITAL MEDIA GROUP, LTD.
Exhibit
4.2
NEITHER
THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THE COMPANY (AS DEFINED BELOW), IN ITS SOLE DISCRETION, SHALL HAVE
THE
RIGHT TO REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
TO
THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION
WITH
ANY PROPOSED TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF ANY APPLICABLE
STATE
SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY WARRANT
ISSUED IN EXCHANGE FOR THIS WARRANT.
VOID
AFTER 5:00 P.M. (EST) ON OCTOBER 12, 2009
WINSONIC
DIGITAL MEDIA GROUP, LTD.
STOCK
PURCHASE WARRANT
| Warrant No. ____________ |
As
of October 12, 2007
|
FOR
VALUE RECEIVED, Winsonic Digital
Media Group, Ltd., a Nevada corporation (the “Company”), hereby grants to
_____________, or its registered successors and/or assigns (the
“Warrantholder”) the right to purchase from the Company ________ shares
(the “Warrant Shares”) of the Company’s common stock, par value $0.001
per share (the “Common Stock”), at a price per share of $0.40 (the
“Exercise Price”), at any time on or after the date hereof (the
“Warrant Commencement Date”) until 5:00 p.m. (EST) on October 11, 2009
(the “Expiration Time”). As provided herein, the Exercise
Price and the number of shares of Common Stock or other securities which
may be
purchased upon the exercise of this Warrant are, upon the happening of certain
events, subject to modification and adjustment.
The
rights of the registered holder of
this Warrant shall be subject to the following further terms and
conditions:
1. Exercise
of Warrant.
(a) This
Warrant may be exercised, in whole or in part, at any time and from time
to
time, during the period commencing on the Warrant Commencement Date and
terminating at the Expiration Time.
(b) This
Warrant shall be deemed to have been exercised when the Company has received
at
its principal office all of the following items (the “Exercise
Time”):
(i) this
Warrant;
(ii) a
completed exercise form in the form attached hereto (the “Exercise
Form”), executed by the Warrantholder exercising all or part of the purchase
rights represented by this Warrant;
(iii) the
payment in full to the Company of an amount of consideration therefor equal
to
the Exercise Price in effect on the date of such exercise multiplied by the
number of Warrant Shares with respect to which this Warrant is then being
exercised, payable by certified or official bank check or wire transfer of
immediately available funds.
(c) As
soon as practicable, but no later than ten business days following the Exercise
Time, the Company, at its expense (including the payment by it of any applicable
taxes), will cause to be issued in the name of and delivered to the
Warrantholder, or such other person identified in the Exercise Form,
certificates evidencing the number of Warrant Shares to which the Warrantholder,
or such other person identified in the Exercise Form, shall be
entitled. Unless this Warrant has expired or all of the purchase
rights represented hereby have been exercised, the Company shall prepare
a new
Warrant, substantially indentical hereto, representing the rights formerly
represented by this Warrant which have not expired or been exercised and
shall,
within such ten business day period, deliver such new Warrant to the person
designated for delivery in the Exercise Form.
(d) No
certificates for fractional Warrant Shares shall be issued upon the exercise
of
all or any part of this Warrant. In lieu of issuing any fractional
Warrant Shares the Company shall round up the calculation of the number of
Warrant Shares issuable upon exercise to the nearest whole number of Warrant
Shares.
(e) The
Warrant Shares issuable upon the exercise of this Warrant shall be deemed
to
have been issued to the Warrantholder at the Exercise Time, and the
Warrantholder shall be deemed for all purposes to have become the record
holder
of such Warrant Shares at the Exercise Time; provided, that, if
the Company shall have notified the Warrantholder in writing, that additional
documentation and/or information is required to effect the exercise of this
Warrant, for the purpose of Section 1(b), the “Exercise Time” shall be the time
when the Company receives such documentation and/or information.
2. Issuance
and Reservation of Warrant Shares. The
Company covenants and agrees that:
(a) all
Warrant Shares which may be issued upon the exercise of all or part of this
Warrant will, upon issuance in accordance with the terms hereof, be validly
issued, fully paid and non-assessable and free from all taxes, liens and
charges
with respect to the issue thereof;
(b) at
all times prior to the Expiration Time, the Company shall keep reserved for
issuance a sufficient number of authorized shares of Warrant Shares to permit
the exercise in full of this Warrant; and
(c) if
any shares of Common Stock to be reserved for the purpose of the issuance
of
Warrant Shares upon the exercise of this Warrant require registration with,
or
approval of, any governmental authority under any federal or state law before
such shares may be validly issued or delivered upon exercise, then the Company
will promptly use its commercially reasonable best efforts to effect such
registration or obtain such approval, as the case may be.
3. Adjustments
of Exercise Price; Number and Character of Warrant
Shares. The Exercise Price and the
number and kind of securities, purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of the
events enumerated in this Section 3.
(a) Stock
Dividends, Subdivisions and Combinations. In case the Company
shall at any time on or after the Warrant Commencement Date and on or before
the
Expiration Time:
(i) pay
a dividend in shares of Common Stock or make a distribution in shares of
Common
Stock or such other stock to holders of all its outstanding shares of Common
Stock;
(ii) subdivide
or reclassify the outstanding shares of Common Stock into a greater number
of
shares;
(iii) combine
the outstanding shares of Common Stock into a smaller number of shares of
Common
Stock; or
(iv) issue
by reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing corporation);
then
the
number and kind of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Warrantholder shall
be
entitled to receive the kind and number of shares of Common Stock or other
securities of the Company which the Warrantholder would have owned or have
been
entitled to receive after the happening of any of
the
events described above had this Warrant been exercised immediately prior
to the
earlier of the happening of such event or any record date in respect
thereto. In the event of any adjustment of the number of Warrant
Shares purchasable upon the exercise of this Warrant pursuant to this Section
3(a), the Exercise Price shall be adjusted to be the amount resulting from
dividing the number of shares of Common Stock (including fractional shares
of
Common Stock) covered by such Warrant immediately after such adjustment into
the
total amount payable upon exercise of such Warrant in full immediately prior
to
such adjustment. An adjustment made pursuant to this Section 3(a)
shall become effective immediately after the effective date of such
event. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) Extraordinary
Dividends. In case the Company shall at any time on or after the
Warrant Commencement Date and on or before the Expiration Time fix a record
date
for the issuance of rights, options, or warrants to all holders of its
outstanding shares of Common Stock, entitling them (for a period expiring
within
45 days after such record date) to subscribe for or purchase shares of Common
Stock (or securities exchangeable for or convertible into shares of Common
Stock) at a price per share of Common Stock (or having an exchange or conversion
price per share of Common Stock, with respect to a security exchangeable
for or
convertible into shares of Common Stock) which is lower than the current
Market
Price per share of Common Stock (as defined in Section 3(d) below) on such
record date, then the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
of
which (i) the numerator shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common
Stock
to be offered (or the aggregate initial exchange or conversion price of the
exchangeable or convertible securities so to be offered) would purchase at
such
current Market Price and (ii) the denominator shall be the number of shares
of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock to be offered for subscription or purchase (or into
which
the exchangeable or convertible securities so to be offered are initially
exchangeable or convertible). Such adjustment shall become effective
at the close of business on such record date; however, to the extent that
shares
of Common Stock (or securities exchangeable for or convertible into shares
of
Common Stock) are not delivered after the expiration of such rights, options,
or
warrants, the Exercise Price shall be readjusted (but only with respect to
exercises of this Warrant after such expiration) to the Exercise Price which
would then be in effect had the adjustments made upon the issuance of such
rights, options, or warrants been made upon the basis of delivery of only
the
number of shares of Common Stock (or securities exchangeable for or convertible
into shares of Common Stock) actually issued. In case any
subscription price may be paid in a consideration part or all of which shall
be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company and shall
be
described in a statement mailed to the Warrantholder. Shares of
Common Stock owned by or held for the account of the Company shall not be
deemed
outstanding for the purpose of any such computation.
(c) Extraordinary
Distributions. In case the Company shall, at any time on or
after the Warrant Commencement Date and on or before the Expiration Time,
distribute to all holders of its shares of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) evidences of its
indebtedness
or assets (excluding cash dividends and distributions payable out of
consolidated net income or earned surplus in accordance with Nevada law and
dividends or distributions payable in shares of stock described in Section
3(a)
above) or rights, options, or warrants or exchangeable or convertible securities
containing the right to subscribe for or purchase shares of Common Stock
(or
securities exchangeable for or convertible into shares of Common Stock),
then
the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect
immediately prior to the record date for such distribution by a fraction,
of
which (i) the numerator shall be the current Market Price per share of Common
Stock (as defined in Section 3(d)) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive, and described in a notice
to
the Warrantholders) of the portion of the evidences of indebtedness or assets
so
to be distributed or of such rights, options or warrants applicable to one
share
of Common Stock and (ii) the denominator shall be such current Market Price
per
share of Common Stock. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for such transaction.
(d) Current
Market Price Defined. For the purpose of any computation under
Sections 3(b) and/or 3(c), the current “Market Price” per share of Common
Stock at any date shall be deemed to be the average daily Closing Price of
the
shares of Common Stock for twenty consecutive trading days ending three trading
days before the date in question. The term “Closing Price” of
the shares of Common Stock for a day or days shall mean (i) if the shares
of
Common Stock are listed or admitted for trading on a national securities
exchange, the last reported sales price regular way, or, in case no such
reported sale takes place on such day or days, the average of the reported
closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the shares of the Common Stock are
listed
or admitted for trading, or (ii) if the shares of Common Stock are not listed
or
admitted for trading on a national securities exchange, (A) the last transaction
price for the Common Stock on The Nasdaq Stock Market (“Nasdaq”) or, in
the case no such reported transaction takes place on such day or days, the
average of the reported closing bid and asked prices thereof quoted on Nasdaq,
or (B) if the shares of Common Stock are not quoted on Nasdaq, the average
of
the closing bid and asked prices of the Common Stock as quoted on the
Over-The-Counter Bulletin Board maintained by the NASD, or (C) if the shares
of
Common Stock are not quoted on Nasdaq nor on the Bulletin Board, the average
of
the closing bid and asked prices of the common stock in the over-the-counter
market, as reported by The Pink Sheets, LLC, or an equivalent generally accepted
reporting service, or (iii) if on any such day or days the shares of Common
Stock are not listed on a national securities exchange nor quoted on Nasdaq,
on
the Bulletin Board, or by The Pink Sheets, LLC, the fair market value of
the
shares of Common Stock on such day or days, as determined in good faith by
the
Board of Directors of the Company, shall be used.
(e) Capital
Reorganizations and Other Reclassifications. In case of any
capital reorganization of the Company, or of any reclassification of the
shares
of Common Stock (other than a reclassification, subdivision or combination
of
shares of Common Stock referred to in Section 3(a)), or in case of the
consolidation of the Company with, or the merger of the Company with, or
merger
of the Company into, any other corporation (other than a reclassification
of the
shares of Common Stock referred to in Section 3(a) or a consolidation or
merger
which does not result in any reclassification or change of the outstanding
shares of
Common
Stock) or of the sale of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation or entity occurring
on or
after the Warrant Commencement Date and on or before the Expiration Time,
this
Warrant shall, after such capital reorganization, reclassification of shares
of
Common Stock, consolidation, merger, or sale, be exercisable, upon the terms
and
conditions specified in this Warrant, for the kind, amount and number of
shares
or other securities, assets, or cash to which a holder of the number of shares
of Common Stock purchasable (at the time of such capital reorganization,
reclassification of shares of Common Stock, consolidation, merger or sale)
upon
exercise of this Warrant would have been entitled to receive upon such capital
reorganization, reclassification of shares of Common Stock, consolidation,
merger, or sale, as otherwise provided herein; and in any such case, if
necessary, the provisions set forth in this Section 3 with respect to the
rights
and interests thereafter of the Warrantholder shall be appropriately adjusted
so
as to be applicable, as nearly equivalent as possible, to any shares or other
securities, assets, or cash thereafter deliverable on the exercise of this
Warrant. The Company shall not effect any such consolidation, merger,
or sale, unless prior to or simultaneously with the consummation thereof
the
successor corporation or entity (if other than the Company) resulting from
such
consolidation or merger or the corporation or entity purchasing such assets
or
other appropriate corporation or entity shall assume, by written instrument,
the
obligation to deliver to the Warrantholder such shares, securities, assets,
or
cash as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations hereunder. The
subdivision or combination of shares of Common Stock at any time outstanding
into a greater or lesser number of shares shall not be deemed to be a
reclassification of the shares of Common Stock for purposes of this Section
3(e).
(f) Minimum
Adjustment. Except as hereinafter provided, no adjustment of the
Exercise Price hereunder shall be made if such adjustment results in a change
of
the Exercise Price then in effect of less than five cents ($0.05) per
share. Any adjustment of less than five cents ($0.05) per share of
any Exercise Price shall be carried forward and shall be made at the time
of and
together with any subsequent adjustment, which, together with adjustment
or
adjustments so carried forward, amounts to five cents ($0.05) per share or
more. However, upon exercise of this Warrant, the Company shall make
all necessary adjustments (to the nearest cent) not theretofore made to the
Exercise Price up to and including the effective date upon which this Warrant
is
exercised.
(g) Notice
of Adjustments. Whenever the Exercise Price shall be adjusted
pursuant to this Section 3, the Company shall promptly deliver a certificate
signed by the President or a Vice President and by the Chief Executive Officer,
Chief Financial Officer, Treasurer or an Assistant Treasurer or the Secretary
or
an Assistant Secretary of the Company, setting forth, in reasonable detail,
the
event requiring the adjustment, the amount of the adjustment, the method
by
which such adjustment was calculated (including a description of the basis
on
which the Board of Directors of the Company made any determination hereunder),
by first class mail postage prepaid to the Warrantholder.
(h) Deferral
of Issuance of Additional Shares in Certain Circumstances. In
any case in which this Section 3 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event,
the
Company may elect to defer until the occurrence of such event issuing to
the
holder of a Warrant exercised after such record date the
shares
of
Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise
Price
in effect prior to such adjustment; provided, however, that the
Company shall deliver as soon as practicable to such holder a due ▇▇▇▇ or
other
appropriate instrument evidencing such holder’s right to receive such additional
shares of Common Stock upon the occurrence of the event requiring such
adjustment.
(i) Company
Right to Reduce the Exercise Price. Notwithstanding anything
contained in this Warrant to the contrary, the Company has the right,
exercisable in the Company’s sole discretion, at any time prior to the
Expiration Time, and from time to time, on not less than 30 days’ prior written
notice (each, a “Reduced Exercise Price Notice”), to reduce the Exercise
Price as then in effect; provided that the period in which such reduced
Exercise Price shall be in effect shall be for no less than fifteen nor more
than 90 days and such period shall be clearly identified in the Reduced Exercise
Price Notice.
4. Replacement
of Warrant. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in each case of loss, theft or destruction,
delivery of an indemnity agreement reasonably satisfactory in form and substance
to the Company or, in the case of mutilation, on surrender and cancellation
of
this Warrant, the Company at its expense shall execute and deliver, in lieu
of
this Warrant, a new Warrant of like tenor.
5. Registration. This
Warrant, as well as all other warrant certificates representing warrants
issued
by the Company shall be numbered and shall be registered in a register (the
“Warrant Register”) maintained at the Company’s principal office as they
are issued. The Warrant Register shall list the name, address and
Social Security or other Federal Identification Number, if any, of the
Warrantholder. The Company shall be entitled to treat the
Warrantholder as set forth in the Warrant Register as the owner in fact of
this
Warrant for all purposes and shall not be bound to recognize any equitable
or
other claim to or interest in this Warrant on the part of any other person,
and
shall not be liable for any registration of transfer of all or a portion
of this
Warrant that are registered or to be registered in the name of a fiduciary
or
the nominee of a fiduciary unless made with the actual knowledge that a
fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith.
6. Exchange
of Warrant. This Warrant may be
exchanged for another certificate or certificates entitling the Warrantholder
thereof to purchase a like aggregate number of Warrant Shares as this Warrant
entitles such Warrantholder to purchase. A Warrantholder desiring to
so exchange this Warrant shall make such request in writing delivered to
the
Company, and shall surrender this Warrant therewith. Thereupon, the
Company shall execute and deliver to the person entitled thereto a new
certificate or certificates, as the case may be, as so requested.
7. Notices. All
notices and other communications required or permitted to be given hereunder
shall be in writing and shall be deemed given when personally delivered or
sent
by registered or certified mail (return receipt requested, postage prepaid),
facsimile transmission or overnight courier, if to the Warrantholder, at
such
address as is shown on the Warrant Register or as may otherwise may have
been
furnished to the Company in writing in accordance with Section 9 by the
Warrantholder and, if to the Company:
Winsonic
Digital Media Group, LTD.
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of the Board and CEO
Facsimile
Number: (▇▇▇) ▇▇▇-▇▇▇▇
or
such
other address as the Company shall give notice thereof to the Warrantholder
in
accordance with this Section 7.
8. Piggy-Back
Registration Rights.
(a) Defined
Terms. As used in this Section 8, terms defined elsewhere herein
shall have their assigned meanings and each of the following terms shall
have
the following meanings (such definitions to be applicable to both the plural
and
singular of the terms defined):
(i) Registrable
Securities; Effectiveness Period. The term “Registrable
Securities” shall mean any shares of the Company Common Stock issuable upon
exercise of this Warrant in accordance with the terms and conditions
hereof. For the purposes of this Section 8, securities will cease to
be Registrable Securities when (A) a registration statement under the Act,
covering such Registrable Securities has been declared effective and (1)
such
Registrable Securities have been disposed of pursuant to such effective
registration statement or (2) such registration statement has remained effective
for 270 consecutive days, (B) such Registrable Securities are transferred
pursuant to an exemption from the registration requirements of the Act,
including, without limitation, Rules 144 and 144A promulgated thereunder,
(C)
such Registrable Securities are eligible for sale pursuant to Rule 144(k)
of the
Act (or any similar provision then in force) or (D) such Registrable Securities
have been otherwise transferred and the Company, in accordance with applicable
law and regulations, has delivered new certificates or other evidences of
ownership for such securities which are not subject to any stop transfer
order
or other restriction on transfer ((A) through (D) collectively referred to
herein as the “Effectiveness Period”).
(ii) Rightsholders. The
term “Rightsholder” shall include the Warrantholder, all successors and
assigns of the Warrantholder and all transferees of Registrable Securities
where
such transfer affirmatively includes the transfer and assignment of the rights
of the Warrantholder under this Warrant with respect to the transferred
Registrable Securities and such transferee agrees in writing to assume all
of
the Warrantholder’s agreements, obligations and liabilities under this
Warrant.
(b) Piggy-Back
Registration.
(i) If,
at any time on or after the date hereof and prior to the Expiration Time,
the
Company proposes to file a registration statement under the Act with respect
to
an offering by the Company or any other party of any class of equity security
similar to any Registrable Securities (other than a registration statement
on
Form S-4 or Form S-8 or any successor form or a registration statement filed
solely in connection with a stock option or other employee benefit plan,
an
exchange offer, a business combination transaction or an offering of securities
solely to the existing stockholders or employees of the Company), then the
Company, on each such occasion, shall give written notice (each, a
“Piggy-Back Notice”) of such proposed filing to all of the Rightsholders
owning Registrable Securities at least fifteen days before the anticipated
filing date of such registration statement, and such Piggy-Back Notice also
shall be required to offer to such Rightsholders the opportunity to register
such aggregate number of Registrable Securities as each such Rightsholder
may
request. Each such Rightsholder shall have the right, exercisable for
the five days immediately following the giving of a Piggy-Back Notice, to
request, by written notice (each, a “Holder Notice”) to the Company, the
inclusion of all or any portion of the Registrable Securities of such
Rightsholders in such registration statement. The Company shall use
reasonable efforts to cause the managing underwriter(s) of a proposed
underwritten offering to permit the inclusion of the Registrable Securities
which were the subject of all Holder Notices in such underwritten offering
on
the same terms and conditions as any similar securities of the Company included
therein. Notwithstanding anything to the contrary contained in this
Section 8(b), if the managing underwriter(s) of such underwritten offering
or
any proposed underwritten offering delivers a written opinion to the
Rightsholders of Registrable Securities which were the subject of all Holder
Notices that the total amount and kind of securities which they, the Company
and
any other person intend to include in such offering is such as to materially
and
adversely affect the success of such offering, then the amount of securities
to
be offered for the accounts of such Rightsholders and persons other than
the
Company shall be eliminated or reduced pro rata (based on the amount of
securities owned by such Rightsholders and other persons which carry
registration rights) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter(s) in the managing underwriter’s written
opinion.
(ii) Number
of Piggy-Back Registrations; Expenses. The obligations of the
Company under this Section 8 shall be unlimited with respect to each
Rightsholder. Subject to the provisions of Section 8(d) hereof, the
Company will pay all Registration Expenses (as defined below) in connection
with
any registration of Registrable Securities effected pursuant to this Section
8,
but the Company shall not be responsible for the payment of any underwriter’s
discount, commission or selling concession in connection therewith.
(iii) Withdrawal
or Suspension of Registration Statement. Notwithstanding anything
contained to the contrary in this Section 8, the Company shall
have
the
absolute right, whether before or after the giving of a Piggy-Back Notice
or
receipt of a Holder Notice, to determine not to file a registration statement
to
which the Rightsholders shall have the right to include their Registrable
Securities therein, to withdraw such registration statement or to delay or
suspend pursuing the effectiveness of such registration statement. In
the event of such a determination after the giving of a Piggy-Back Notice,
the
Company shall give notice of such determination to all Rightsholders and,
thereupon, (A) in the case of a determination not to register or to withdraw
such registration statement, the Company shall be relieved of its obligation
under this Section 8 to register any of the Registrable Securities in connection
with such registration and (B) in the case of a determination to delay the
registration, the Company shall be permitted to delay or suspend the
registration of Registrable Securities pursuant to this Section 8(b) for
the
same period as the delay in the registration of such other
securities. No registration effected under this Section 8 shall
relieve the Company of its obligation to effect any registration upon demand
otherwise granted to a Rightsholder under any other agreement with the
Company.
(c) Registration
Procedures.
(i) Obligations
of the Company. The Company will, in connection with any
registration pursuant to Section 8(b) hereof, as expeditiously as
possible:
(1) prepare
and file with the Securities and Exchange Commission (the “Commission”) a
registration statement under the Act on any appropriate form chosen by the
Company, in the Company’s sole discretion, which shall be available for the sale
of all Registrable Securities in accordance with the intended method(s) of
distribution thereof set forth in all applicable Holder Notices, and use
the
Company’s commercially reasonable efforts to cause such registration statement
to become effective as soon thereafter as reasonably practicable;
provided, that, at least five business days before filing with the
Commission of such registration statement, the Company shall furnish to each
Rightsholder whose Registrable Securities are to be included therein draft
copies of such registration statement, including all exhibits thereto; and
provided, further, the Company shall modify or amend the
registration statement as it relates to such Rightsholder as reasonably
requested by such Rightsholder on a timely basis, and shall reasonably consider
other changes to the registration statement (but not including any exhibit
or
document incorporated therein by reference) reasonably requested by such
Rightsholder on a timely basis, in light of the requirements of the Act and
any
other applicable laws and regulations.
(2) prepare
and file with the Commission such amendments and supplements to a registration
statement and the prospectus used in connection therewith as may be necessary
to
keep the registration statement effective and to comply with the provisions
of
the Act with respect to the sale or other disposition of all securities covered
by the registration statement during the Effectiveness Period;
(3) furnish
to such Rightsholder such number of copies of a prospectus, including a
preliminary prospectus, in conformation with the requirements of the Act,
and
such other documents, as such Rightsholder may reasonably request;
(4) use
its reasonable efforts to register or qualify the Registrable Securities
included in such registration statement under such other securities or blue
sky
laws of such jurisdictions as any Rightsholder whose Registrable Securities
are
included in such registration statement reasonably requests in writing and
do
any and all other acts and things which may be necessary or advisable to
enable
such Rightsholder to consummate the disposition in such jurisdictions of
such
Registrable Securities; provided, that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would
not
otherwise be required to qualify but for this clause (4), (ii) subject itself
to
taxation in any such jurisdiction or (iii) take any action which would subject
it to general service of process in any such jurisdiction;
(5) notify
each Rightsholder of any Registrable Securities covered by the registration
statement, promptly at any time when a prospectus relating thereto is required
to be delivered under the Act, of the occurrence of a Discontinuation Event
(as
defined below). For purposes of this Section 8(c)(5), a
“Discontinuation Event” shall mean (i) when the Commission notifies the
Company that there will be a “review” of such registration statement and
whenever the Commission comments in writing on such registration statement
and
until the Company has addressed the comments in a supplemented prospectus
and/or
amended registration statement and/or supplementally; (ii) any request by
the
Commission or any other Federal or state governmental authority for amendments
or supplements to such registration statement or prospectus or for additional
information and until the request has been responded to; (iii) the issuance
by the Commission of any stop order suspending the effectiveness of such
registration statement covering any or all of the Registrable Securities
or the
initiation of any proceedings for that purpose; (iv) the receipt by the Company
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale
in
any jurisdiction, or the initiation or threatening, in writing, of any
proceeding for such purpose; and/or (v) the occurrence of any event or passage
of time that makes the financial statements included in such registration
statement ineligible for inclusion therein or any statement made in such
registration statement or prospectus or any document incorporated or deemed
to
be incorporated therein by reference untrue in any material respect or that
requires any revisions to such registration statement, prospectus or other
documents so that, in the case of such registration statement or prospectus,
as
the case may be, it will not contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein in light of the circumstances under which they
were
made, not misleading;
(6) use
reasonable efforts to obtain the withdrawal of any order suspending the
effectiveness of such registration statement at the earliest possible time
and
to prevent the entry of such an order;
(7) make
available for inspection by each Rightsholder whose Registrable Securities
are
included in such registration statement, any underwriter(s) participating
in any
disposition pursuant to such registration statement, and any representative,
agent or employee of or attorney or accountant retained by any such Rightsholder
or underwriter(s) (collectively, the “Inspectors”), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the “Records”) and cause the officers, directors and
employees of the Company to supply all information reasonably requested by
any
such Inspector in connection with such registration statement; provided,
that records which the Company determines, in good faith, to be confidential
and
which it notifies the Inspectors are confidential shall not be disclosed
by the
Inspectors, unless (i) the release of such Records is ordered pursuant to
a
subpoena or other order from a court of competent jurisdiction or (ii) the
disclosure of such Records is required by any applicable law or regulation
or
any governmental regulatory body with jurisdiction over such Rightsholder
or
underwriter; provided, further, that such Rightsholder or
underwriter(s) agree that such Rightsholder or underwriter(s) will, upon
learning the disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the Company’s
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential;
(8) cooperate
with the Rightsholder whose Registrable Securities are included in such
registration statement and the managing underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold thereunder, not bearing any restrictive legends, and
enable such Registrable Securities to be in such denominations and registered
in
such names as such Rightsholder or any managing underwriter(s) may reasonably
request at least two business days prior to any sale of Registrable
Securities;
(9) comply
with all applicable rules and regulations of the Commission and promptly
make
generally available to its security holders an earnings statement covering
a
period of twelve months commencing, (i) in an underwritten offering, at the
end
of any fiscal quarter in which Registrable Securities are sold to
underwriter(s), or (ii) in a non-underwritten offering, with the first month
of
the Company’s first fiscal quarter beginning after the effective date of such
registration statement, which earnings statement in each case shall satisfy
the
provisions of Section 11(a) of the Act;
(10) provide
a CUSIP number for all Registrable Securities not later than the effective
date
of the registration statement relating to the first public offering of
Registrable Securities of the Company pursuant hereto;
(11) enter
into such customary agreements (including an underwriting agreement in customary
form) and take all such other actions reasonably requested by the Rightsholders
holding a majority of the Registrable Securities included in such registration
statement or the managing underwriter(s) in order to expedite and facilitate
the
disposition of such Registrable Securities and in such connection, whether
or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations
and warranties, if any, to the
holders
of such Registrable Securities and any underwriter(s) with respect to the
registration statement, prospectus and documents incorporated by reference,
if
any, in form, substance and scope as are customarily made by issuers to
underwriter(s) in underwritten offerings and confirm the same if and when
requested, (ii) obtain opinions of counsel to the Company and updates thereof
addressed to each such Rightsholder and the underwriter(s), if any, with
respect
to the registration statement, prospectus and documents incorporated by
reference, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such Rightsholders and underwriter(s), (iii) obtain a “comfort”
letter from the Company’s independent certified public accountants addressed to
such Rightsholders and to the underwriter(s), if any, which letters shall
be in
customary form and cover matters of the type customarily covered in “comfort”
letters by accountants in connection with underwritten public offerings,
and
(iv) deliver such documents and certificates as may be reasonably requested
by
the Rightsholders holding a majority of such Registrable Securities and managing
underwriter(s), if any, to evidence compliance with any customary conditions
contained in the underwriting agreement or other agreement entered into by
the
Company; each such action required by this clause (11) shall be done at each
closing under such underwriting or similar agreement or as and to the extent
required thereunder; and
(12) if
requested by the holders of a majority of the Registrable Securities included
in
such registration statement, use its best efforts to cause all Registrable
Securities which are included in such registration statement to be listed,
subject to notice of issuance, by the date of the first sale of such Registrable
Securities pursuant to such registration statement, on each securities exchange,
if any, on which securities similar to the Registered Securities are
listed.
(ii) Obligations
of Rightsholders. In connection with any registration of
Registrable Securities of a Rightsholder pursuant to Section 8(b)
hereof:
(1) The
Company may require that each Rightsholder whose Registrable Securities are
included in such registration statement furnish to the Company such information
regarding the distribution of such Registrable Securities and such Rightsholder
as the Company may from time to time reasonably request in writing;
(2) Each
Rightsholder agrees by its acquisition of such Registrable Securities that,
upon
receipt of any notice from the Company of the happening of any Discontinuation
Event, shall forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such Rightsholder’s receipt of the copies of the supplemented prospectus
and/or amended registration statement or until it is advised in writing by
the
Company that the use of the applicable prospectus may be resumed, and, in
either
case, has received copies of any additional or supplemental filings that
are
incorporated or deemed to be incorporated by reference in such prospectus
or
registration statement; and
(3) It
shall be a condition precedent to the Company's obligation to take any action
pursuant to this Section 8 in respect of the Registrable Securities that
are to
be registered at the request of any Rightsholder that such Rightsholder shall
furnish to the Company such information regarding the securities held by
such
Rightsholder, the intended method of disposition thereof and any other
information as the Company shall reasonably request and as shall be required
in
connection with the action taken by the Company. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(i) agrees to sell such holder’s securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and to comply with Regulation M under the Securities Exchange
Act of 1934, as amended and (ii) completes and executes all questionnaires,
appropriate and limited powers of attorney, escrow agreements, indemnities,
underwriting agreements and other documents reasonably required under the
terms
of such underwriting arrangement.
(d) Registration
Expenses. All expenses incident to the performance of or
compliance with this Warrant by the Company, including, without imitation,
all
registration and filing fees of the Commission, NASD, Inc. and other agencies,
fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, internal expenses (including,
without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection
with
the listing, if any, of the Registrable Securities on any securities exchange
and fees and disbursements of counsel for the Company and the Company’s
independent certified public accountants (including the expenses of any special
audit or “comfort” letters required by or incidental to such performance), Act
or other liability insurance (if the Company elects to obtain such insurance),
the fees and expenses of any special experts retained by the Company in
connection with such registration and the fees and expenses of any other
person
retained by the Company (but not including any underwriting discounts or
commissions attributable to the sale of Registrable Securities or other
out-of-pocket expenses of the Rightsholders, or the agents who act on their
behalf, unless reimbursement is specifically approved by the Company) will
be
borne by the Company. All such expenses are herein referred to as
“Registration Expenses”.
(d) Indemnification;
Contribution.
(i) Indemnification
by the Company. The Company agrees to indemnify and hold
harmless, to the full extent permitted by law, each Rightsholder, its officers
and directors and each person who controls such Rightsholder (within the
meaning
of the Act), if any, and any agent thereof against all losses, claims, damages,
liabilities and expenses incurred by such party pursuant to any actual or
threatened suit, action, proceeding or investigation (including reasonable
attorney’s fees and expenses) arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission
to
state therein a material fact required to be stated therein or necessary
to make
the statements therein (in the case of a prospectus, in the light of
the
circumstances
under which they were made) not misleading, except insofar as the same arise
out
of or are based upon, any such untrue statement or omission based upon
information with respect to such Rightsholder furnished in writing to the
Company by such Rightsholder expressly for use therein.
(ii) Indemnification
by Rightsholder. In connection with any registration statement in
which a Rightsholder is participating, each such Rightsholder will be required
to furnish to the Company in writing such information with respect to such
Rightsholder as the Company reasonably requests for use in connection with
any
such registration statement or prospectus, and each Rightsholder agrees to
the
extent it is such a holder of Registrable Securities included in such
registration statement, and each other such holder of Registrable Securities
included in such Registration Statement hereby agrees, to indemnify, to the
full
extent permitted by law, the Company, the directors and officers of the Company
and each person who controls the Company (within the meaning of the Act)
and any
agent thereof, against any losses, claims, damages, liabilities and expenses
(including reasonable attorney’s fees and expenses) incurred by such party
pursuant to any actual or threatened suit, action, proceeding or investigation
arising out of or based upon any untrue or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact necessary,
to make the statements therein (in the case of a prospectus, in the light
of the
circumstances under which they are made) not misleading, to the extent, but
only
to the extent, that such untrue statement or omission is based upon information
relating to such Rightsholder or other holder furnished in writing to the
Company expressly for use therein.
(iii) Conduct
of Indemnification Proceedings. Promptly after receipt by an indemnified
party under this Section 8(d) of written notice of the commencement of any
action, proceeding, suit or investigation or threat thereof made in writing
for
which such indemnified party may claim indemnification or contribution pursuant
to this Warrant, such indemnified party shall notify in writing the indemnifying
party of such commencement or threat; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
which the indemnifying party may have to any indemnified party
(A) hereunder, unless the indemnifying party is actually prejudiced
thereby, or (B) otherwise than under this Section 8(d). In case any
such action, suit or proceeding shall be brought against any indemnified
party,
and the indemnified party shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and the indemnifying party shall assume the defense thereof, with
counsel reasonably satisfactory to the indemnified party, and the obligation
to
pay all expenses relating thereto. The indemnified party shall have
the right to employ separate counsel in any such action, suit or proceeding
and
to participate in the defense thereof, but the fees and expenses of such
counsel
shall be at the expense of such indemnified party unless (A) the indemnifying
party has agreed to pay such fees and expenses, (B) the indemnifying party
shall
have failed to assume the defense of such action, suit or proceeding or to
employ counsel reasonably satisfactory to the indemnified party therein or
to
pay all expenses relating thereto or (C) the named parties to any such action
or
proceeding (including any impleaded parties) include both the indemnified
party
and the indemnifying party and the indemnified party shall have
been
advised by counsel that there may be one or more legal defenses available
to the
indemnified party which are different from or additional to those available
to
the indemnifying party and which may result in a conflict between the
indemnifying party and such indemnified party (in which case, if the indemnified
party notifies the indemnifying party in writing that the indemnified party
elects to employ separate counsel at the expense of the indemnifying party,
the
indemnifying party shall not have the right to assume the defense of such
action
or proceeding on behalf of the indemnified party; it being understood, however,
that the indemnifying party shall not, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than
one separate firm of attorneys at any time for the indemnified party, which
firm
shall be designated in writing by the indemnified party).
(iv) Contribution. If
the indemnification provided for in this Section 8(d) from the indemnifying
party is unavailable to an indemnified party hereunder in respect of any
losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (A) in such proportion
as is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other or (B) if the
allocation provided by clause (A) above is not permitted by applicable law,
in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified party
on
the other but also the relative fault of the indemnifying party and indemnified
party, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and the indemnified parties shall
be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates
to
information supplied by, such indemnifying party or indemnified parties,
and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party
as a result of the losses, claims, damages, liabilities and expenses referred
to
above shall be deemed to include, subject to the limitation set forth in
Section
5.5, any legal or other fees or expenses reasonably incurred by such party
in
connection with any investigation or proceeding.
The
parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 8(d)(iv)
were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in clauses
(A) and (B) of the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Act) shall be entitled to contribution from any person who was not guilty
of
such fraudulent misrepresentation.
(v) Limitation. Notwithstanding
anything to the contrary contained in this Section 8(d), no holder of
Registrable Securities shall be liable for indemnification and contribution
payments aggregating an amount in excess of the maximum amount received by
such
holder in connection with any sale of Registrable Securities as contemplated
herein.
9. Redemption. To
the extent permitted by applicable law, this Warrant is redeemable by the
Company in whole, but not in part, on not less than ten days’ prior written
notice (the “Redemption Notice”) at a redemption price of $0.001 (the
“Redemption Price”), at any time on or after the Warrant Commencement
Date and on or before the Expiration Time. The Warrantholders will
have full rights to exercise all rights under this Warrant subject to the
Redemption Notice until 5:00 p.m. (EST) (the “Accelerated Expiration
Time”), on the business day immediately preceding the date fixed for
redemption (the “Redemption Date”) in the Redemption Notice.
10. Miscellaneous. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. This
Warrant shall be governed by and construed in accordance with the laws of
the
State of New York without giving effect to conflicts of law principles
thereof. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms
hereof.
Winsonic
Digital Media Group,
Ltd.
By: ___________________________________
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇,
Chief
Executive Officer
EXERCISE
FORM
Dated:_____________
TO: Winsonic
Digital Media Group, Ltd. (the “Company”)
The
undersigned hereby irrevocably
elects to exercise the right to purchase represented by the attached Warrant
for, and to purchase thereunder, ________________ shares of the Company’s common
stock, par value $0.001 (the “Common Stock”), and hereby makes payment of
$______________ in payment of the actual Exercise Price thereof.
[The
number of share of Common Stock to
be issued does not include all shares of Common Stock purchasable as provided
in
the attached Warrant and, accordingly, a certificate evidencing a new Warrant
for _________ shares of Common Stock is to be issued in the name of
__________________, whose address is
_____________________________________________ _________________________________
and whose (SS#)(FEIN#) is ____________________.]
I
ACKNOWLEDGE THAT SUCH SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANY APPLICABLE STATE SECURITIES
LAWS
AND SUCH SHARES OF COMMON STOCK MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY APPLICABLE
STATE SECURITIES LAWS. THE COMPANY, IN ITS SOLE DISCRETION, SHALL
HAVE THE RIGHT TO REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN
CONNECTION WITH ANY PROPOSED TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF
ANY
APPLICABLE STATE SECURITIES LAWS.
INSTRUCTIONS
FOR REGISTRATION OF COMMON STOCK
|
Name:
|
________________________________________________________________________________________________ | ||
| (Please type or print in block letters) | |||
|
(SS#)(FEIN#):
|
________________________________________________________________________________________________ | ||
|
Address:
|
________________________________________________________________________________________________ | ||
| ________________________________________________________________________________________________ | |||
|
Signature:
|
________________________________________________________________________________________________ | ||
|
(Signature
must conform in all respects to the name of the Warrantholder
as set forth
on the face of this Warrant.)
|
ASSIGNMENT
FORM
|
FOR
VALUE RECEIVED,
|
_____________________________________________________________________________________________________________________ |
|
|
(Please
type or print in block letters)
|
hereby
sells, assigns and transfers all rights of the undersigned under the attached
Warrant with respect to the number of shares of Common Stock covered thereby
set
forth below, unto:
| Name of Assignee(s) | SS#/FEIN# | Address(es) | No. of Shares |
Dated: _____________________
|
Signature:
|
________________________________________________________________________________________________ | ||
|
(Signature
must conform in all respects to the name of the Warrantholder
as set forth
on the face of this Certificate.)
|
|||
|
By:
|
________________________________________________________________________________________________ | ||
|
Title:
|
________________________________________________________________________________________________ |
Dated: _____________________