Merger Agreement Term Sheet
The
securities of Sound Revolution Inc. have not been registered under the
Securities Act of 1933 (the "US Securities Act") and may not be offered or sold
in the United States or to U.S. persons (other than distributors) unless the
securities are registered under the US Securities Act, or an exemption from the
registration requirements of the US Securities Act is available. Hedging
transactions involving these securities may not be conducted unless in
compliance with the US Securities Act.
Merger
Agreement Term Sheet
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Parties:
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Sound
Revolution Inc., a Delaware corporation (“Sound Revolution”), and On4
Communications, Inc., an Arizona corporation (“On4”), hereby agree to
merge into one corporation according to the terms and conditions described
below (the “Merger”).
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This document
outlines the principal terms and conditions of the merger between Sound
Revolution and On4 (the “Agreement”). The terms and conditions outlined in this
document, once signed by both parties, will constitute a binding
agreement. It is the intention of the parties to enter into a longer
form agreement governing the Merger. Until a longer form agreement is
entered into, this document shall govern the relationship between the
parties.
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Structure:
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The parties
shall complete the Merger in accordance with the provisions of the Arizona
Revised Statutes and the Delaware General Corporation Law as applicable to
the respective companies.
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Consideration:
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Sound
Revolution shall be the surviving entity. Pursuant to the
merger, each common share of On4 shall be converted into one common share
of Sound Revolution and each preferred share of On4 shall be converted to
one common share of Sound Revolution.
Certain
outstanding stock options and warrants of On4, as designated by On4, will
be assumed by Sound Revolution upon completion of the Merger (the “Merger
Closing”) and converted into options and warrants to purchase Sound
Revolution stock with identical vesting provisions.
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Conditions
Precedent:
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Prior to the
Merger Closing:
· Sound
Revolution shall have raised a minimum of US$400,000 through a private
placement of units at US$0.15 per unit, each unit comprised of one common
share and one half warrant to purchase one common share at a price of
US$1.00 for a period of 12 months (the “Units”). The warrants shall be
subject to an acceleration clause whereby Sound Revolution will have
the right to accelerate the exercise of the options via a press
release notice should the share price exceed US$1.15 for seven consecutive
trading days.
· Both parties
shall submit the Merger to a vote of their shareholders and obtain
approval from holders of a majority of both parties’ respective voting
shares once $400,000 has been raised by Sound Revolution.
· Sound
Revolution shall have forwarded to On4 a bridge loan of at least
US$250,000 with no interest. On4 shall return the entire amount of the
bridge loan if the merger agreement is terminated.
· Sound
Revolution shall enter into a Convertible Note in the amount of US$95,000
with Xxxxx Xxxxx, the majority shareholder, CEO, a Director and the sole
officer of Sound Revolution, which shall be convertible into common stock
at US$0.10 at the option of the holder, and which shall be due in seven
months (the “Note”), and which shall be reduced to US$75,000 if On4 incurs
legal fees in excess of US$10,000 in connection with the
Merger.
· Sound
Revolution will have transferred all of its assets and debts, other than
the Note and any debt owing to Xxxxx Xxxxx, to its wholly owned
subsidiary, Charity Tunes Inc., a Delaware company.
· Sound
Revolution and On4 will have received necessary approval for the Merger
from shareholders, and have taken all steps to complete the Merger as
required by applicable corporate and securities rules and regulations
Sound
Revolution will not have issued any securities other than the Note and the
Units, unless such issuance had been approved in writing by
On4.
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Details:
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Upon the
Merger Closing, the following shall apply to the surviving entity (the
“New Entity”):
· It shall
adopt the articles and bylaws of Sound Revolution, except that the name of
the surviving entity shall be On4 Communications, Inc
· the directors
shall be Xxxxxxx Xxxx and Xxxxxx Xxxxxx
· Xxxxxxx Xxxx
shall be the CEO
· The head
office shall be located at the location designated by On4
Upon the
Merger Closing:
· Charity Tunes
Inc. shall be sold to Bacchus Filings Inc., a company controlled by Xxxxx
Xxxxx, in consideration for which Bacchus Filings Inc. shall assume the
entire amount of loan owing to Xxxxx Xxxxx, exclusive of the Note, which
shall result in a debt to be assumed by Bacchus Filings Inc. of
approximately $335,000 which represents the remaining debt currently owed
by Sound Revolution; and
· 17,000,000
common shares of Sound Revolution in the name of Bacchus Entertainment
Ltd. shall be cancelled:
· the only debt
carried from Sound Revolution remaining will be the Note.
At or after
the Merger Closing:
· all On4
deferred or accrued salaries shall be limited to an amount representing
not more than 30 days of pay to each employee, and in some instances it
will be required for employees and consultant to convert such accrued
salary to shares.
· all notes
payable by On4 in excess of US$100,000 shall be converted to equity at a
price to be mutually agreed on by On4 and the specific creditor or receive
a repayment extension of no less than six months and with an annual
interest rate not to exceed 12%.
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Shareholder
Approval:
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Selected
insiders and other stockholders of Sound Revolution and On4 have agreed to
vote for this transaction.
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Long
Form Agreement:
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The parties
shall negotiate to enter into a long form agreement which shall contain
additional representations, warranties and covenants of Sound Revolution
and On4 customary in a transaction of this nature. The parties
shall make good faith efforts to enter into a long form agreement within
35 days of this agreement. This document shall govern the terms
of the merger until such long form agreement has been entered
into.
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Termination
Events:
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This merger
agreement will be terminable upon the occurrence of any one of the
following events:
· By mutual
consent and such consent will not be unreasonably withheld;
· By either
party, after 30 days, if Sound Revolution has not raised a minimum of
US$400,000 pursuant to a private placement issuance of the Units, in
accordance with the terms as set out in the term sheet attached as Exhibit
A; or
· By On4, after
30 days, if Sound Revolution has not forwarded to On4 a minimum of
US$50,000 as an interest free bridge loan, to be repaid only upon the
termination of the Merger.
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Sound
Revolution Covenants
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Sound
Revolution covenants as follows:
· It shall act
in good faith in attempting to raise capital according to the Financing
Term Sheet attached hereto as Exhibit A (the “First Financing”) which is
subject to a minimum of $400,000 and a maximum of $750,000
· Upon
receiving private placements in the amount of a minimum of $400,000, Sound
Revolution shall complete the First Financing, of which the proceeds shall
be used as follows:
· $150,000
shall be repaid to Xxxxx Xxxxx towards the outstanding loans owed to her
by Sound Revolution
· The balance
of the net proceeds of the First Financing may be immediately provided to
On4 as a non interest bearing loan, to be repaid only upon termination of
the merger
· After
completion of the First Financing, if requested by On4 to raise additional
capital, Sound Revolution shall act in good faith in attempting to raise
capital according to the Financing Term Sheet attached hereto as Exhibit B
(the “Second Financing”) which, when combined with the total amount raised
in the First Financing, shall not exceed a maximum of
$1,500,000. The proceeds of the Second Financing shall be held
in trust pending the Merger Closing.
· Other than
pursuant to First Financing, the Second Financing and the Note, Sound
Revolution shall not issue any securities or enter into any agreement
unless the issuance or the agreement has first been approved in writing by
On4
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Independent
Legal
Advice:
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Each party
acknowledges that it has had the opportunity to obtain its own independent
legal and tax advice with respect to the terms of this Agreement prior to
execution of this Agreement and further acknowledges that it fully
understands this Agreement. On4 and the On4 Shareholders
acknowledge that counsel for Sound Revolution does not represent the
interests of On4 or its shareholders.
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Registration:
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Common shares
of Sound Revolution issued to On4 shareholders are granted registration
rights covering the resale of the shares, whereby Sound Revolution is
obligated to use its best efforts to register the resale of the shares by
filing a registration statement with the Securities and Exchange
Commission under the United States Securities Act of 1933 (the
“Registration Statement”) within 30 days of the Merger
Closing. Each of the On4 shareholders shall be entitled to have
up to 30% of his or her common shares of Sound Revolution included on the
Registration Statement, except that no one person shall be entitled to
have more than 10% of the total amount of shares registered on the
Registration Statement.
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Representations
and Warranties
Of
Sound Revolution:
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Sound
Revolution represents and warrants to ON4 that:
1. Sound
Revolution is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and to carry on its business
as now being conducted. Sound Revolution is duly qualified to
do business and is in good standing as a foreign corporation in each of
the jurisdictions in which Sound Revolution owns property, leases
property, does business, or is otherwise required to do so, where the
failure to be so qualified would have a material adverse effect on the
business of Sound Revolution taken as a whole.
2. To the best
knowledge of Sound Revolution, there is no basis for and there is no
action, suit, judgment, claim, demand or proceeding outstanding or
pending, or threatened against or affecting Sound Revolution or which
involves any of the business, or the properties or assets of Sound
Revolution that, if adversely resolved or determined, would have a
material adverse effect on the business, operations, assets, properties,
prospects, or conditions of Sound Revolution taken as a whole (a “Sound
Revolution Material Adverse Effect”). There is no reasonable
basis for any claim or action that, based upon the likelihood of its being
asserted and its success if asserted, would have such a Sound Revolution
Material Adverse Effect.
a) For a
period of 6 months following the Merger Closing, Xxxxx Xxxxx agrees to
personally indemnify and to hold harmless Sound Revolution and On4, their
affiliates, and their respective officers, directors, agents and
employees, against any and all losses and damages to the extent any such
losses or damages are due to a judgment entered against Sound Revolution
with regard to an agreement entered into by Sound Revolution before the
Merger Closing and up to a maximum of US$500,000. Xxxxx Xxxxx,
in her sole discretion, shall select counsel to defend any action pursuant
to this indemnity. Sound Revolution hereby covenants not to settle or
compromise any claim or cause of action for which indemnification is
sought from Xxxxx Xxxxx without the written permission of Xxxxx Xxxxx. The
obligation of Xxxxx Xxxxx to so indemnify Sound Revolution is expressly
contingent upon Sound Revolution notifying Xxxxx Xxxxx, in writing, within
seven (7) calendar days after Sound Revolution knows, or reasonably should
have known, of any claim, complaint, potential cause of action or
proceeding. Failure by Sound Revolution to timely notify Xxxxx Xxxxx shall
relieve Xxxxx Xxxxx of her obligation to so indemnify Sound Revolution.
Xxxxx Xxxxx shall have no obligation to indemnify Sound Revolution should
any such losses or damages result, in whole or in part, from acts,
omissions, willful misconduct or gross negligence of Sound Revolution, its
affiliates, officers, directors, agents and employees after the Merger
Closing.
3. Sound
Revolution has all requisite corporate power and authority to execute and
deliver this Agreement and any other document contemplated by this
Agreement (collectively, the “Sound Revolution Documents”) to be signed by
Sound Revolution and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution
and delivery of each of the Sound Revolution Documents by Sound Revolution
and the consummation by Sound Revolution of the transactions contemplated
hereby have been duly authorized by its board of directors and no other
corporate or shareholder proceedings on the part of Sound Revolution is
necessary to authorize such documents or to consummate the transactions
contemplated hereby. This Agreement has been, and the other
Sound Revolution Documents when executed and delivered by Sound Revolution
as contemplated by this Agreement will be, duly executed and delivered by
Sound Revolution and this Agreement is, and the other Sound Revolution
Documents when executed and delivered by Sound Revolution, as contemplated
hereby will be, valid and binding obligations of Sound Revolution
enforceable in accordance with their respective terms,
except:
a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other
laws of general application affecting enforcement of creditors’ rights
generally;
b) as limited by
laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies; and
c) as limited by
public policy.
4. The Sound
Revolution common shares to be issued upon the Merger Closing will, upon
issuance, have been duly and validly authorized and, when so issued in
accordance with the terms of this Agreement, will be duly and validly
issued, fully paid and non-assessable.
5. No
representation or warranty by Sound Revolution in this Agreement nor any
certificate, schedule, statement, document or instrument furnished or to
be furnished to On4 pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact required to be stated herein or therein or necessary to make any
statement herein or therein not materially misleading.
6. Sound
Revolution has 30,258,478 shares of common stock outstanding and no
outstanding derivative securities other than the Note and no issued or
outstanding preferred shares.
7. Compliance
a) To the best
knowledge of Sound Revolution, Sound Revolution is in compliance with, is
not in default or violation in any material respect under, and has not
been charged with or received any notice at any time of any material
violation of any statute, law, ordinance, regulation, rule, decree or
other applicable regulation to the business or operations of Sound
Revolution;
b) To the best
knowledge of Sound Revolution, Sound Revolution is not subject to any
judgment, order or decree entered in any lawsuit or proceeding applicable
to its business and operations that would constitute a Sound Revolution
Material Adverse Effect;
c) Sound
Revolution has duly filed all reports and returns required to be filed by
it with governmental authorities and has obtained all governmental permits
and other governmental consents, except as may be required after the
execution of this Agreement. All of such permits and consents
are in full force and effect, and no proceedings for the suspension or
cancellation of any of them, and no investigation relating to any of them,
is pending or to the best knowledge of Sound Revolution, threatened, and
none of them will be adversely affected by the consummation of the Merger;
and
d) Sound
Revolution has operated in material compliance with all laws, rules,
statutes, ordinances, orders and regulations applicable to its
business. Sound Revolution has not received any notice of any
violation thereof, nor is Sound Revolution aware of any valid basis
therefore.
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Representations
and Warranties of On4:
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On4
represents and warrants to Sound Revolution that:
1. On4 is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Arizona and has the requisite corporate power and
authority to own, lease and to carry on its business as now being
conducted. On4 is duly qualified to do business and is in good
standing as a foreign corporation in each of the jurisdictions in which
On4 owns property, leases property, does business, or is otherwise
required to do so, where the failure to be so qualified would have a
material adverse effect on the business of On4 taken as a
whole.
2. To the best
knowledge of On4, there is no basis for and there is no action, suit,
judgment, claim, demand or proceeding outstanding or pending, or
threatened against or affecting On4 or which involves any of the business,
or the properties or assets of On4 that, if adversely resolved or
determined, would have a material adverse effect on the business,
operations, assets, properties, prospects, or conditions of On4 taken as a
whole (an “On4 Material Adverse Effect”). There is no
reasonable basis for any claim or action that, based upon the likelihood
of its being asserted and its success if asserted, would have such an On4
Material Adverse Effect.
3. On4 has all
requisite corporate power and authority to execute and deliver this
Agreement and any other document contemplated by this Agreement
(collectively, the “On4 Documents”) to be signed by On4 and to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of each of the On4 Documents
by On4 and the consummation by On4 of the transactions contemplated hereby
have been duly authorized by its board of directors and no other corporate
or shareholder proceedings on the part of On4 is necessary to authorize
such documents or to consummate the transactions contemplated
hereby. This Agreement has been, and the other On4 Documents
when executed and delivered by On4 as contemplated by this Agreement will
be, duly executed and delivered by On4 and this Agreement is, and the
other On4 Documents when executed and delivered by On4, as contemplated
hereby will be, valid and binding obligations of On4 enforceable in
accordance with their respective terms, except:
a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other
laws of general application affecting enforcement of creditors’ rights
generally;
b) as limited by
laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies; and
c) as limited by
public policy.
4. No
representation or warranty by On4 in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be furnished
to Sound Revolution pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact required to be stated herein or therein or necessary to make any
statement herein or therein not materially misleading.
5. Neither the
execution, delivery and performance of this Agreement, nor the
consummation of the Merger, will conflict with, result in a violation of,
cause a default under (with or without notice, lapse of time or both) or
give rise to a right of termination, amendment, cancellation or
acceleration of any obligation contained in or the loss of any material
benefit under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the material properties or assets of On4
or any of its subsidiaries under any term, condition or provision of any
loan or credit agreement, note, debenture, bond, mortgage, indenture,
lease or other agreement, instrument, permit, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to On4 or
any of its subsidiaries, or any of their respective material property or
assets.
6. On4
acknowledges that any Sound Revolution securities issued in any financings
contemplated in this Agreement will have such hold periods as are required
under applicable securities laws and as a result may not be sold,
transferred or otherwise disposed, except pursuant to an effective
registration statement under the Securities Act of 1933, or pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933 and in each case only in
accordance with all applicable securities laws.
7. Compliance
a) To the best
knowledge of On4, On4 is in compliance with, is not in default or
violation in any material respect under, and has not been charged with or
received any notice at any time of any material violation of any statute,
law, ordinance, regulation, rule, decree or other applicable regulation to
the business or operations of On4;
b) To the best
knowledge of On4, On4 is not subject to any judgment, order or decree
entered in any lawsuit or proceeding applicable to its business and
operations that would constitute a On4 Material Adverse Effect, other than
a lawsuit with Datatrail, the details of which have been provided to Sound
Revolution;
c) On4 has duly
filed all reports and returns required to be filed by it with governmental
authorities and has obtained all governmental permits and other
governmental consents, except as may be required after the execution of
this Agreement. All of such permits and consents are in full
force and effect, and no proceedings for the suspension or cancellation of
any of them, and no investigation relating to any of them, is pending or
to the best knowledge of On4, threatened, and none of them will be
adversely affected by the consummation of the Merger; and
d) On4 has
operated in material compliance with all laws, rules, statutes,
ordinances, orders and regulations applicable to its
business. On4 has not received any notice of any violation
thereof, nor is On4 aware of any valid basis therefore.
8. PetsMobility
Inc., a Delaware corporation, is a wholly owned subsidiary of On
4.
9. On4
Communications Inc., incorporated under the Canadian Business Corporations
Act, shall not own any shares of On4 as of the Merger
Closing.
10. The
financial statements of On4 provided to Sound Revolution for the year
ended October 31, 2007 and the period ended July 31, 2008 are true an
accurate in describing the financial condition of On4 and its
subsidiaries.
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Mutual
Covenants:
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1. The
representations and warranties of both parties set forth in this Agreement
will be true, correct and complete in all respects as of the Merger
Closing, as though made on and as of the Merger Closing.
2. All
information regarding the business of On4 including, without limitation,
financial information that On4 provides to Sound Revolution during Sound
Revolution’s due diligence investigation of On4 will be kept in strict
confidence by Sound Revolution and will not be used (except in connection
with due diligence), dealt with, exploited or commercialized by Sound
Revolution or disclosed to any third party (other than Sound Revolution’s
professional accounting and legal advisors) without the prior written
consent of On4. If the Merger contemplated by this Agreement
does not proceed for any reason, then upon receipt of a written request
from On4, Sound Revolution will immediately return to On4 (or as directed
by On4) any information received regarding On4’s
business. Likewise, all information regarding the business of
Sound Revolution including, without limitation, financial information that
Sound Revolution provides to On4 during its due diligence investigation of
Sound Revolution will be kept in strict confidence by On4 and will not be
used (except in connection with due diligence), dealt with, exploited or
commercialized by On4 or disclosed to any third party (other than On4’s
professional accounting and legal advisors) without Sound Revolution’s
prior written consent. If the Merger contemplated by this
Agreement does not proceed for any reason, then upon receipt of a written
request from Sound Revolution, On4 will immediately return to Sound
Revolution (or as directed by Sound Revolution) any information received
regarding Sound Revolution’s business.
3. Between the
date of this Agreement and the Merger Closing, each of the parties to this
Agreement will promptly notify the other parties in writing if it becomes
aware of any fact or condition that causes or constitutes a material
breach of any of its representations and warranties as of the date of this
Agreement, if it becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would cause or constitute a
material breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. During the same period,
each party will promptly notify the other parties of the occurrence of any
material breach of any of its covenants in this Agreement or of the
occurrence of any event that may make the satisfaction of such conditions
impossible or unlikely.
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Currency
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All
references to currency in this Agreement are in United States Dollars
(US$), unless expressly stated otherwise.
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Jurisdiction
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The parties
agree to attorn to the non-exclusive jurisdiction of the Province of
British Columbia regarding this
Agreement.
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Accepted and agreed
this 12th day of
March, 2009.
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Per: /s/
Xxxxx Xxxxx
Xxxxx Xxxxx, CEO
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/s/ Xxxxx Xxxxx
Xxxxx
Xxxxx, in her personal
capacity
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On4
Communications, Inc.
Per: /s/
Xxxxxxx
Xxxx
Xxxxxxx
Xxxx
Title: CEO
Title: CEO
On4 Shareholders
agreeing to vote in favour of the Merger:
Name #
of Shares
Owned Percentage
Xxxxxxx
Xxxx
______________________
Per:
Xxxxxx
Xxxxxx
______________________
Per:
______________________ _______________ __________
______________________ _______________ __________
______________________ _______________ __________
Sound Revolution
Shareholders agreeing to vote in favour of the Merger:
Name
# of Shares Owned
Percentage
/s/
Xxxxx
Xxxxx
43,208 16.7%
Xxxxx
Xxxxx
Xxxxxxx
Entertainment Ltd.
142,858
55.2%
/s/
Xxxxx
Xxxxx
Per: Xxxxx Xxxxx,
President
EXHIBIT
A
These
securities have not been registered under the Securities Act of 1933 (the "US
Securities Act") and may not be offered or sold in the United States or to U.S.
persons (other than distributors) unless the securities are registered under the
US Securities Act, or an exemption from the registration requirements of the US
Securities Act is available. Hedging transactions involving these securities may
not be conducted unless in compliance with the US Securities Act.
Private
Placement
Offering
Terms
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Issuer
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Sound
Revolution Inc., a Delaware corporation (the “Company”, “we”,
“our”)
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Offering
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We intend to
raise a minimum of US$400,000 and a maximum of US$750,000 through the sale
of units at US$0.15 per Unit, each Unit consisting of one share of our
common stock (the “Shares”) and one half common stock purchase warrant
(the “Warrants”).
We intend to
sell Units only to investors who are “accredited investors” as defined by
Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933 (for U.S. investors) and
Section 2.4 of National Instrument 45-106 (for Canadian investors), or to
Canadian investors who purchase at least CDN$150,000. We
reserve the right to reject any subscription, in whole or in part, or to
allot to any prospective investor less than the number of Units subscribed
for by such prospective investor. This offering is subject to
withdrawal, cancellation or modification without notice.
The minimum
subscription amount per investor is $5,000.
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Warrants
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Each Warrant
when exercised entitles the holder to purchase one share of the Company’s
common stock at US$1.00 per share for 12 months after
issuance.
The Company
will have the right to accelerate the exercise of the options via
a press release notice should the share price of our common stock
exceed US$1.15 for seven consecutive trading
days.
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Use
of Proceeds
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We intend to
use the proceeds of the subscription funds to meet the conditions we must
complete prior to our merger with On4 Communications, Inc. We have
promised that prior to the merger, we will forward a bridge loan to On4 in
the amount of at least $250,000, and we have agreed to repay shareholder
debts in the amount of $150,000 prior to the merger. We have
agreed that upon the merger being effective, all of our existing
operations and debt will be vended out through our existing operating
wholly owned subsidiary, Charity Tunes Inc. This offering
is subject to an offering minimum of US$400,000, and therefore if we do
not raise a minimum of US$400,000 within 60 days, we will refund your
subscription amount to you. We will not hold the proceeds of
this offering in escrow pending the completion of the
merger.
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Closing
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The closing
of the transactions contemplated by this Agreement (the “Closing”) will
take place once the Company has received subscriptions for a total amount
of a minimum of US$400,000. Upon closing, we will cause to be
delivered to purchasers, whose Subscription Agreements and funds we have
accepted, the Share and Warrant certificates representing the investment
that has been made.
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Resale
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The
securities offered hereby are subject to stringent limitations on their
resale or transfer by an investor. Persons who purchase Units
pursuant to this offering will not have the benefit of a review of the
material by any securities commission or other regulatory
authority. Sales of the Units will only be made in accordance
with exemptions from registration and prospectus requirements under
applicable securities legislation.
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Registration
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Investors are
granted registration rights covering the resale of the Shares and the
shares issuable upon exercise of the Warrants, whereby we are obligated to
use our best efforts to register the resale of the Shares and the shares
issuable upon exercise of the Warrants by filing a registration statement
with the SEC under the United States Securities Act of 1933 within 60 days
of closing.
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Dilution
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As of the
start of this offering we have 33,258,478 shares of common stock
outstanding.
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Business
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We were
incorporated in Delaware on June 4, 2001. To date, we have
generated nominal revenues. We have entered into a Merger
Agreement Term Sheet with On4 Communications, Inc., an Arizona company
(“On4”), which is subject to the closing of the financing contemplated by
this term sheet. The Merger Agreement Term Sheet also
contemplates a second financing that, when combined with this First
Financing, shall not exceed $1,500,000 on substantially similar terms,
except that proceeds will be held in trust until the closing of the
merger.
On4
manufactures industry-leading two-way communication devices that track
people, pets, assets, inventory or just about anything else that is of
importance to our customers. Incorporating both proprietary and
non-proprietary hardware, On4™ Code Division Multiple Access (CDMA) based
devices are harmonized with some of the most sophisticated Location Based
Service (LBS) tracking software available on the market today, enabling
On4 to provide seamless, integrated end-to-end tracking solutions for you,
our customer.
On4 can
provide either hardware-only or fully integrated custom solutions,
depending on end-user requirements. On4 specializes in the integration of
proprietary and non-proprietary hardware and wireless carrier platforms
with non-competing vertical partners to access lucrative consumer-based
niche markets.
We face all
of the risks inherent in a new business. In addition, we cannot
provide historical information and financial data about our planned
operations upon which a prospective investor can make an informed judgment
as to our future prospects. The purchase of the securities
offered hereby must therefore be regarded as the placing of funds at a
high risk in a new or “start-up” venture with all the unforeseen costs,
expenses, problems, and difficulties to which such ventures are
subject.
We have
limited financial resources, no revenues and can give you no assurance
that additional funding will be available to us for development of our
projects. The only significant source of funds presently
available to us is the sale of our equity capital. There can be
no assurance that we will be able to obtain adequate financing in the
future or that the terms of such financing will be
favorable. Failure to obtain such additional
financing could result in delay or indefinite postponement of the
development of our projects.
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EXHIBIT
B
These
securities have not been registered under the Securities Act of 1933 (the "US
Securities Act") and may not be offered or sold in the United States or to U.S.
persons (other than distributors) unless the securities are registered under the
US Securities Act, or an exemption from the registration requirements of the US
Securities Act is available. Hedging transactions involving these securities may
not be conducted unless in compliance with the US Securities Act.
Private
Placement
Offering
Terms
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Issuer
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Sound
Revolution Inc., a Delaware corporation (the “Company”, “we”,
“our”)
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Offering
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We intend to
raise a maximum of US$1,500,000 through the sale of units at US$0.15 per
Unit each Unit consisting of one share of our common stock (the “Shares”)
and one half common stock purchase warrant (the “Warrants”).
We intend to
sell Units only to investors who are “accredited investors” as defined by
Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933 (for U.S. investors) and
Section 2.4 of National Instrument 45-106 (for Canadian investors), or to
Canadian investors who purchase at least CDN$150,000. We
reserve the right to reject any subscription, in whole or in part, or to
allot to any prospective investor less than the number of Units subscribed
for by such prospective investor. This offering is subject to
withdrawal, cancellation or modification without notice.
The minimum
subscription amount per investor is $5,000.
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Warrants
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Each Warrant
when exercised entitles the holder to purchase one share of the Company’s
common stock at US$1.00 per share for 12 months after
issuance.
The Company
will have the right to accelerate the exercise of the options via
a press release notice should the share price of our common stock
exceed US$1.15 for seven consecutive trading
days.
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Use
of Proceeds
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We intend to
use the proceeds of the subscription funds on developing On4
Communications, Inc.’s (“On4”) business plan, products and corporate
brand. We will hold the proceeds in trust until our merger with
On4 is completed. If our merger agreement with On4 does not complete and
is terminated, we will return your investment.
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Closing
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The closing
of the transactions contemplated by this Agreement (the “Closing”) will
take place once we have closed the merger with On4. All funds
provided to us in connection with this offering will be held in trust
until the closing of the merger with On4. Upon closing, we will
cause to be delivered to purchasers, who’s Subscription Agreements and
funds we have accepted, the Share and Warrant certificates representing
the investment that has been made.
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Resale
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The
securities offered hereby are subject to stringent limitations on their
resale or transfer by an investor. Persons who purchase Units
pursuant to this offering will not have the benefit of a review of the
material by any securities commission or other regulatory
authority. Sales of the Units will only be made in accordance
with exemptions from registration and prospectus requirements under
applicable securities legislation.
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Registration
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Investors are
granted registration rights covering the resale of the Shares and the
shares issuable upon exercise of the Warrants, whereby we are obligated to
use our best efforts to register the resale of the Shares and the shares
issuable upon exercise of the Warrants by filing a registration statement
with the SEC under the United States Securities Act of 1933 within 30 days
of closing of the merger.
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Business
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We were
incorporated in Delaware on June 4, 2001. To date, we have
generated nominal revenues. We have entered into a Merger
Agreement Term Sheet with On4 Communications, Inc., an Arizona company
(“On4”). The closing of this financing is subject to the
closing of the merger with On4.
On4
manufactures industry-leading two-way communication devices that track
people, pets, assets, inventory or just about anything else that is of
importance to its customers. Incorporating both proprietary and
non-proprietary hardware, On4 Code Division Multiple Access (CDMA) based
devices are harmonized with some of the most sophisticated Location Based
Service (LBS) tracking software available on the market today, enabling
On4 to provide seamless, integrated end-to-end tracking solutions for
On4’s customers.
On4 can
provide either hardware-only or fully integrated custom solutions,
depending on end-user requirements. On4 specializes in the integration of
proprietary and non-proprietary hardware and wireless carrier platforms
with non-competing vertical partners to access lucrative consumer-based
niche markets.
We face all
of the risks inherent in a new business. In addition, we cannot
provide historical information and financial data about our planned
operations upon which a prospective investor can make an informed judgment
as to our future prospects. The purchase of the securities
offered hereby must therefore be regarded as the placing of funds at a
high risk in a new or “start-up” venture with all the unforeseen costs,
expenses, problems, and difficulties to which such ventures are
subject.
We have
limited financial resources, no revenues and can give you no assurance
that additional funding will be available to us for development of our
projects. The only significant source of funds presently
available to us is the sale of our equity capital. There can be
no assurance that we will be able to obtain adequate financing in the
future or that the terms of such financing will be
favorable. Failure to obtain such additional financing could
result in delay or indefinite postponement of the development of our
projects.
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