exv4w2



 




Exhibit 4.2



THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND ANY SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE
MADE ONLY (i) IN A REGISTRATION OR QUALIFICATION OR (ii) IF AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION IS AVAILABLE AND THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL TO THAT EFFECT REASONABLY SATISFACTORY TO THE COMPANY.


SALE OR OTHER TRANSFER OF THESE SECURITIES IS FURTHER RESTRICTED FOR UP TO 180
DAYS FOLLOWING THE ISSUANCE OF THIS WARRANT BY THE TERMS OF A BRIDGE LOAN AND
INVESTMENT AGREEMENT, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
OFFICES OF THE COMPANY.


WARRANT TO PURCHASE

SHARES OF COMMON STOCK

OF

MAKEMUSIC! INC.


VOID AFTER 5:00 P.M. MINNEAPOLIS, MINNESOTA TIME ON FEBRUARY 27, 2008



	 	 	 	 	 
	Issuance Date:	 	
February 28, 2003
	 	Warrant No.      



     THIS CERTIFIES that, subject to the terms and conditions herein set forth,
________________________ or his/her/its registered assigns, is entitled to purchase from
MAKEMUSIC! INC., a Minnesota corporation (the “Company”), at any time after the
Issuance Date and prior to the fifth anniversary of the issuance
date, __________________
shares of Common Stock (as defined below) (the “Warrant Shares”) at the Warrant
Exercise Price (as defined below). The $.01 par value common stock of the
Company is herein referred to as the “Common Stock”. The “Warrant Exercise
Price” is $0.50 per share.


     This Warrant and the rights granted hereby are subject to the following
terms and conditions:


1. Adjustment of Warrant Exercise Price and Number of Warrant Shares. The
provisions in this Warrant relating to the Warrant Exercise Price and the
number of Warrant Shares to be issued upon exercise of this Warrant shall be
subject to adjustment from time to time as hereinafter provided in this
Section.


 






 


     (a)  Upon each adjustment of the Warrant Exercise Price, the holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment, the number of shares of Common Stock obtained
by multiplying the Warrant Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock purchasable hereto
immediately prior to such adjustment and dividing the product thereof by the
Warrant Exercise Price resulting from such adjustment.


     (b)  In case the Company shall at any time subdivide its outstanding Common
Stock into a greater number of shares or declare a dividend payable in Common
Stock, the Warrant Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock purchasable pursuant to this Warrant shall be proportionately increased,
and conversely, in case the Company’s outstanding Common Stock shall be
combined into a smaller number of shares, the Warrant Exercise Price in effect
immediately prior to such combination shall be proportionately increased and
the number of shares of Common Stock purchasable upon the exercise of this
Warrant shall be proportionately reduced.


     (c)  If any capital reorganization or reclassification of the capital stock
of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities or assets (“Substituted Property”)
with respect to or in exchange for such Common Stock, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale, the
holder shall have the right to purchase and receive upon the basis and upon the
terms and conditions specified in this Warrant, and in lieu of the Common Stock
of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such Substituted Property as would
have been issued or delivered to the holder if it had exercised this Warrant
and had received upon exercise of this Warrant the Common Stock prior to such
reorganization, reclassification, consolidation, merger, or sale. The Company
shall not effect any such consolidation, merger, or sale, unless prior to the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume the obligation to deliver to the holder such Substituted
Property as, in accordance with the foregoing provisions, the holder may be
entitled to purchase.


     (d)  If the Company takes any other action, or if any other event occurs
which does not come within the scope of the provisions of Sections 2(b) or
2(c), but which should, in the Company’s reasonable judgment, result in an
adjustment in the Warrant Exercise Price and/or the number of shares subject to
the Warrant in order to fairly protect the purchase rights of the holder, an
appropriate adjustment in such purchase rights shall be made by the Company.


     (e) Upon any adjustment of the Warrant Exercise Price or the number of
shares issuable upon exercise of this Warrant, the Company shall give written
notice thereof, by express delivery or first-class mail, postage prepaid,
addressed to the holder at the address of the holder as shown on the books of
the Company, which notice shall state


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the Warrant Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.


2.     No Fractional Shares. No fractional shares will be issued in connection
with any exercise of this Warrant. In lieu of any fractional share which would
otherwise be issuable, the Company shall round up to the nearest whole number
of shares.


3.     No Shareholder Rights. This Warrant shall not entitle its holder to vote,
receive dividends or exercise any of the rights of a shareholder of the Company
prior to exercise of this Warrant.


4.     Covenants of the Company. The Company covenants that during the period this
Warrant is exercisable, the Company will reserve from its authorized and
unissued shares of Common Stock a sufficient number of shares of Common Stock
to provide for the issuance of Warrant Shares upon the exercise of this
Warrant. The Company further covenants that all Warrant Shares that may be
issued upon the exercise of this Warrant will, upon payment and issuance, be
duly authorized and issued, fully paid and nonassessable shares of Common
Stock.


5.     Exercise of Warrant. This Warrant may be exercised by the registered
holder, in whole or in part, by providing the Company with at least 10 business
days’ written notice of such holder’s intent to exercise and by surrendering
this Warrant at the principal office of the Company, together with the Exercise
Form attached hereto duly executed, accompanied by payment in full of the
amount of the aggregate Warrant Exercise Price in cash or check payable to the
Company. Notwithstanding anything to the contrary in this Warrant, in no event
shall a partial exercise be for Warrant Shares with an aggregate exercise price
of less than $1,000. Upon partial exercise hereof, a new warrant or warrants
containing the same date and provisions as this Warrant shall be issued by the
Company to the registered holder for the number of Warrant Shares with respect
to which this Warrant shall not have been exercised. A Warrant shall be deemed
to have been exercised immediately prior to the close of business on the date
the Company is in receipt of this Warrant, a completed Exercise Form, all
documents the Company may reasonably request from the holder for the purpose of
complying with applicable securities and other laws, and payment for the number
of Warrant Shares being acquired upon exercise of this Warrant. The holder
entitled to receive the Warrant Shares issuable upon such exercise shall be
treated for all purposes as the holder of record of such Warrant Shares as of
the close of business on such date. After such date, the Company shall issue
and deliver to the holder or holders entitled to receive the same, a
certificate or certificates for the number of full Warrant Shares issuable upon
such exercise.


     The holder has been advised that the Warrant Shares and the Warrant are
not being registered under the Act, or state securities laws pursuant to
exemptions from the Act and such laws, and that the Company’s ability and
obligation to issue Warrant Shares are dependent upon the availability of
exemptions from registration under the Act and state securities law. In the
event that the Company does not meet the requirements for an


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exemption to registration under the Act and state securities laws for issuance
of the Warrant Shares upon exercise of the Warrant, the Company shall issue the
Warrant Shares at the first opportunity an exemption is available, but shall
not be under any obligation to register the Warrant Shares under the Act at any
time.


     Notwithstanding anything herein to the contrary, the Company shall have
the right to delay any exercise for the purpose of ensuring the availability of
an exemption under applicable securities laws for the issuance of the Warrant
Shares to the holder in light of the transactions by the Company in its
securities. If the Company elects to delay any such exercise, the Company
shall inform the holder, in writing, of such delay and the terms of such delay.
Any such delay shall not lead to any change in the Warrant Exercise Price or
the terms of the Warrant and shall not extend the term of any Warrant unless
such delay would extend past the expiration date of such Warrant. In such
case, the expiration date shall be extended to thirty (30) days after the end
of such delay.


6.     Acceleration of Warrant Termination. For purposes of this section, “Change
of Control” shall mean the sale or lease of all or substantially all of the
Company’s assets or a merger or other transaction in which the holders of the
Company’s voting capital stock before such transaction hold less than fifty
percent of the outstanding voting capital stock of the successor entity after
the transaction. Immediately prior to the Company completing a Change of
Control, the Company shall automatically have the right to call and terminate
the Warrant, without paying any additional consideration. The Company shall
deliver prior written notice to the holder (“Call Notice”) of a Change of
Control and the effectiveness of the call right. The holder shall have
forty-five (45) days from the date of the Call Notice (“Call Period”) during
which the holder may exercise the Warrant. If the Warrant is not exercised
during the Call Period, the holder shall deliver the Warrant to the Company for
cancellation. Cancellation of the Warrant shall be effective on the Company’s
books and records notwithstanding the holder’s failure to deliver the Warrant
to the Company for cancellation.


7.     Compliance with Securities Laws and Other Transfer Restrictions.


     (a) The holder of this Warrant, by acceptance hereof, agrees, represents
and warrants that this Warrant and the Warrant Shares which may be issued upon
exercise hereof are being acquired for investment, that the holder has no
present intention to resell or otherwise dispose of all or any part of this
Warrant or any Warrant Shares, and that the holder will not offer, sell or
otherwise dispose of all or any part of this Warrant or any Warrant Shares
except under circumstances which will not result in a violation of the Act or
applicable state securities laws. The Company may condition any transfer,
sale, pledge, assignment or other disposition on the receipt from the party to
whom this Warrant is to be so transferred or to whom Warrant Shares are to be
issued or so transferred, of any representations and agreements requested by
the Company in order to permit such issuance or transfer to be made pursuant to
exemptions from registration under federal and applicable state securities
laws. Upon exercise of this Warrant, the holder hereof shall, if requested by
the Company, confirm in writing holder’s investment purpose and acceptance of
the restrictions on transfer of the Warrant Shares, as well as any
representations and agreements requested by the Company in order to permit the


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issuance of Warrant Shares to be made pursuant to exemptions from registration
under federal and applicable state securities laws.


     (b)  In the event the holder of this Warrant desires to transfer this
Warrant, the holder shall provide the Company with a Form of Assignment, in the
form attached hereto describing the manner of such transfer, and an opinion of
counsel (reasonably acceptable to the Company) that the proposed transfer may
be effected without registration or qualification under applicable securities
laws, whereupon such holder shall be entitled to transfer this Warrant in
accordance with the notice delivered by such holder to the Company. If, in the
opinion of the counsel referred to in this Section, the proposed transfer or
disposition described in the written notice given may not be effected without
registration or qualification of this Warrant, the Company shall give written
notice thereof to the holder hereof, and such holder will limit its activities
in respect to such proposed transfer or disposition as, in the opinion of such
counsel, are permitted by law. The Company may place one or more restrictive
legends on the Warrant or any certificates representing the Warrant Shares
which set forth the restrictions contained herein, and may further place a
“stop transfer” restriction in the Company’s books and records with respect to
the Warrant and any Warrant Shares. The restrictions set forth in this Warrant
shall be binding upon any holder, donee, assignee or transferee of the Warrant
or the Warrant Shares.


     (c)  The holder will not, for a period of 180 days after the issuance date
of this Warrant, sell, transfer or otherwise dispose of, or agree to sell,
transfer or otherwise dispose of any of the Warrants or Warrant Shares or sell,
transfer or otherwise dispose of, or agree to sell, transfer or otherwise
dispose of any options, rights or warrants to purchase any of the Warrants or
Warrant Shares beneficially held by the holder. The foregoing restrictions do
not prohibit gifts to donees or transfers by will or the laws of descent to
heirs or beneficiaries provided that such donees, heirs and beneficiaries shall
be bound by these restrictions.


8.     Registration Rights.


     (a) If at any time after the issuance date of this Warrant and prior to
the end of the one-year period following complete exercise of this Warrant, the
Company proposes to register under the 1933 Act (except by a Form S-4 or Form
S-8 Registration Statement or any successor forms thereto) or qualify for a
public distribution under Section 3(b) of the 1933 Act, any of its securities,
it will give written notice to the holder of this Warrant, any Warrants issued
in exchange hereof and any Warrant Shares of its intention to do so and, on the
written request of any such holder given within twenty (20) days after receipt
of any such notice (which request shall specify the interest in this Warrant or
the Warrant Shares intended to be sold or disposed of by such holder and
describe the nature of any proposed sale or other disposition thereof), the
Company will use its best efforts to cause all such Warrant Shares, the holder
of which shall have requested the registration or qualification thereof, to be
included in such registration statement proposed to be filed by the Company;
provided, however, that if a greater number of Warrant Shares is offered for
participation in the proposed offering than in the reasonable opinion of the
managing underwriter of the proposed offering can be accommodated without
adversely affecting the proposed offering,


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then the amount of Warrant Shares proposed to be offered by such holder
for registration, as well as the number of securities of any other selling
shareholders participating in the registration, shall be proportionately
reduced to a number deemed satisfactory by the managing underwriter, which
number of shares to be sold by selling shareholders may be zero.


     (b)  With respect to each inclusion of securities in a registration
statement pursuant to this Section 8, the Company shall bear the following
fees, costs, and expenses: all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the Company,
fees and disbursements of counsel for the underwriter or underwriters of such
securities (if the Company is required to bear such fees and disbursements),
all internal expenses, the premiums and other costs of policies of insurance
against liability arising out of the public offering, and legal fees and
disbursements and other expenses of complying with state securities laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified. Fees and disbursements of special counsel and accountants for the
selling holders, underwriting discounts and commissions, and transfer taxes for
selling holders and any other expenses relating to the sale of securities by
the selling holders not expressly included above shall be borne by the selling
holders;


     (c)  The Company hereby indemnifies the holder of this Warrant and of any
Warrant Shares, and the officers and directors, if any, who control such
holder, within the meaning of Section 15 of the 1933 Act, against all losses,
claims, damages, and liabilities caused by (1) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement or
prospectus (and as amended or supplemented if the Company shall have furnished
any amendments thereof or supplements thereto), any preliminary prospectus or
any state securities law filings related to the registration of the Warrant
Shares pursuant to this Section 8; (2) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading except insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission
contained in information furnished in writing to the Company by such holder
expressly for use therein. Holder by its acceptance hereof severally agrees
that it will indemnify and hold harmless the Company, each of its officers who
signs any such registration statement related to the registration of the
Warrant Shares pursuant to this Section 8, and each person, if any, who
controls the Company, within the meaning of Section 15 of the 1933 Act, with
respect to losses, claims, damages or liabilities which are caused by any
untrue statement or omission contained in information furnished in writing to
the Company by such holder expressly for use therein.


9. Subdivision of Warrant. At the request of the holder of this Warrant in
connection with a transfer or exercise of a portion of the Warrant, upon
surrender of such Warrant for such purpose to the Company, the Company will
issue and exchange therefor warrants of like tenor and date representing in the
aggregate the right to purchase such number of shares of Common Stock as shall
be designated by such holder at the time of such surrender; provided, however,
that the Company’s obligations to subdivide


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securities under this Section shall be subject to and conditioned upon the
compliance of any such subdivision with applicable securities laws.


10.     Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of the initial
Warrant, in lieu of this Warrant.


11.     Miscellaneous. This Warrant shall be governed by the laws of the state of
Minnesota without reference to such state’s choice of laws provisions. The
headings in this Warrant are for purposes of convenience and reference only,
and shall not be deemed to constitute a part hereof. Neither this Warrant nor
any term hereof may be changed, waived, discharged or terminated orally but
only by an instrument in writing signed by the Company and the registered
holder hereof. All notices or other communications required or permitted
hereunder shall be in writing. A written notice or other communication shall
be deemed to have been sufficiently given: (i) if delivered by hand, when such
notice is received from the notifying party; (ii) if transmitted by facsimile
or timely delivered to a reputable express courier, on the next business day
following the day so transmitted or delivered; or (iii) if delivered by mail,
on the seventh day following the date such notice or other communication is
deposited in the U.S. Mail for delivery by certified or registered mail
addressed to the other party, or when actually received, whichever occurs
earlier.


     ISSUED this 28th day of February, 2003.


MAKEMUSIC! INC.



	 	 	 	 
	By
 	 	 



Its   Chief Financial Officer






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FORM OF ASSIGNMENT


MAKEMUSIC! INC.


     FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:



	 	 	 	 	 	 	 	 	 	 	 
	Name of Assignee	 	Address	 	 	Number of Shares	 
	
	 	
	 	 	
	 
	 
	 
	 
	 



and does hereby irrevocably constitute and appoint
_________________ Attorney to make such transfer on the books of
MAKEMUSIC! INC. maintained for the purpose, with full power of substitution in
the premises. The undersigned understands that compliance with the provisions
of the Warrant is necessary to effect any assignment or transfer.


Dated: ___________________________ , _____





Signature



Print Name

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EXERCISE FORM


MAKEMUSIC! INC.


(To be executed only upon exercise of Warrant)


     The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases ______________________ of the number of
shares of Common Stock of MAKEMUSIC! INC. purchasable with this Warrant, and
herewith makes payment therefor, all at the price and on the terms and
conditions specified in this Warrant.


     The undersigned agrees to deliver a completed and executed subscription,
investment or similar document requested by the Company in connection with the
purchase of shares of Common Stock upon exercise of this Warrant.


Dated: _________________________ , _______





Signature of Registered Owner




Street Address




City, State, Zip Code




IRS Identification Number



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