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EXHIBIT 4.9
THIS WARRANT AND THE SHARES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED
WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT
OF 1933 ("ACT"), AND THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT.
STOCK PURCHASE WARRANT
RIGHT TO PURCHASE UP TO 90,000 SHARES OF COMMON STOCK
THIS CERTIFIES THAT Xxxxxxx Corporate Finance, Inc. and all registered and
permitted assigns (collectively, "Holder") is entitled to purchase, on or before
February 5, 2000, up to 90,000 shares of the common stock ("Common Stock") of
AMERICAN TECHNOLOGY CORPORATION (the "Corporation" or "Company") upon exercise
of this Warrant along with presentation of the full purchase price as provided
herein. The purchase price of the common stock upon exercise of this Warrant
("Warrant Shares") is equal to Five Dollars ($5.00) per share (the "Exercise
Price"). This Warrant is granted to Holder in consideration of Holder's
execution of that certain letter agreement dated February 5, 1997 between the
Holder and the Company. The number of shares of Common Stock purchasable
pursuant to this Warrant is subject to vesting as provided in Section 3.
1. Exercise of Warrant.
(a) This Warrant may be exercised in whole or in part on any business day on or
before the expiration date listed above by presentation and surrender hereof to
the Company at its principal office of an exercise request and the Exercise
Price in lawful money of the United States of America in the form of a wire
transfer or check, subject to collection, for the number of Warrant Shares
specified in the exercise request. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the balance
of the Warrant Shares purchasable hereunder. Upon receipt by the Company of this
Warrant and an exercise request and representations, together with proper
payment of the Exercise Price, at such office, the Holder shall be deemed to be
the holder of record of the Warrant Shares, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to the
Holder. The Company shall pay any and all transfer agent fees, documentary stamp
or similar issue or transfer taxes payable in respect of the issue or delivery
of the Warrant Shares.
(b) At any time during the Exercise Period, the Holder may, at its option,
exchange this Warrant, in whole or in part (a "Warrant Exchange"), into the
number of Warrant Shares determined in accordance with this Section (1)(b), by
surrendering this Warrant at the principal office of the Company, accompanied by
a written notice stating such Holder's intent to effect such exchange, the
number of Warrant Shares to be exchanged and the date on which the Holder
requests that such Warrant Exchange occur (the "Notice of Exchange"). The
Warrant Exchange shall take place on the date the Notice of Exchange is received
by the Company or such later date as may be specified in the Notice of Exchange
(the "Exchange Date"). Certificates for the shares issuable upon such Warrant
Exchange and, if applicable, a new Warrant of like tenor evidencing the balance
of the shares remaining subject to this Warrant, shall be issued as of the
Exchange Date and delivered to the Holder within seven (7) days following the
Exchange Date. In connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the number of Warrant Shares
(rounded to the next highest integer) equal to (i) the number of Warrant Shares
specified by the Holder in its Notice of Exchange (the "Total Number") less (ii)
the number of Warrant Shares equal to the quotient obtained by dividing (A) the
product of the Total Number and the existing Exercise Price by (B) the current
market value of a share of Common Stock. Current market value shall be the
average closing price for the 5-day period prior to the Exchange Date.
2. Adjustment of Exercise Price and Number of Shares Deliverable Upon Exercise
of Warrant.
The Exercise Price and the number of Shares purchasable upon the exercise of
this Warrant are subject to adjustment from time to time upon the occurrence of
the events enumerated in this paragraph.
(a) In case the Corporation shall at any time after the date of this Warrant:
(i) Pay a dividend of its shares of its Common Stock or make a distribution
in shares, or rights or warrants to purchase shares of its Common Stock with
respect to its outstanding Common Stock;
(ii) Subdivide its outstanding shares of Common Stock;
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(iii) Combine its outstanding shares of Common Stock; or
(iv) Issue any other shares of capital stock by reclassification of its
shares of Common Stock
the Exercise Price in effect and the number of Warrant Shares purchasable at the
time of the record date of such dividend, subdivision, combination, or
reclassification shall be proportionately adjusted so that Holder shall be
entitled to receive the aggregate number and kind of shares which, if this
Warrant had been exercised prior to such event, Holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination, or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) In case of any reorganization of the Corporation, or in case of any
reclassification or change of outstanding Common Stock issuable upon exercise of
this Warrant (other than a change in par value. or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
split-up or combination of the Common Stock), or in case of any consolidation or
merger of the Company with or into another entity (other than a consolidation or
merger with a subsidiary or a continuing corporation), or in case of any sale or
conveyance to another entity of all or substantially all of the property of the
Corporation, then, as a condition of such reorganization, reclassification,
change, consolidation, merger, sale, or conveyance, the Corporation or such
successor or purchasing entity, as the case may be, shall forthwith provide to
Holder a supplemental warrant (the "Supplement Warrant") which will make lawful
and adequate provision whereby Holder shall have the right thereafter to
receive, upon exercise of such Supplemental Warrant, the kind and amount of
shares and other securities and property which would have been received upon
such reorganization, reclassification, change, consolidation, merger, sale, or
conveyance by a holder of a number of shares of Common Stock equal to the number
of Shares issuable upon exercise of this Warrant immediately prior to such
reorganization, reclassification, change, consolidation, merger, sale, or
conveyance. Such Supplemental Warrant shall include provisions for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this paragraph. The above provisions of this paragraph shall
similarly apply to successive consolidations, mergers, sales, or conveyances.
3. Vesting.
The number of Warrant Shares described above shall vest and become exercisable
only at the rate of 15,000 Warrant Shares (as may be adjusted for events
outlined in this Warrant) for each full month of financial advisory services,
prorated for any partial month, pursuant to that certain letter agreement dated
February 5, 1997 between Holder and the Company. Accordingly 15,000 Warrant
Shares shall vest and become exercisable on March 5, 1997 and each full month of
service thereafter with all 90,000 Warrant Shares becoming fully vested and
exercisable on August 5, 1997. Any written termination of the letter agreement
by the Company or Holder shall serve as termination of vesting and any unvested
shares as of the date of termination shall be canceled and unexercisable for the
term of the Warrant. The Warrant shall remain in effect and fully exercisable
into the number of Warrant Shares so vested.
4. Registration Rights.
If the shares underlying this Warrant can be registered within the same
registration statement selected by the Company for the securities issued in
connection with the Private Placement Memorandum dated March 6, 1997 then the
Company shall include such Warrant Shares. Otherwise;
(1) The Company shall advise the Holder of this Warrant or of the Warrant Shares
or any then holder of Warrants or Warrant Shares (such persons being
collectively referred to herein as "holders") by written notice at least two
weeks prior to the filing of any new registration statement ("Registration
Statement") under the Securities Act of 1933 (the "Act") covering securities of
the Company, other than a Registration Statement filed with respect to any
employee benefit plan or an offering solely related to an acquisition for which
such Warrant Shares cannot be appropriately registered or which does not permit
registration of the Warrants or Warrant Shares, and will for a period of five
years, from the date of this Warrant upon the request of any such holder,
include in any such registration statement the number of Warrant Shares holder
desires to include in the Registration Statement. In the event the managing
underwriter for any said registration advises the Company that the inclusion of
the Warrant Shares would be detrimental to the offering, then such Warrant
Shares shall be included in the Registration Statement only if the Holder agrees
in writing, for a period of up to 120 days following such offering, not to sell
or otherwise dispose of the Warrant Shares. The Company shall supply
prospectuses and other documents as the Holder may request in order to
facilitate the public sale or other disposition of the Warrant Shares for sale
in such states where the Company qualifies its other securities pursuant to the
Registration Statement for sale and do any and all other acts and things which
may be necessary or desirable to enable such Holders to consummate the public
sale or other disposition of the Warrant or Warrant Shares. The Holder need not
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exercise the Warrant to have the Warrant Shares included in a registration
statement. Nothing in this Section shall be construed to extend the expiration
date of this Warrant.
(2) The following provision of this Section shall also be applicable:
(A) The Company shall bear the entire cost and expense of any registration
of securities initiated by it notwithstanding that Warrants Shares subject to
this Warrant may be included in any such registration. Any holder whose Warrant
Shares are included in any such registration statement shall, however, bear the
fees of his own counsel, transfer taxes or underwriting discounts or commissions
applicable to the Warrant Shares sold by him pursuant thereto.
(B) Neither the giving of any notice by any holder nor making of any
request for prospectus shall impose upon such holder or owner making such
request any obligation to sell any Warrant Shares, or exercise any Warrants.
The Company's agreements with respect to Warrant Shares in this Section
shall continue in effect regardless of the exercise and surrender of this
Warrant.
5. Assignment or Loss of Warrant.
(a) Any sale, transfer, assignment, hypothecation or other disposition of this
Warrant or of the Warrant Shares shall only be made if any such transfer,
assignment or other disposition will comply with the rules and statutes
administered by the Securities and Exchange Commission and (i) a Registration
Statement under the Act including such Shares is currently in effect, or (ii) in
the opinion of counsel, which counsel and which opinion shall be reasonably
satisfactory to the Company, a current Registration Statement is not required
for such disposition of the shares. Each stock certificate representing Warrant
Shares issued upon exercise or exchange of this Warrant shall bear the following
legend (unless, in the opinion of counsel, which counsel and which opinion shall
be reasonably satisfactory to the Company, such legend is not required):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED EXCEPT
UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY
IN FORM AND SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT VIOLATE THE
SECURITIES ACT OF 1933, AS AMENDED."
(b) The Holder understands that the Company may place, and may instruct any
transfer agent or depository for the Shares to place, a stop transfer notation
in the securities records in respect of the Shares.
(c) Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnification satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
6. Reservation of Shares.
The Company hereby agrees that at all times there shall be reserved for issuance
and delivery upon exercise or exchange of this Warrant all shares of its Common
Stock or other shares of capital stock of the Company from time to time issuable
upon exercise or exchange of this Warrant. All such shares shall be duly
authorized and, when issued upon the exercise or exchange of the Warrant in
accordance with the terms hereof, shall be validly issued, fully paid and
nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale (other than as provided in the
Company's articles of incorporation and any restrictions on sale set forth
herein or pursuant to applicable federal and state securities laws) and free and
clear of all preemptive rights.
7. Notices to Warrant Holders. No Shareholder Rights.
So long as this Warrant shall be outstanding, (i) if the Company shall pay any
dividend or make any distribution upon the Common Stock or (ii) if the Company
shall offer to the holders of Common Stock for subscription or purchase by them
any share of any class or any other rights or (iii) if any capital
reorganization of the Company, reclassification of the capital stock of the
Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the property
and assets of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then in
any such case, the Company shall cause to be mailed by certified mail to the
Holder, at least fifteen days prior the date, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which such action is to take place
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and the date, if any is to be fixed, as of which the holders of Common Stock or
other securities shall receive cash or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
Nothing in this Warrant shall be construed as conferring upon the Holder or its
transferees any rights as a stockholder in the Company, including the right to
vote, receive dividends, consent or receive notices as a stockholder in respect
to any meeting of stockholders.
8. Arbitration.
In the event that a dispute arises between the Corporation and the Holder of
this Warrant as to any matte relating to this Warrant, the matter shall be
settled by arbitration in San Diego, California in accordance with the Rules of
the American Arbitration Association and the award rendered by such
arbitrator(s) shall not be subject to appeal and may be entered in any federal
or state court located in California having jurisdiction thereof, and actions or
proceedings shall be brought in no other forum or venue.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers effective this 5th day of February 1997.
AMERICAN TECHNOLOGY CORPORATION
BY /s/ XXXXXX XXXXXX
Xxxxxx Xxxxxx, President
BY /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx, Secretary
ACKNOWLEDGMENT OF REPRESENTATION:
/s/ XXXXXXX MRGDCHIAN
Warrant Holder
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