EXHIBIT 4.2
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
AMBIENT CORPORATION
COMMON STOCK PURCHASE WARRANT
1. ISSUANCE. In consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
AMBIENT CORPORATION, a Delaware corporation (the "Company"),
_____________________________ or registered assigns (the "Holder") is hereby
granted the right to purchase at any time, on or after the Commencement Date (as
defined below) until 5:00 P.M., New York City time, on _____________, 200__1
(the "Expiration Date"), _________________ Thousand __________ (____________)2
fully paid and nonassessable shares of the Company's Common Stock, $0.001 par
value per share (the "Common Stock"), at an initial exercise price per share
(the "Exercise Price") of $0.50 per share, subject to further adjustment as set
forth herein. This Warrant is being issued pursuant to the terms of that certain
Securities Purchase Agreement, dated as of December ___, 2004 (the "Agreement"),
to which the Company and Holder (or Holder's predecessor in interest) are
parties. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement. This Warrant was originally issued to the
Holder of the Holder's predecessor in interest on _____________, 20043 (the
"Issue Date").
2. EXERCISE OF WARRANTS.
2.1 GENERAL.
(a) This Warrant is exercisable in whole or in part
at any time and from time to time commencing on the Commencement Date (as
defined below). Such exercise shall be effectuated by submitting to the Company
(either by delivery to the Company or by facsimile transmission as provided in
Section 8 hereof) a completed and duly executed Notice of Exercise
(substantially in the form attached to this Warrant Certificate) as provided in
the Notice of Exercise (or revised by notice given by the Company as
contemplated by the Section headed "NOTICES" in the Agreement). The date such
Notice of
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1 Insert date which the last calendar of the month in which the third
anniversary of the Buyer's Closing Date occurs.
2 Insert number equal one hundred percent (100%) of the Issue Date Conversion
Shares.
3 Insert the Buyer's Closing Date.
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Exercise is faxed to the Company shall be the "Exercise Date," provided that, if
such exercise represents the full exercise of the outstanding balance of the
Warrant, the Holder of this Warrant tenders this Warrant Certificate to the
Company within five (5) Trading Days thereafter. The Notice of Exercise shall be
executed by the Holder of this Warrant and shall indicate (i) the number of
shares then being purchased pursuant to such exercise and (ii) if applicable (as
provided below), whether the exercise is a cashless exercise.
(b) The provisions of this Section 2.1(b) shall only
be applicable (i) on or after the first anniversary of the Issue Date, and (ii)
if, and only if, on the Exercise Date there is no effective Registration
Statement covering the Warrant Shares (other than during a Permitted Suspension
Period, as defined in the Registration Rights Agreement). If the Notice of
Exercise form elects a "cashless" exercise, the Holder shall thereby be entitled
to receive a number of shares of Common Stock equal to (w) the excess of the
Current Market Value (as defined below) over the total cash exercise price of
the portion of the Warrant then being exercised, divided by (x) the Market Price
of the Common Stock as of the trading day immediately prior to the Exercise
Date. For the purposes of this Warrant, the terms (y) "Current Market Value"
shall mean an amount equal to the Market Price of the Common Stock as of the
Trading Day immediately prior to the Exercise Date, multiplied by the number of
shares of Common Stock specified in such Notice of Exercise Form, and (z)
"Market Price of the Common Stock" shall mean the Closing Price (as defined
below) of the Common Stock.
(c) If the Notice of Exercise form elects a "cash"
exercise (or if the cashless exercise referred to in the immediately preceding
paragraph (b) is not available in accordance with its terms), the Exercise Price
per share of Common Stock for the shares then being exercised shall be payable,
at the election of the Holder, in cash or by certified or official bank check or
by wire transfer in accordance with instructions provided by the Company at the
request of the Holder..
(d) Upon the appropriate payment, if any, of the
Exercise Price for the shares of Common Stock purchased, together with the
surrender of this Warrant Certificate (if required), the Holder shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased. The Company shall deliver such certificates representing the
Warrant Shares in accordance with the instructions of the Holder as provided in
the Notice of Exercise (the certificates delivered in such manner, the "Warrant
Share Certificates") within three (3) Trading Days (such third Trading Day, a
"Warrant Share Delivery Date") of (i) with respect to a "cashless exercise," the
Exercise Date or, (ii) with respect to a "cash" exercise, the later of the
Exercise Date or the date the payment of the Exercise Price for the relevant
Warrant Shares is received by the Company.
(e) The Holder shall be deemed to be the holder of
the shares issuable to it in accordance with the provisions of this Section 2.1
on the Exercise Date.
2.2 LIMITATION ON EXERCISE. Notwithstanding the
provisions of this Warrant, the Agreement or of the other Transaction
Agreements, in no event (except (i) as
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specifically provided in this Warrant as an exception to this provision, (ii)
during the forty-five (45) day period prior to the Expiration Date, or (iii)
while there is outstanding a tender offer for any or all of the shares of the
Company's Common Stock) shall the Holder be entitled to exercise this Warrant,
or shall the Company have the obligation to issue shares upon such exercise of
all or any portion of this Warrant to the extent that, after such exercise the
sum of (1) the number of shares of Common Stock beneficially owned by the Holder
and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised portion of the
Warrants or other rights to purchase Common Stock or through the ownership of
the unconverted portion of convertible securities), and (2) the number of shares
of Common Stock issuable upon the exercise of the Warrants with respect to which
the determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock (after taking into account the shares to be issued to the
Holder upon such exercise). For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), except as otherwise provided in clause (1) of such sentence. The Holder,
by its acceptance of this Warrant, further agrees that if the Holder transfers
or assigns any of the Warrants to a party who or which would not be considered
such an affiliate, such assignment shall be made subject to the transferee's or
assignee's specific agreement to be bound by the provisions of this Section 2.2
as if such transferee or assignee were the original Holder hereof.
2.3 CERTAIN DEFINITIONS. As used herein, each of the
following terms has the meaning set forth below, unless the context otherwise
requires:
(a) "Commencement Date" means the earlier of (i) the
date which is sixty-five (65) days after the Issue Date, or (ii) the Effective
Date.
(b) "Closing Price" means the 4:00 P.M. closing bid
price of the Common Stock on the Principal Trading Market on the relevant
Trading Day(s), as reported by the Reporting Service for the relevant date.
(c) "Reporting Service" means Bloomberg LP or if
that service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by a
Majority in Interest of the Holders and reasonably acceptable to the Company.
3. RESERVATION OF SHARES. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant
(x) until the Final Lock-up Date, one hundred ten percent (110%) of the
number of shares of its Common Stock as shall be required for issuance
of the Warrant Shares for the then unexercised portion of this Warrant,
and
(y) thereafter, one hundred percent (100%)
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of the number of shares of its Common Stock as shall be required for issuance of
the Warrant Shares for the then unexercised portion of this Warrant. For the
purposes of such calculations, the Company should assume that the outstanding
portion of this Warrants were exercisable in full at any time, without regard to
any restrictions which might limit the Holder's right to exercise any portion of
this Warrant held by the Holder.
4. MUTILATION OR LOSS OF WARRANT. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
receipt of reasonably satisfactory indemnification, and (in the case of
mutilation) upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor and date and any such lost,
stolen, destroyed or mutilated Warrant shall thereupon become void.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. PROTECTION AGAINST XXXXXXXX AND OTHER ADJUSTMENTS.
6.1 ADJUSTMENT MECHANISM. If an adjustment of the
Exercise Price is required pursuant to this Section 6, the Holder shall be
entitled to purchase such number of shares of Common Stock as will cause (i) (x)
the total number of shares of Common Stock Holder is entitled to purchase
pursuant to this Warrant following such adjustment, multiplied by (y) the
adjusted Exercise Price per share, to equal the result of (ii) (x) the dollar
amount of the total number of shares of Common Stock Holder is entitled to
purchase before adjustment, multiplied by (y) the total Exercise Price before
adjustment.4
6.2 CAPITAL ADJUSTMENTS. In case of any stock split
or reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation (where the Company is not the
surviving entity), the provisions of this Section 6 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Warrant and the original Exercise Price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions of
this Section shall be applied in a fair, equitable and reasonable manner so as
to give effect, as nearly as may be, to the purposes hereof. A rights offering
to stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights. The Company will not effect any consolidation or
merger, unless prior to the consummation thereof, the successor or acquiring
entity (if other than the Company) and, if an entity different from the
successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock of the Company are entitled to receive as a result
of such consolidation or merger assumes by written instrument the obligations
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4 Example: Assume 10,000 shares remain under Warrant at original stated Exercise
Price of US$0.50. Total exercise price (clause (y) in text) is (i) 10,000 x (ii)
US$0.50, or US$5,000. Company effects 2:1 stock split. Exercise Price is
adjusted to US$0.25. Number of shares covered by Warrant is adjusted to 20,000,
because (applying clause (x) in text) (i) 20,000 x (ii) US$0.25 = US$5,000.
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under this Warrant (including under this Section 6) and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.
6.3 ADJUSTMENT FOR SPIN OFF. If, for any reason,
prior to the exercise of this Warrant in full, the Company spins off or
otherwise divests itself of a part of its business or operations or disposes all
or of a part of its assets in a transaction (the "Spin Off") in which the
Company does not receive compensation for such business, operations or assets,
but causes securities of another entity (the "Spin Off Securities") to be issued
to security holders of the Company, then the Company shall cause (i) to be
reserved Spin Off Securities equal to the number thereof which would have been
issued to the Holder had all of the Holder's unexercised Warrants outstanding on
the record date (the "Record Date") for determining the amount and number of
Spin Off Securities to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of business on the
Trading Day immediately before the Record Date (the "Reserved Spin Off Shares"),
and (ii) to be issued to the Holder on the exercise of all or any of the
Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x)
the Reserved Spin Off Shares, multiplied by (y) a fraction, of which (I) the
numerator is the amount of the Outstanding Warrants then being exercised, and
(II) the denominator is the amount of the Outstanding Warrants.
6.4 ADJUSTMENT FOR CERTAIN TRANSACTIONS. Reference
is made to the provisions of Section 4(g) of the Agreement, the terms of which
are incorporated herein by reference. The number of shares covered by this
Warrant and the Exercise Price shall be adjusted as provided in the applicable
provisions of said Section 4(g) of the Agreement.
7. TRANSFER TO COMPLY WITH THE SECURITIES ACT; REGISTRATION
RIGHTS.
7.1 TRANSFER. This Warrant has not been registered
under the Securities Act of 1933, as amended, (the "Act") and has been issued to
the Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 REGISTRATION RIGHTS. (a) Reference is made to
the Registration Rights Agreement. The Company's obligations under the
Registration Rights Agreement and the other terms and conditions thereof with
respect to the Warrant Shares, including, but not necessarily limited to, the
Company's commitment to file a registration statement including the Warrant
Shares, to have the registration of the Warrant Shares completed and effective,
and to maintain such registration, are incorporated herein by reference.
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(b) In addition to the registration rights referred
to in the preceding provisions of Section 7.2(a), effective after the expiration
of the effectiveness of the Registration Statement as contemplated by the
Registration Rights Agreement, the Holder shall have piggy-back registration
rights with respect to the Warrant Shares then held by the Holder or then
subject to issuance upon exercise of this Warrant (collectively, the "Remaining
Warrant Shares"), subject to the conditions set forth below. If, at any time
after the Registration Statement has ceased to be effective, the Company
participates (whether voluntarily or by reason of an obligation to a third
party) in the registration of any shares of the Company's stock (other than a
registration on Form S-8 or on Form S-4), the Company shall give written notice
thereof to the Holder and the Holder shall have the right, exercisable within
ten (10) Trading Days after receipt of such notice, to demand inclusion of all
or a portion of the Holder's Remaining Warrant Shares in such registration
statement. If the Holder exercises such election, the Remaining Warrant Shares
so designated shall be included in the registration statement at no cost or
expense to the Holder (other than any costs or commissions which would be borne
by the Holder under the terms of the Registration Rights Agreement). The
Holder's rights under this Section 7 shall expire at such time as the Holder can
sell all of the Remaining Warrant Shares under Rule 144 without volume or other
restrictions or limit.
8. BUY-IN AMOUNT.
(a) If, by the relevant Warrant Share Delivery Date, the
Company fails for any reason to deliver the relevant Warrant Share Certificates,
and after such Warrant Share Delivery Date, the Holder who has exercised this
Warrant (an "Exercising Holder") purchases, in an arm's-length open market
transaction or otherwise, shares of Common Stock (the "Covering Shares") in
order to make delivery in satisfaction of a sale of Common Stock by the
Exercising Holder (the "Sold Shares"), which delivery such Exercising Holder
anticipated to make using the shares to be issued upon such exercise (a
"Buy-In"), the Exercising Holder shall have the right to require the Company to
pay to the Exercising Holder, in addition to and not in lieu of all other
amounts contemplated in other provisions of the Transaction Agreements, the
Warrant Share Buy-In Adjustment Amount (as defined below). The Company shall pay
the Warrant Share Buy-In Adjustment Amount to the Exercising Holder in
immediately available funds immediately upon demand by the Exercising Holder.
(b) The term "Warrant Share Buy-In Adjustment Amount" means
the amount equal to the excess, if any, of (i) the Exercising Holder's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (ii) the net proceeds (after brokerage commissions, if any) received by the
Exercising Holder from the sale of the Sold Shares. By way of illustration and
not in limitation of the foregoing, if the Exercising Holder purchases shares of
Common Stock having a total purchase price (including brokerage commissions) of
$11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Warrant Share Buy-In Adjustment Amount which the
Company will be required to pay to the Exercising Holder will be $1,000.
9. NOTICES. Any notice required or permitted hereunder
shall be given in manner provided in the Section headed "NOTICES" in the
Agreement, the terms of which are incorporated herein by reference.
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10. SUPPLEMENTS AND AMENDMENTS; WHOLE AGREEMENT. This
Warrant may be amended or supplemented only by an instrument in writing signed
by the parties hereto. This Warrant contains the full understanding of the
parties hereto with respect to the subject matter hereof and thereof and there
are no representations, warranties, agreements or understandings other than
expressly contained herein and therein.
11. GOVERNING LAW. This Warrant shall be deemed to be a
contract made under the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the County of New
York or the state courts of the State of New York sitting in the County of New
York in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on FORUM NON CONVENIENS, to the bringing of any such proceeding
in such jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
12. JURY TRIAL WAIVER. The Company and the Holder hereby
waive a trial by jury in any action, proceeding or counterclaim brought by
either of the Parties hereto against the other in respect of any matter arising
out or in connection with this Warrant.
13. REMEDIES. The Company stipulates that the remedies at
law of the Holder of this Warrant in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms
of this Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. COUNTERPARTS. This Warrant may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Balance of page intentionally left blank]
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15 DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Warrant are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the 23th day of December, 2004.
AMBIENT CORPORATION
By:/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
(Print Name)
Chief Executive Officer
(Title)
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NOTICE OF EXERCISE OF WARRANT
TO: AMBIENT CORPORATION. VIA TELECOPIER TO:
79 Chapel Street (000) 000-0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: CEO
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate for the above-referenced Class, dated as
of ________________, 20___ , to purchase ___________ shares of the Common Stock,
$0.001 par value ("Common Stock"), of AMBIENT CORPORATION and tenders herewith
payment in accordance with Section 2 of said Common Stock Purchase Warrant, as
follows:
_ CASH: $_____________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
__ enclosed check
__ wire transfer
__ other
_ CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:
Net number of Warrant Shares to be issued to Holder : ________*
* based on: Current Market Value - (Exercise Price X Exercise Shares)
---------------------------------------------------------
Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = $_______________
Current Market Value [MP x Exercise Shares] = $_______________
It is the intention of the Holder to comply with the provisions of
Section 2.2 of the Warrant regarding certain limits on the Holder's right to
exercise thereunder. Based on the analysis on the attached Worksheet Schedule,
the Holder believes this exercise complies with the provisions of said Section
2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby,
the Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
As contemplated by the Warrant, this Notice of Conversion is being sent
by facsimile to the telecopier number and officer indicated above.
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If this Notice of Exercise represents the full exercise of the
outstanding balance of the Warrant, the Holder either (1) has previously
surrendered the Warrant to the Company or (2) will surrender (or cause to be
surrendered) the Warrant to the Company at the address indicated above by
express courier within five (5) Trading Days after delivery or facsimile
transmission of this Notice of Exercise.
The certificates representing the Warrant Shares should be transmitted
by the Company to the Holder
via express courier, or
by electronic transfer
after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:
_____________________________________
_____________________________________
_____________________________________
Dated: ______________________
_____________________________
[Name of Holder]
By: _________________________
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NOTICE OF EXERCISE OF WARRANT
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates ___________
2. Shares to be issued on current exercise ___________
3. Other shares to be issued on other current exercise(s) and
other current conversion(s)5 ___________
4. Other shares eligible to be acquired within next 60 days
without restriction ___________
5. Total [sum of Lines 1 through 4] ___________
6. Outstanding shares of Common Stock6 ___________
7. Adjustments to Outstanding
a. Shares known to Holder as previously issued
to Holder or others but not included in Line 6 ___________
b. Shares to be issued per Line(s) 2 and 3 ___________
c. Total Adjustments [Lines 7a and 7b] ___________
8. Total Adjusted Outstanding [Lines 6 plus 7c] ___________
9. Holder's Percentage [Line 5 divided by Line 8] __________%
[Note: Line 9 not to be above 4.99%]
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5 Includes shares issuable on conversion of convertible securities (including
assumed payment of interest or dividends) or exercise of other rights, including
other warrants or options
6 Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent
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