EXHIBIT 4.1
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; CERTAIN DEFINITIONS. 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 until 5:00 P.M., New York City time, on the Expiration Date
(as defined below), _____________ (___________) 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 $0.25
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 May , 2003 (the "Agreement"), to which the Company and
Holder (or Xxxxxx's predecessor in interest) are parties. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement.
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. 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 this paragraph. The date such Notice of Exercise is faxed to the
Company shall be the "Exercise Date," provided that the Holder of this Warrant
tenders this Warrant Certificate to the Company within five (5) business days
thereafter. The Notice of Exercise shall be executed by the Holder of this
Warrant and shall indicate the number of shares then being purchased pursuant to
such exercise. Upon surrender of this Warrant Certificate, together with
appropriate payment of the Exercise Price for the shares of Common Stock
purchased, the Holder shall be entitled to receive a certificate or certificates
for the shares of Common Stock so purchased.
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(b) 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 specifically provided in this Warrant as
an exception to this provision, (ii) during the forty-five (45) day period prior
to the Expiration Date, (iii) after the Company issues an Early Expiration Date
Notice (as defined below), or (iv) 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 the Debentures or other
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) "Closing Price" means the closing price during
regular trading hours of the Common Stock (in U.S. Dollars) on the Principal
Trading Market, as reported by the Reporting Service.
(b) "Expiration Date" means the earlier of May 31, 2005
or the Early Expiration Date (as defined below).
(c) "Principal Trading Market" means the Over the
Counter Bulletin Board Market.
(d) "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 the
Holder and reasonably acceptable to the Company.
(e) "Target Price" means $0.50 per share, subject to
further adjustment in the same manner as adjustments to the Exercise Price are
made herein.
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(f) "Trading Day" means any day during which the
Principal Trading Market shall be open for business.
2.4 EARLY EXPIRATION DATE. So long as an effective
registration statement exists with respect to the resale of the shares issuable
on exercise of this Warrant, if the Closing Price for the Common Stock is more
than the Target Price for each of twenty (20) consecutive Trading Days (the
twentieth of such consecutive Trading Days, the "Target Trading Day"), then the
Company will have the right to give the Holder a written notice (an "Early
Expiration Date Notice") within five (5) Trading Days after the Target Trading
Day. The Early Expiration Date Notice shall state that the Expiration Date shall
be a date specified in such notice (the "Early Expiration Date"), which date
shall not be earlier than thirty (30) days after the Target Trading Day.
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 such number of shares of its Common Stock as shall
be required for issuance upon exercise of this Warrant (the "Warrant Shares").
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.1
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
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1 Example: Assume 100,000 shares remain under Warrant at original stated
Exercise Price of $0.25. Total exercise price (clause (y) in text) is (i)
100,000 x (ii) $0.25, or $25,000. Company effects 5:1 stock split. Exercise
Price is adjusted $0.05. Number of shares covered by Warrant is adjusted to
500,000, because (applying clause (x) in text) (i) 500,000 x (ii) $0.05, or
$25,000.
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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.
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.
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) 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 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) business
days after receipt of such notice, to demand inclusion of all or a portion of
the Xxxxxx'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 (without any holdbacks) at no cost or
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expense to the Holder (other than any costs or commissions which would be borne
by the Holder). The Holder's rights under this Section 7.2(a) 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.
(b) Notwithstanding the foregoing, if at any time or
from time to time after the date of effectiveness of the registration statement,
the Company notifies the Holder in writing of the existence of a Potential
Material Event (as defined below), the Holder shall not offer or sell any
Remaining Warrant Shares covered by such registration statement ("Registrable
Securities"), or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until the Holder receives written notice from the
Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; PROVIDED, HOWEVER,
that the Company may not so suspend such right other than during a Permitted
Suspension Period. The term "Potential Material Event" means any of the
following: (i) the possession by the Company of material information not ripe
for disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the registration statement would be
detrimental to the business and affairs of the Company; or (ii) any material
engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading absent
the inclusion of such information. The term "Permitted Suspension Period" means
one or more suspension periods during any consecutive 12-month period which
suspension periods, in the aggregate, do not exceed fifty (50) days, provided,
however, that no one such suspension period shall either (i) be for more than
twenty (20) days or (ii) begin less than ten (10) business days after the last
day of the preceding suspension (whether or not such last day was during or
after a Permitted Suspension Period).
8. NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission or sent by certified, registered or express mail,
return receipt requested, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, or sent by confirmed and acknowledged
facsimile transmission, or, if so mailed, two days after the date of deposit in
the United States mails, as follows:
(i) if to the Company, to:
AMBIENT CORPORATION 0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Attn: President
Telephone No.: (000) 000-0000 Telecopier
No.: ( ) -
with a copy to:
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Aboudi & Xxxxxxxxxx
Attn: Xxxxx Xxxxxx, Esq.
Rechov Gavish 3, POB 2432
Kfar Saba Industrial Zone 44641 Israel
Telephone No.: (000-000-0) 000-0000
Telecopier No.: (000-000-0) 000-0000
(ii) if to the Holder, to:
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with a copy to:
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Any party may, by notice given in accordance with this Section to the other
parties, designate another address or person for receipt of notices hereunder.
9. 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.
10. GOVERNING LAW. This Warrant shall be deemed to be a
contract made under the laws of the State of Delaware 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 City of
Wilmington or the state courts of the State of Delaware sitting in the City of
Wilmington 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.
11. 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.
12. 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.
13. 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the th day of ______________________________, 2003.
AMBIENT CORPORATION
By:
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(Print Name)
-----------------------------------
(Title)
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ________________, 20___ , to
purchase ___________ shares of the Common Stock, $0.001 par value, of AMBIENT
CORPORATION and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
_ CASH: $ ______________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
enclosed check
_ wire transfer
_ other ______________________
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 believe 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.
Please deliver the stock certificate to:
Dated:
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[Name of Holder]
By:
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