EXHIBIT 4.1
THIS WARRANT AND THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE
ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.
SERIES F WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
AMBIENT CORPORATION
Expires April 23, 2013
No.: W-F-08-01
Number of Shares: 135,000,000
Date of Issuance: April 23,
2008
FOR VALUE RECEIVED, the undersigned,
Ambient Corporation, a Delaware corporation (together with its
successors and assigns, the “ Issuer ”), hereby
certifies that VICIS CAPITAL MASTER FUND or its registered assigns
is entitled to subscribe for and purchase, during the Term (as
hereinafter defined), up to One Hundred Thirty-Five Million
(135,000,000) shares (subject to adjustment as hereinafter
provided) of the duly authorized, validly issued, fully paid and
non-assessable Common Stock of the Issuer, at an exercise price per
share equal to the Warrant Price then in effect, subject, however,
to the provisions and upon the terms and conditions hereinafter set
forth. This Warrant has been executed and delivered pursuant
to the Securities Purchase Agreement dated as of April 23, 2008
(the “Purchase Agreement”) by and among the Issuer and
the purchaser(s) listed therein. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth for
such terms in the Purchase Agreement. Capitalized terms used in
this Warrant and not otherwise defined herein shall have the
respective meanings specified in Section 8 hereof.
1.
Term . The term of this Warrant shall commence on
April 23, 2008 and shall expire at 6:00 p.m., eastern time, on
April 23, 2013 (such period being the “ Term
”).
2.
Method of Exercise; Payment; Issuance
of New Warrant; Transfer and Exchange .
(a)
Time of Exercise
. The purchase rights represented
by this Warrant may be exercised in whole or in part at any time
during the Term.
(b)
Method of Exercise
. The Holder hereof may exercise
this Warrant, in whole or in part, by the surrender of this Warrant
(with the exercise form attached hereto duly executed) at the
principal office of the Issuer, and by the payment to the Issuer of
an amount of consideration therefor equal to the Warrant Price
in
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effect on the date of such exercise
multiplied by the number of shares of Warrant Stock with respect to
which this Warrant is then being exercised, payable at such
Holder’s election (i) by certified or official bank check or
by wire transfer to an account designated by the Issuer, (ii) by
“cashless exercise” in accordance with the provisions
of subsection (c) of this Section 2, but only when a registration
statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect, or (iii) when permitted by
clause (ii), by a combination of the foregoing methods of payment
selected by the Holder of this Warrant.
(c)
Cashless Exercise
. Notwithstanding any provisions
herein to the contrary and commencing one (1) year following the
Original Issue Date if (i) the Per Share Market Value of one share
of Common Stock is greater than the Warrant Price (at the date of
calculation as set forth below) and (ii) a registration statement
under the Securities Act providing for the resale of the Warrant
Stock is not in effect in accordance with the terms of the
Registration Rights Agreement at the time of exercise, unless the
registration statement is not effective as a result of the Issuer
exercising its rights under Section 3(n) of the Registration Rights
Agreement, in lieu of exercising this Warrant by payment of cash,
the Holder may exercise this Warrant by a cashless exercise and
shall receive the number of shares of Common Stock equal to an
amount (as determined below) by surrender of this Warrant at the
principal office of the Issuer together with the properly endorsed
Notice of Exercise in which event the Issuer shall issue to the
Holder a number of shares of Common Stock computed using the
following formula:
X = Y - (A)(Y)
B
Where
X =
the number of shares of Common Stock to
be issued to the Holder.
Y =
the number of shares of Common Stock
purchasable upon exercise of all of the Warrant or, if only a
portion of the Warrant is being exercised, the portion of the
Warrant being exercised.
A =
the Warrant Price.
B =
the Per Share Market Value of one share
of Common Stock.
(d)
Issuance of Stock
Certificates . In the
event of any exercise of this Warrant in accordance with and
subject to the terms and conditions hereof, certificates for the
shares of Warrant Stock so purchased shall be dated the date of
such exercise and delivered to the Holder hereof within a
reasonable time, not exceeding three (3) Trading Days after such
exercise (the “ Delivery Date ”) or, at the
request of the Holder (provided that a registration statement under
the Securities Act providing for the resale of the Warrant Stock is
then in effect), issued and delivered to the Depository Trust
Company (“ DTC ”) account on the Holder’s
behalf via the Deposit Withdrawal Agent Commission System (“
DWAC ”) within a reasonable time, not exceeding three
(3) Trading Days after such exercise, and the Holder hereof shall
be deemed for all purposes to be the holder of the shares of
Warrant Stock so purchased as of the date of such exercise.
Notwithstanding the foregoing to the contrary, the Issuer or
its transfer agent shall only be obligated to issue and deliver the
shares to the DTC on a holder’s behalf via DWAC if such
exercise is in connection with a sale and the Issuer and its
transfer agent are participating in DTC through the DWAC system.
The Holder shall deliver this original Warrant, or an
indemnification undertaking with respect to such Warrant in the
case of its loss, theft or destruction, at such time that this
Warrant is fully exercised. With respect to partial exercises
of this Warrant, the Issuer shall keep written records for the
Holder of the number of shares of Warrant Stock exercised as of
each date of exercise.
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(e)
Compensation for Buy-In on Failure to
Timely Deliver Certificates Upon Exercise .
(i)
The Issuer understands that a delay in
the delivery of the shares of Common Stock upon exercise of this
Warrant beyond the Delivery Date could result in economic loss to
the Holder. If the Issuer fails to deliver to the Holder such
shares via DWAC or a certificate or certificates pursuant to this
Section hereunder by the Delivery Date, the Issuer shall pay to the
Holder, in cash, for each $500 of Warrant Shares (based on the
Closing Price of the Common Stock on the date such Securities are
submitted to the Issuer’s transfer agent), $5 per Trading Day
(increasing to $10 per Trading Day five (5) Trading Days after such
damages have begun to accrue and increasing to $15 per Trading Day
ten (10) Trading Days after such damages have begun to accrue) for
each Trading Day after the Delivery Date until such certificate is
delivered (which amount shall be paid as liquidated damages and not
as a penalty). Nothing herein shall limit a Holder’s
right to pursue actual damages for the Issuer’s failure to
deliver certificates representing any Securities as required by the
Transaction Documents, and the Holder shall have the right to
pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or
injunctive relief. Notwithstanding anything to the contrary
contained herein, the Holder shall be entitled to withdraw an
Exercise Notice, and upon such withdrawal the Issuer shall only be
obligated to pay the liquidated damages accrued in accordance with
this Section 2(e)(i) through the date the Exercise Notice is
withdrawn.
(ii)
In addition to any other rights available
to the Holder, if the Issuer fails to cause its transfer agent to
transmit to the Holder a certificate or certificates representing
the Warrant Stock pursuant to an exercise on or before the Delivery
Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of
the Warrant Stock which the Holder anticipated receiving upon such
exercise (a “ Buy-In” ), then the Issuer shall
(1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of
shares of Warrant Stock that the Issuer was required to deliver to
the Holder in connection with the exercise at issue times (B) the
price at which the sell order giving rise to such purchase
obligation was executed, and (2) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of shares of Warrant Stock for which such exercise was not honored
or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Issuer timely complied with its
exercise and delivery obligations hereunder. For example, if
the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted exercise of
shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Issuer shall be required to pay
the Holder $1,000. The Holder shall provide the Issuer written
notice indicating the amounts payable to the Holder in respect of
the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Issuer. Nothing herein
shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Issuer’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of
this Warrant as required pursuant to the terms hereof.
(f)
Transferability of Warrant
. Subject to Section 2(h) hereof,
this Warrant may be transferred by a Holder, in whole or in part,
subject only to the restrictions specified in the Purchase
Agreement. If transferred pursuant to this paragraph, this
Warrant may be transferred on the books of the Issuer by the Holder
hereof in person or by duly authorized attorney, upon surrender of
this Warrant at the principal office of the Issuer,
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properly endorsed (by the Holder
executing an assignment in the form attached hereto) and upon
payment of any necessary transfer tax or other governmental charge
imposed upon such transfer. This Warrant is exchangeable at
the principal office of the Issuer for Warrants to purchase the
same aggregate number of shares of Warrant Stock, each new Warrant
to represent the right to purchase such number of shares of Warrant
Stock as the Holder hereof shall designate at the time of such
exchange. All Warrants issued on transfers or exchanges shall
be dated the Original Issue Date and shall be identical with this
Warrant except as to the number of shares of Warrant Stock issuable
pursuant thereto.
(g)
Continuing Rights of Holder
. The Issuer will, at the time of
or at any time after each exercise of this Warrant, upon the
request of the Holder hereof, acknowledge in writing the extent, if
any, of its continuing obligation to afford to such Holder all
rights to which such Holder shall continue to be entitled after
such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such
request, the failure shall not affect the continuing obligation of
the Issuer to afford such rights to such Holder.
(h)
Compliance with Securities
Laws.
(i)
The Holder of this Warrant, by acceptance
hereof, acknowledges that this Warrant and the shares of Warrant
Stock to be issued upon exercise hereof are being acquired solely
for the Holder’s own account and not as a nominee for any
other party, and for investment, and that the Holder will not
offer, sell or otherwise dispose of this Warrant or any shares of
Warrant Stock to be issued upon exercise hereof except pursuant to
an effective registration statement, or an exemption from
registration, under the Securities Act and any applicable state
securities laws.
(ii)
Except as provided in paragraph (iii)
below, this Warrant and all certificates representing shares of
Warrant Stock issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following
form:
THIS WARRANT AND THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE
ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.
(iii)
The Issuer agrees to reissue this Warrant
or certificates representing any of the Warrant Stock, without the
legend set forth above if at such time, prior to making any
transfer of any such securities, the Holder shall give written
notice to the Issuer describing the manner and terms of such
transfer. Such proposed transfer will not be effected until:
(a) either (i) the Issuer has received an opinion of counsel
reasonably satisfactory to the Issuer, to the effect that the
registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a
registration statement under the Securities Act covering such
proposed disposition has been filed by the
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Issuer with the Securities and Exchange
Commission and has become effective under the Securities Act, (iii)
the Issuer has received other evidence reasonably satisfactory to
the Issuer that such registration and qualification under the
Securities Act and state securities laws are not required, or (iv)
the Holder provides the Issuer with reasonable assurances that such
security can be sold pursuant to Rule 144 under the Securities Act;
and (b) either (i) the Issuer has received an opinion of counsel
reasonably satisfactory to the Issuer, to the effect that
registration or qualification under the securities or “blue
sky” laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable state
securities or “blue sky” laws has been effected or a
valid exemption exists with respect thereto. The Issuer will
respond to any such notice from a holder within three (3) Trading
Days. In the case of any proposed transfer under this Section
2(h), the Issuer will use reasonable efforts to comply with any
such applicable state securities or “blue sky” laws,
but shall in no event be required, (x) to qualify to do business in
any state where it is not then qualified, (y) to take any action
that would subject it to tax or to the general service of process
in any state where it is not then subject, or (z) to comply with
state securities or “blue sky” laws of any state for
which registration by coordination is unavailable to the Issuer.
The restrictions on transfer contained in this Section 2(h)
shall be in addition to, and not by way of limitation of, any other
restrictions on transfer contained in any other section of this
Warrant. Whenever a certificate representing the Warrant
Stock is required to be issued to a the Holder without a legend, in
lieu of delivering physical certificates representing the Warrant
Stock, the Issuer shall cause its transfer agent to electronically
transmit the Warrant Stock to the Holder by crediting the account
of the Holder’s Prime Broker with DTC through its DWAC system
(to the extent not inconsistent with any provisions of this Warrant
or the Purchase Agreement).
(i)
Accredited Investor Status
. In no event may the Holder
exercise this Warrant in whole or in part unless the Holder is an
“accredited investor” as defined in Regulation D under
the Securities Act.
(j)
No Mandatory Redemption
. This Warrant may not be called or
redeemed by the Issuer without the written consent of the
Holder.
(k)
Consent to Change in Control
Transaction .
Notwithstanding anything contained herein, the Company shall
not enter into any Change in Control Transaction without the
consent of the Majority Holders as set forth in Section 3.23(e) of
the Purchase Agreement.
3.
Stock Fully Paid; Reservation and
Listing of Shares; Covenants .
(a)
Stock Fully Paid
. The Issuer represents, warrants,
covenants and agrees that all shares of Warrant Stock which may be
issued upon the exercise of this Warrant or otherwise hereunder
will, when issued in accordance with the terms of this Warrant, be
duly authorized, validly issued, fully paid and non-assessable and
free from all taxes, liens and charges created by or through the
Issuer. The Issuer further covenants and agrees that during
the period within which this Warrant may be exercised, the Issuer
will at all times have authorized and reserved for the purpose of
the issuance upon exercise of this Warrant a number of authorized
but unissued shares of Common Stock equal to at least one hundred
percent (100%) of the number of shares of Common Stock issuable
upon exercise of this Warrant without regard to any limitations on
exercise.
(b)
Reservation . If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise
provided hereunder require registration or qualification with any
Governmental Authority under any federal or state law before such
shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such
shares to be duly registered or qualified. If
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the Issuer shall list any shares of
Common Stock on any securities exchange or market it will, at its
expense, list thereon, and maintain and increase when necessary
such listing, of, all shares of Warrant Stock from time to time
issued upon exercise of this Warrant or as otherwise provided
hereunder (provided that such Warrant Stock has been registered
pursuant to a registration statement under the Securities Act then
in effect), and, to the extent permissible under the applicable
securities exchange rules, all unissued shares of Warrant Stock
which are at any time issuable hereunder, so long as any shares of
Common Stock shall be so listed. The Issuer will also so list
on each securities exchange or market, and will maintain such
listing of, any other securities which the Holder of this Warrant
shall be entitled to receive upon the exercise of this Warrant if
at the time any securities of the same class shall be listed on
such securities exchange or market by the Issuer.
(c)
Loss, Theft, Destruction of
Warrants . Upon receipt
of evidence satisfactory to the Issuer of the ownership of and the
loss, theft, destruction or mutilation of any Warrant and, in the
case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the case of
any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same number of shares of
Common Stock.
(d)
Payment of Taxes
. The Issuer will pay any
documentary stamp taxes attributable to the initial issuance of the
Warrant Stock issuable upon exercise of this Warrant;
provided , however , that the Issuer shall not be
required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issuance or delivery of any
certificates representing Warrant Stock in a name other than that
of the Holder in respect to which such shares are
issued.
4.
Adjustment of Warrant Price and Number
of Shares Issuable Upon Exercise . The Warrant Price and the number of shares of
Warrant Stock that may be purchased upon exercise of this Warrant
shall be subject to adjustment from time to time as set forth in
this Section 4. The Issuer shall give the Holder notice of any
event described below which requires an adjustment pursuant to this
Section 4 in accordance with the notice provisions set forth in
Section 5.
(a)
Recapitalization, Reorganization,
Reclassification, Consolidation, Merger or Sale
. In case the Issuer after the
Original Issue Date shall do any of the following (each, a “
Triggering Event ”): (a) consolidate or merge with or
into any other Person and the Issuer shall not be the continuing or
surviving corporation of such consolidation or merger, or (b)
permit any other Person to consolidate with or merge into the
Issuer and the Issuer shall be the continuing or surviving Person
but, in connection with such consolidation or merger, any Capital
Stock of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or
(c) transfer all or substantially all of its properties or assets
to any other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and as a condition to
each such Triggering Event, proper and adequate provision shall be
made so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this Warrant shall be
entitled upon the exercise hereof at any time after the
consummation of such Triggering Event, to the extent this Warrant
is not exercised prior to such Triggering Event, to receive at the
Warrant Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such
Triggering Event, the Securities, cash and property to which such
Holder would have been entitled upon the consummation of such
Triggering Event if such Holder had exercised the rights
represented by this Warrant immediately prior thereto (including
the right of a shareholder to elect the type of consideration it
will receive upon a Triggering Event), subject to adjustments
(subsequent to such corporate action) as nearly equivalent as
possible to the adjustments provided for elsewhere in this Section
4; provided , however , the Holder shall
have
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the option to receive, in lieu of the
foregoing right to receive such securities, cash and property, an
amount in cash equal to the value of this Warrant calculated in
accordance with the Black-Scholes formula. Notwithstanding
the foregoing to the contrary, in the event of a Triggering Event,
at the request of the Holder delivered before the ninetieth (90
th ) day after such Triggering Event, the Issuer shall
pay to the Holder an amount in cash equal to the value of the
unexercised portion of this Warrant as of the date of such
Triggering Event calculated in accordance with the Black-Scholes
formula within five (5) days of such request.
(b)
Stock Dividends, Subdivisions and
Combinations . If at any
time the Issuer shall:
(i)
make or issue or set a record date for
the holders of the Common Stock for the purpose of entitling them
to receive a dividend payable in, or other distribution of, shares
of Common Stock,
(ii)
subdivide its outstanding shares of
Common Stock into a larger number of shares of Common Stock,
or
(iii)
combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock,
then (1) the number of shares of Common
Stock for which this Warrant is exercisable immediately after the
occurrence of any such event shall be adjusted to equal the number
of shares of Common Stock which a record holder of the same number
of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be
entitled to receive after the happening of such event, and (2) the
Warrant Price then in effect shall be adjusted to equal (A) the
Warrant Price then in effect multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares of
Common Stock for which this Warrant is exercisable immediately
after such adjustment.
(c)
Certain Other Distributions
. If at any time the Issuer shall
make or issue or set a record date for the holders of the Common
Stock for the purpose of entitling them to receive any
dividend or other distribution of:
(i)
cash (other than a cash dividend payable
out of earnings or earned surplus legally available for the payment
of dividends under the laws of the jurisdiction of incorporation of
the Issuer),
(ii)
any evidences of its indebtedness, any
shares of stock of any class or any other securities or property of
any nature whatsoever (other than cash, Common Stock Equivalents or
Additional Shares of Common Stock), or
(iii)
any warrants or other rights to subscribe
for or purchase any evidences of its indebtedness, any shares of
stock of any class or any other securities or property of any
nature whatsoever (other than cash, Common Stock Equivalents or
Additional Shares of Common Stock),
then (1) the number of shares
