AMERICAN TECHNOLOGY CORPORATION WARRANT-A
Exhibit
99.3
NEITHER
THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE
UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT.
AMERICAN
TECHNOLOGY CORPORATION
WARRANT-A
Warrant
No. A-[ ] Date
of
Original Issuance: July 18, 2005
American
Technology Corporation, a Delaware corporation (the “Company”), hereby certifies
that, for value received, [ ] or its registered assigns
(the
“Holder”), is entitled to purchase from the Company up to a total of
[ ]1
shares
of common stock, par value $.00001 per share (the “Common Stock”), of the
Company (each such share, a “Warrant Share” and all such shares, the “Warrant
Shares”) at an exercise price equal to $6.36 per share (as adjusted from time to
time as provided in Section 9, the “Exercise Price”), at any time and from time
to time from and after the six month anniversary of the date hereof and through
and including July 18, 2009 (the “Expiration Date”), and subject to the
following terms and conditions:
1. Definitions.
In
addition to the terms defined elsewhere in this Warrant, capitalized terms
that
are not otherwise defined herein shall have the meanings given to such terms
in
the Securities Purchase Agreement of even date herewith to which the Company
and
the original Holder are parties (the “Purchase Agreement”).
2. Registration
of Warrant.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”), in the name of the record
Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes,
absent actual notice to the contrary.
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______________________________
1 The number of shares of Common Stock equal to 25% of the quotient obtained by dividing the Investment Amount of such Purchaser by the $4.88.
1 The number of shares of Common Stock equal to 25% of the quotient obtained by dividing the Investment Amount of such Purchaser by the $4.88.
3. Registration
of Transfers.
Subject
to the Holder’s appropriate compliance with Section 5 of the Securities Act and
Section 4.1 of the Purchase Agreement, the Company shall register the transfer
of any portion of this Warrant in the Warrant Register, upon surrender of
this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. Upon any such registration
or
transfer, a new Warrant to purchase Common Stock, in substantially the form
of
this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant
by
the transferee thereof shall be deemed the acceptance by such transferee
of all
of the rights and obligations of a holder of a Warrant.
4. Exercise
and Duration of Warrants.
This
Warrant shall be exercisable by the registered Holder at any time and from
time
to time on or after the date hereof to and including the Expiration Date,
but
not for less than 2,500 Warrant Shares at a time (or such lesser number of
Warrant Shares that may then constitute the maximum number purchasable; such
number being subject to adjustment as provided in Section 9, below). At 6:30
p.m., New York City time on the Expiration Date, the portion of this Warrant
not
exercised prior thereto shall be and become void and of no value. The Company
may not call or redeem all or any portion of this Warrant without the prior
written consent of the Holder.
5. Delivery
of Warrant Shares.
(a) To
effect
conversions hereunder, the Holder shall not be required to physically surrender
this Warrant unless the aggregate Warrant Shares represented by this Warrant
is
being exercised. Upon delivery of the Exercise Notice to the Company (with
the
attached Warrant Shares Exercise Log) at its address for notice set forth
herein
and upon payment of the Exercise Price multiplied by the number of Warrant
Shares that the Holder intends to purchase hereunder, the Company shall promptly
(but in no event later than three Trading Days after the Date of Exercise
(as
defined herein)) issue and deliver to the Holder, a certificate for the Warrant
Shares issuable upon such exercise, which shall be free of restrictive legends
in the circumstances specified in the Purchase Agreement. The Company shall,
upon request of the Holder and subsequent to the date on which a registration
statement covering the resale of the Warrant Shares has been declared effective
by the Securities and Exchange Commission, use its best efforts to deliver
Warrant Shares hereunder electronically through the Depository Trust Corporation
or another established clearing corporation performing similar functions,
if
available, provided, that, the Company may, but will not be required to change
its transfer agent if its current transfer agent cannot deliver Warrant Shares
electronically through the Depository Trust Corporation. A “Date of Exercise”
means the date on which the Holder shall have delivered to Company: (i) the
Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
completed and duly signed and (ii) if such Holder is not utilizing the cashless
exercise provisions set forth in this Warrant, payment of the Exercise Price
for
the number of Warrant Shares so indicated by the Holder to be
purchased.
(b) If
by the
third Trading Day after a Date of Exercise the Company fails to deliver the
required number of Warrant Shares in the manner required pursuant to Section
5(a), then the Holder will have the right to rescind such exercise.
-2-
(c) If
by the
third Trading Day after a Date of Exercise the Company fails to deliver the
required number of Warrant Shares in the manner required pursuant to Section
5(a), and if after such third Trading Day and prior to the receipt of such
Warrant Shares, the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the
Holder of the Warrant Shares which the Holder anticipated receiving upon
such
exercise (a “Buy-In”), then the Company 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 Warrant Shares that the
Company
was required to deliver to the Holder in connection with the exercise at
issue
by (B) the closing bid price of the Common Stock at the time of the obligation
giving rise to such purchase obligation and (2) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant
Shares 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 Company
timely complied with its exercise and delivery obligations hereunder. The
Holder
shall provide the Company written notice indicating the amounts payable to
the
Holder in respect of the Buy-In.
(d) The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person
or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to
the
Holder in connection with the issuance of Warrant Shares. 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 Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise
of
the Warrant as required pursuant to the terms hereof.
6. Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue
or
transfer tax, withholding tax, transfer agent fee or other incidental tax
or
expense in respect of the issuance of such certificates, all of which taxes
and
expenses shall be paid by the Company; provided, however, that the Company
shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrants
in a name other than that of the Holder. The Holder shall be responsible
for all
other tax liability that may arise as a result of holding or transferring
this
Warrant or receiving Warrant Shares upon exercise hereof.
7. Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue
or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity (which shall
not
include a surety bond), if requested.
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Applicants
for a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable third-party
costs as the Company may prescribe. If a New Warrant is requested as a result
of
a mutilation of this Warrant, then the Holder shall deliver such mutilated
Warrant to the Company as a condition precedent to the Company’s obligation to
issue the New Warrant.
8. Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares
which
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from preemptive rights or any other contingent purchase rights of persons
other
than the Holder (taking into account the adjustments and restrictions of
Section
9).
The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable.
9. Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section 9.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or
(iii) combines outstanding shares of Common Stock into a smaller number
of
shares, then in each such case the Exercise Price shall be multiplied by
a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall
be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.
(b) Pro
Rata Distributions.
If the
Company, at any time while this Warrant is outstanding, distributes
to all
holders of Common Stock (i) evidences of its indebtedness, (ii) any
security (other than a distribution of Common Stock covered by the preceding
paragraph), (iii) rights or warrants to subscribe for or purchase
any
security, or (iv) any other asset (in each case, “Distributed Property”), then
upon any exercise of the Warrant that occurs after the record date for such
distribution, such Holder shall be entitled to receive, in addition to the
Warrant Shares otherwise issuable upon such conversion, the Distributed Property
that such Holder would have been entitled to receive in respect of such number
of Warrant Shares had the Holder been the record holder of such Warrant Shares
immediately prior to such record date, but not before the time such Holder
would
have received the Distributed Property if it held the Warrant Shares on such
record date.
-4-
(c) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding, (1) the Company effects any merger
or consolidation of the Company with or into another Person, (2) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions, (3) any tender offer or exchange offer (whether by
the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (4) the Company effects any reclassification of the
Common
Stock or any compulsory share exchange pursuant to which the Common Stock
is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental Transaction”), then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the same amount
and
kind of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant
Shares then issuable upon exercise in full of this Warrant (the “Alternate
Consideration”). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in
respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components
of
the Alternate Consideration. If holders of Common Stock are given any choice
as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder’s option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder
a new
warrant substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder’s right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof. The
terms
of any agreement pursuant to which a Fundamental Transaction is effected
shall
include terms requiring any such successor or surviving entity to comply
with
the provisions of this paragraph (c) and insuring that the Warrant (or any
such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction. If any Fundamental Transaction
constitutes or results in a Change of Control, then at the request of the
Holder
delivered before the 90th day after such Fundamental Transaction, the Company
(or any such successor or surviving entity) will purchase the Warrant from
the
Holder for a purchase price, payable in cash within five Trading Days after
such
request (or, if later, on the effective date of the Fundamental Transaction),
equal to the Black-Scholes value of the remaining unexercised portion of
this
Warrant on the date of such request.
(d) Future
Issuances.
(1) If
the
Company or any subsidiary thereof, as applicable with respect to Common Stock
Equivalents (as defined below), at any time while this Warrant is outstanding,
shall issue shares of Common Stock or rights, warrants, options or other
securities or debt that are convertible into or exchangeable for shares of
Common Stock (“Common Stock Equivalents”), entitling any Person to acquire
shares of Common Stock at a price per share less than the Exercise Price
(subject to equitable adjustment for stock splits, recombinations and similar
transactions) (if the holder of the Common Stock or Common Stock Equivalent
so
issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or
-5-
otherwise,
or due to warrants, options or rights issued in connection with such issuance,
be entitled to receive shares of Common Stock at a price less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price), then, at the option of the Holder, the Exercise Price shall be
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of such shares
of
Common Stock or such Common Stock Equivalents plus the number of shares of
Common Stock which the offering price for such shares of Common Stock or
Common
Stock Equivalents would purchase at the Exercise Price, and the denominator
of
which shall be the sum of the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Common Stock
so
issued or issuable. For purposes hereof, all shares of Common Stock that
are
issuable upon conversion, exercise or exchange of Common Stock Equivalents
shall
be deemed outstanding immediately after the issuance of such Common Stock
Equivalents. Such adjustment shall be made whenever such shares of Common
Stock
or Common Stock Equivalents are issued. The Company shall notify the Holder
in
writing, no later than the Trading Day following the issuance of any Common
Stock or Common Stock Equivalent subject to this section, indicating therein
the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms.
(2) If,
at
any time while this Warrant is outstanding, the Company or any Subsidiary
issues
Common Stock Equivalents with an Effective Price or a number of underlying
shares that floats or resets or otherwise varies or is subject to adjustment
based (directly or indirectly) on market prices of the Common Stock (a “Floating
Price Security”), then for purposes of applying the preceding paragraph in
connection with any subsequent exercise, the Effective Price will be determined
separately on each Exercise Date and will be deemed to equal the lowest
Effective Price at which any holder of such Floating Price Security is entitled
to acquire Common Stock on such Exercise Date (regardless of whether any
such
holder actually acquires any shares on such date).
(3) The
adjustment of the Exercise Price described in Section 9(d)(1) above shall
not
apply to: (i) the issuance of securities upon the exercise or conversion
of any
Common Stock Equivalents issued by the Company prior to the date of this
Agreement (or to any amendments or modifications thereof other than such
modifications or amendments which have the effect of lowering the exercise,
conversion or purchase price thereof), (ii) the grant of options or warrants,
or
the issuance of additional securities, under any duly authorized Company
stock
option, restricted stock plan or stock purchase plan, including any inducement
grant to a new executive officer or director, or (iii) the issuance of Common
Stock or Common Stock Equivalents pursuant to a Strategic Transaction (as
defined in the Purchase Agreement).
(4) Notwithstanding
any other provision in Section 9(d) to the contrary, prior to the receipt,
if
any, of the stockholder approval specified in the Purchase Agreement, the
Exercise Price shall not be reduced to a price less than the closing bid
price
of the Common Stock on the Trading Day immediately preceding the Closing
Date
(appropriately
adjusted for any stock split, reverse stock split, stock dividend or other
reclassification or combination of the Common Stock occurring after the date
hereof).
-6-
(e) Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
(a) or (d) of this Section, the number of Warrant Shares that may be purchased
upon exercise of this Warrant shall be increased or decreased proportionately,
so that after such adjustment the aggregate Exercise Price payable hereunder
for
the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.
(f) Calculations.
All
calculations under this Section
9
shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable.
The
number of shares of Common Stock outstanding at any given time shall not
include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common
Stock.
(g) Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section
9,
the
Company at its expense will promptly compute such adjustment in accordance
with
the terms of this Warrant and prepare a certificate setting forth such
adjustment, including a statement of the adjusted Exercise Price and adjusted
number or type of Warrant Shares or other securities issuable upon exercise
of
this Warrant (as applicable), describing the transactions giving rise to
such
adjustments and showing in detail the facts upon which such adjustment is
based.
Upon written request, the Company will promptly deliver a copy of each such
certificate to the Holder and to the Company’s Transfer Agent.
(h) Notice
of Corporate Events.
If the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including without limitation
any
granting of rights or warrants to subscribe for or purchase any capital stock
of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation
or
winding up of the affairs of the Company, then the Company shall deliver
to the
Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order
to
participate in or vote with respect to such transaction, and the Company
will
take all steps reasonably necessary in order to insure that the Holder is
given
the practical opportunity to exercise this Warrant prior to such time so
as to
participate in or vote with respect to such transaction; provided, however,
that
the failure to deliver such notice or any defect therein shall not affect
the
validity of the corporate action required to be described in such
notice.
10. Payment
of Exercise Price.
The
Holder may pay the Exercise Price in one of the following manners:
(a) Cash
Exercise.
The
Holder may deliver immediately available funds; or
(b) Cashless
Exercise.
If an
Exercise Notice is delivered after the Effectiveness Date (as defined in
the
Registration Rights Agreement among the original Holder and the Company in
connection with this Warrant) and a registration statement permitting the
Holder
to resell the Warrant Shares is not then effective or the prospectus forming
a
part thereof is not then available to the Holder for the resale of the Warrant
Shares, then the Holder may notify the Company in an Exercise Notice of its
election to utilize cashless exercise, in which event the Company shall issue
to
the Holder the number of Warrant Shares determined as follows:
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|
X
=
Y [(A-B)/A]
|
|
|
where:
|
|
|
X
=
the number of Warrant Shares to be issued to the Holder.
|
|
|
Y
=
the number of Warrant Shares with respect to which this Warrant
is being
exercised.
|
|
|
A
=
the closing price of shares of Common Stock for the Trading Day
immediately prior to (but not including) the Exercise Date.
|
|
|
B
=
the Exercise Price.
|
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder,
and
the holding period for the Warrant Shares shall be deemed to have commenced,
on
the date this Warrant was originally issued.
11. Limitation
on Exercise.
a) [Notwithstanding
anything to the contrary contained herein, the number of shares of Common
Stock
that may be acquired by the Holder upon any exercise of this Warrant (or
otherwise in respect hereof) shall be limited to the extent necessary to
insure
that, following such exercise (or other issuance), the total number of shares
of
Common Stock then beneficially owned by such Holder and its Affiliates and
any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act, does
not exceed 4.999% of the total number of issued and outstanding shares of
Common
Stock (including for such purpose the shares of Common Stock issuable upon
such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of an Exercise Notice hereunder will
constitute a representation by the Holder that it has evaluated the limitation
set forth in this paragraph and determined that issuance of the full number
of
Warrant Shares requested in such Exercise Notice is permitted under this
paragraph. This provision shall not restrict the number of shares of Common
Stock which a Holder may receive or beneficially own in order to determine
the
amount of securities or other consideration that such Holder may receive
in the
event of a merger or other business combination or reclassification involving
the Company as contemplated in Section 9 of this Warrant. The Holder may
waive
the limitations set forth in this clause (a) upon sixty-one (61) days prior
written notice to the Company.2 ]
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______________________________
2 This provision (a) shall not be included in the Warrants for the four Special Situations funds (the “SSFs”).
2 This provision (a) shall not be included in the Warrants for the four Special Situations funds (the “SSFs”).
(b) If
the
Company has not obtained the Shareholder Approval (as defined below), then
the
Company may not issue in the aggregate under the Transaction Documents in
excess
of 19.99% of the outstanding shares of Common Stock (as determined on the
Closing Date immediately prior to the Closing) upon exercise of the Warrants
(as
defined in the Purchase Agreement) at an exercise price below the closing
sale
price of the Common Stock on the Trading Day immediately preceding the original
date of this Warrant (such number of shares of Common Stock, the “Issuable
Maximum”). Each holder of Warrants shall be entitled to a portion of the
Issuable Maximum equal to the quotient obtained by dividing: (x) the purchase
price paid by it pursuant to the Purchase Agreement by (y) the purchase
price paid by all holders pursuant to the Purchase Agreement. If a holder
of
Warrants shall no longer hold its Warrant due to exercise or cancellation
of its
Warrant, then such holder’s remaining portion of the Issuable Maximum shall be
allocated pro-rata among the remaining holders of the Warrants. If on any
Date
of Exercise: (A) the aggregate number of shares of Common Stock that would
then
be issuable upon exercise in full of this Warrant would exceed the Issuable
Maximum, and (B) the Company shall not have previously obtained the vote
of
shareholders (the “Shareholder Approval”), if any, as may be required by the
applicable rules and regulations of the Nasdaq SmallCap Market (or any successor
entity) applicable to approve the issuance of shares of Common Stock in excess
of the Issuable Maximum pursuant to the terms hereof, then the Company shall
issue to the Holder a number of shares of Common Stock equal to the Issuable
Maximum and, with respect to the remainder of the Warrant Shares then issuable
under the Warrant for which an exercise in accordance with the applicable
exercise price would result in an issuance of shares of Common Stock in excess
of the Issuable Maximum (the “Excess Warrant Shares”), the Holder shall have the
option to require the Company to use its best efforts to obtain the Shareholder
Approval applicable to such issuance as soon as is possible, but in any event
not later than the 90th day after such request. The Company and the Holder
understand and agree that shares of Common Stock issued to and then held
by the
Holder as a result of exercise of this Warrant shall not be entitled to cast
votes on any resolution to obtain Shareholder Approval pursuant hereto. If
the
Company shall succeed in obtaining the Shareholder Approval, the Excess Warrant
Shares shall again become fully exercisable by the Holder.
12. No
Fractional Shares.
No
fractional shares of Warrant Shares will be issued in connection with any
exercise of this Warrant. In lieu of any fractional shares which would,
otherwise be issuable, the Company shall pay cash equal to the product of
such
fraction multiplied by the closing price of one Warrant Share as reported
on the
Nasdaq National Market on the date of exercise.
13. Notices.
Any and
all notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed
given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
on
any Trading Day, (iii) the Trading Day following the date of mailing, if
sent by
nationally recognized overnight courier service, or (iv) upon actual receipt
by
the party to whom such notice is required to be given. The addresses for
such
communications shall be: (i) if to the Company, to American Technology
Corporation, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn:
Chief
Financial Officer, Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇, or (ii) if to the Holder,
to the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.
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14. Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon 30 days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged
or any
corporation resulting from any consolidation to which the Company or any
new
warrant agent shall be a party or any corporation to which the Company or
any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
15. Miscellaneous.
(a) This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by
the
Company and holder or holders of Warrants representing no less than 66 2/3%
in
interest of the Warrant Shares then issuable upon exercise of all of the
Warrants issued pursuant to the Purchase Agreement, and any amendment so
effected shall be binding upon each holder of such Warrants, provided, that
(y)
any such amendment or waiver must apply to all Warrants; and (z) the number
of
Warrant Shares subject to this Warrant, the Exercise Price (except for
adjustments pursuant to Section 9(d)) and the expiration date of this Warrant
may not be amended, and the right to exercise this Warrant (including, without
limitation, the provisions of Section 10 of this Warrant) may not be altered
or
waived, without the written consent of the Holder.
(b) All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of this
Warrant and the transactions herein contemplated (“Proceedings”) (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the “New York Courts”). Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of
the New
York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and
hereby irrevocably waives, and agrees not to assert in any Proceeding, any
claim
that it is not personally subject to the jurisdiction of any New York Court,
or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under
this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be
deemed
to limit in any way any right to serve process in any manner permitted by
law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted
by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions
of
this Warrant, then the prevailing party in such Proceeding shall be reimbursed
by the other party for its attorney’s fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such
Proceeding.
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(c) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d) In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon
a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[REMAINDER
OF ▇▇▇▇ INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its
authorized officer as of the date first indicated above.
|
AMERICAN
TECHNOLOGY CORPORATION
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|
By:
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_________________________________________________
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|
Name:
|
|||
|
Title:
|
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EXERCISE
NOTICE
To
American Technology Corporation:
The
undersigned hereby irrevocably elects to purchase _____________ shares of
common
stock, par value $.00001 per share, of American Technology Corporation (“Common
Stock”), pursuant to Warrant No. [ ], originally issued
July
18, 2005 (this “Warrant”), and, if such Holder is not utilizing the cashless
exercise provisions set forth in the Warrant, encloses herewith $________
in
cash, certified or official bank check or checks or other immediately available
funds, which sum represents the aggregate Exercise Price (as defined in the
Warrant) for the number of shares of Common Stock to which this Exercise
Notice
relates, together with any applicable taxes payable by the undersigned pursuant
to the Warrant.
[By
its
delivery of this Exercise Notice, the undersigned represents and warrants
to the
Company that in giving effect to the exercise evidenced hereby the Holder
will
not beneficially own in excess of the number of shares of Common Stock
(determined in accordance with Section 13(d) of the Securities Exchange Act
of
1934) permitted to be owned under Section 11 of this Warrant.3 ]
As
of the
date hereof, the undersigned represents and warrants to the Company as
follows:
(a) If
an
entity, the undersigned is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or formation, and has
the
requisite entity power and authority to exercise the Warrant and purchase
the
Warrant Shares (as hereinafter defined).
(b) The
undersigned is an “accredited investor” as defined in Rule 501(a) promulgated
under the United States Securities Act of 1933, as amended (the “Securities
Act”), and is not a registered broker-dealer under Section 15 of the Securities
Exchange Act of 1934, as amended.
(c) The
undersigned, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Warrant Shares, and has so evaluated the merits and risks of such
investment. The undersigned is able to bear the economic risk of an investment
in the Warrant Shares and, at the present time, is able to afford a complete
loss of such investment.
(d) The
undersigned is not purchasing the Warrant Shares as a result of any
advertisement, article, notice or other communication regarding the Warrant
Shares published in any newspaper, magazine or similar media or broadcast
over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
-1-
______________________________
3 This provision shall not be included in the Warrant Exercise Notice for the SSFs.
3 This provision shall not be included in the Warrant Exercise Notice for the SSFs.
(e) The
undersigned understands that the Warrant Shares have not been registered
under
the Securities Act and may not be offered, resold, pledged or otherwise
transferred except (a) pursuant to an exemption from registration under the
Securities Act or pursuant to an effective registration statement in compliance
with Section 5 under the Securities Act and (b) in accordance with all
applicable securities laws of the states of the United States and other
jurisdictions.
(f) To
the
extent a Registration Statement is not in effect, the undersigned understands
and acknowledges that (i) the Warrant Shares being issued and sold without
registration under the Securities Act in a private placement that is exempt
from
the registration provisions of the Securities Act, and (ii) the availability
of
such exemption depends in part on, and that American Technology Corporation
and
its counsel will rely upon, the accuracy and truthfulness of the foregoing
representations and the undersigned hereby consents to such
reliance.
The
undersigned requests that certificates for the shares of Common Stock issuable
upon this exercise (the “Warrant Shares”) be issued in the name of
PLEASE
INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
TAX IDENTIFICATION NUMBER
(Please
print name and address)
-2-
Warrant
Shares Exercise Log
|
Date
|
Number
of Warrant Shares
|
Number
of Warrant Shares
|
Number
of Warrant Available to be Exercised
|
Exercised
Shares Remaining to be Exercised
|
-1-
FORM
OF
ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the within Warrant
to
purchase ____________ shares of Common Stock of American Technology Corporation
to which the within Warrant relates and appoints ________________ attorney
to
transfer said right on the books of the Company with full power of substitution
in the premises.
Dated:
_______________, ____
|
(Signature must conform in all respects to name of holder as specified on the face of the Warrant) |
|
|
Address
of Transferee
|
|
|
In
the presence of:
|
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