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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 1, 1997
(March 25, 1997)
AMERICAN TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-24248 87-0361799
(State or other jurisdiction of (Commission (I.R.S. Empl. Ident. No.)
incorporation or organization) File Number)
12725 Stowe Drive, Poway, California 92064
(Address of principal executive offices) (Zip Code)
(619) 679-2114
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On March 25, 1997 the Company completed the private offering and sale for cash
of an aggregate of $1,000,000 of unsecured 6% Convertible Subordinated
Promissory Notes due March 1, 1999 ("Notes") to a limited number of investors.
The principal and interest amount of each Note may at the election of the Note
holder be converted one or more times into fully paid and nonassessable shares
of common stock, $.00001 par value, of the Company, at a price which is the
lower of (i) $3.50 per share or (ii) 85% of five days market price prior to
conversion but not less than $2.50 per share or (iii) for any conversions on or
after March 1, 1998 the average of the closing bid prices for the prior thirty
days but in no event less than $1.00 per share. The Notes may be called by the
Company for conversion if the market price exceeds $9.00 per share for ten days
and certain conditions are met.
Each purchaser was granted a warrant to purchase 50 common shares of the
Company at $5.00 per share until March 1, 2000 ("Warrant") for each $1,000 of
Notes (aggregate Warrants exercisable into 50,000 shares). These securities
were offered and sold without registration under the Securities Act of 1933, as
amended (the "Act"), in reliance upon the exemption provided by Regulation D
thereunder and an appropriate legend was placed on the Notes and Warrants and
will be placed on the shares issuable upon conversion of the Notes or exercise
of the Warrants unless registered under the Act prior to issuance. The Company
has agreed to file a registration statement on the stock obtained on conversion
of the Notes and to certain piggy-back registration rights on the stock
obtained on exercise of the warrants.
Net proceeds from the sale of the Notes of approximately $950,000 is intended
for the purchase of additional laboratory equipment, the addition of new
research and development personnel, patent costs, financial advisory services
and for working capital. There can be no assurance that the Company can
successfully develop or exploit its various technologies.
The Company currently has 9,459,222 common shares issued and outstanding.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
None
(b) Pro forma financial information.
None
(c) Exhibits
4.7 Form of 6% Convertible Subordinated Promissory Note due March
1, 1999 aggregating $1,000,000 granted to sixteen investors
4.8 Form of Stock Purchase Warrant exercisable at $5.00 per share
until March 1, 2000 granted to sixteen investors for an
aggregate of 50,000 common shares
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN TECHNOLOGY CORPORATION
Date: April 1, 1997 By: /s/ ROBERT PUTNAM
-------------------------------------
Robert Putnam
President and Chief Executive Officer
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AMERICAN TECHNOLOGY CORPORATION
EXHIBIT 4.7
Form of 6% Convertible Subordinated Promissory Note
due March 1, 1999 aggregating $1,000,000
(Individual Notes dated March 25, 1997 differ as to amount and Payee)
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EXHIBIT 4.7
"THIS NOTE AND THE SHARES OF CAPITAL STOCK INTO WHICH
THIS NOTE MAY BE CONVERTED HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE
"RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144
UNDER THE ACT. THESE SHARES MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT."
(ALL AMOUNTS IN U.S. DOLLARS)
AMERICAN TECHNOLOGY CORPORATION
6% CONVERTIBLE SUBORDINATED PROMISSORY NOTE
Due March 1, 1999
March 25, 1997 US$_________. 00
Poway, California
FOR VALUE RECEIVED, American Technology Corporation, the undersigned
Delaware corporation (together with all successors, "Borrower"), hereby
promises to pay to the order of
Payee: ___________________________________________________
or his, her or its successors or assigns
(collectively, "Noteholder") at
Address:
or at such other address or addresses as Noteholder may subsequently designate
in writing to Borrower, the full and true sum of ________________ and NO/100
Dollars ($______________.00), due and payable in one (1) installment on or
before March 1, 1999, unless sooner accelerated ("Maturity Date"), plus simple
interest thereon at the rate of six percent (6.00%) per annum, in lawful monies
of the United States of America. Interest shall accrue and be payable at the
Maturity Date. If the Maturity Date should fall on a weekend or national
holiday, payment shall be due on the following business day.
1. Any payment shall be deemed timely made if received by
Noteholder within ten (10) calendar days of the due date. Payments received
shall be imputed first to late or penalty charges then due, next to interest
payments then due, and next to the remaining principal balance.
An "Event of Default" occurs if (a) the Borrower does not make
the payment of principal of this Note when the same becomes due and payable at
maturity, upon redemption or otherwise, (b) the Borrower fails to comply with
any of its other agreements in this Note that do not otherwise have separate
remedies or provisions and such failure continues for the period and after the
notice specified below, (c) the Borrower pursuant to or within the meaning of
any Bankruptcy Law (as hereinafter defined): (i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an involuntary
case; (iii) consents to the appointment of a Custodian (as hereinafter defined)
of it or for all or substantially all of its property or (iv) makes a general
assignment for the benefit of its creditors or (v) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is
for relief against the Borrower in an involuntary case; (B) appoints a
Custodian of the Borrower or for all or substantially all of its property or
(C) orders the liquidation of the Company, and any order or decree remains
unstayed and in effect for 60 days, (d) the Borrower shall have its Common
Stock delisted from the over-the-counter market. As used in this paragraph, the
term "Bankruptcy Law" means Title 11 of the United States Code or any similar
federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law. A default under clause (b) or (d) above is not an Event of
Default until the holders of at least 25% of the aggregate principal amount of
the Notes outstanding notify the Borrower of such default and the Borrower does
not cure it within thirty (30) days after receipt of such notice, which must
specify the default, demand that it be remedied and state that it is a "Notice
of Default". If an Event of Default occurs and is continuing, the Noteholder
hereof by notice to the Borrower, may declare the principal of and accrued
interest on this Note to be due and payable immediately.
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2. Borrower may not prepay the principal or any accrued interest
amount due under this Note in full or in part without the prior written
agreement of Noteholder.
3. (a) The outstanding principal amount of this Note (or
increments thereof of at least $100,000) and any proportionate accrued interest
may, at any time and from time to time, be converted at the option of the
Noteholder into fully paid, nonassessable shares of Common Stock of the
Borrower, $.00001 par value per share (the "Conversion Shares"), at the
Conversion Price per share as hereinafter defined, subject to restrictions and
limitations set forth herein. The Conversion Price shall be the lesser of (i)
85% of the average of the closing bid prices of Borrower's common stock each
day for the ten trading days immediately preceding the date of conversion but
in no event less than $2.50 per share, or (ii) for conversions on or after
March 1, 1998 the average of the closing bid prices of Borrower's common stock
each day for the thirty trading days immediately preceding March 1, but in no
event less than $1.00 per share, or (iii) $3.50 per share. If there are no
trades on any particular date, such date shall not count as one of the trading
days.
(b) Conversion shall be effected by Noteholder's writing which
unequivocally expresses Noteholder's intent to effect the conversion and states
the amount of principal being converted (Borrower shall compute the
proportionate accrued interest being converted) and tender of such writing (in
the form of Exhibit A or other similar form) and this original Note to
Borrower. Conversion shall be deemed to occur on the date such writing is
presented to Borrower by fax or other means as long as the original Note is
received promptly thereafter. Upon such conversion duly made, Borrower shall
execute a new Note of like tenor for the balance of the principal amount of
this Note not converted to common stock, and deliver such new Note and common
stock to Noteholder. Borrower shall bear all expenses and charges of issuing
and delivering the conversion shares. Not less than $100,000 of principal and
interest owed under this Note may be converted at any one time; provided, that
if the aggregate of principal and interest owed is less than that amount, then
all amounts owed under the Note must be converted at the same time.
(c) The conversion rate set forth in paragraph 3(a) will be
subject to adjustment if the Borrower is reorganized, merged, consolidated or
party to a plan of exchange with another corporation pursuant to which
shareholders of the Borrower receive any shares of stock or other securities,
or in the event of any sale or other transfer of all or substantially all of
the Borrower's assets, or in case of any reclassification of Borrower's common
stock. Noteholder shall be entitled, after the occurrence of any such event, to
receive on conversion thereof the kind and amount of shares of stock or other
securities, cash or other property receivable upon such event by a holder of
the number of Common Shares into which the principal balance of this Note at
such time might have been converted immediately prior to occurrence of the
event. In addition, the conversion rate set forth in paragraph 3(a) of this
Note will be appropriately adjusted if the Borrower's common stock is split or
combined.
(d) Upon conversion of this Note, Borrower shall use
its best efforts to issue and deliver to Noteholder a certificate or
certificates for the number of Conversion Shares to which Noteholder shall be
entitled within ten (10) business days after Noteholder has fulfilled all
conditions required for conversion as set forth in this Note (the "Deadline").
Borrower understands that a delay in the issuance of Conversion Shares beyond
the Deadline could result in economic loss to Noteholder. As compensation to
Noteholder for such loss, and not as a penalty, Borrower agrees to pay
liquidated damages to Noteholder for late issuance of Conversion Shares in the
amount of one percent (1.0%) of the requested conversion amount per day,
beginning on the twelfth (12th) business day from receipt by the Borrower of a
duly executed notice of conversion of the Note, provided that the original Note
to be converted has been delivered to Borrower within such time period, all in
accordance with this Note agreement and the requirements of the Borrower's
transfer agent. Said liquidated damages shall accrue each day through the date
the Conversion Shares are issued to the Noteholder, and shall be paid by wire
transfer to an account designated by Noteholder upon the earlier to occur of
(i) issuance of said Conversion Shares to Noteholder, or (ii) each monthly
anniversary of the receipt by Borrower of such Noteholder's notice of
conversion. Nothing herein shall waive Borrower's obligations to deliver
Conversion Shares or limit Noteholder's right to pursue actual damages for
Borrower's unexcused failure to issue and deliver Conversion Shares to
Noteholder in accordance with the terms of this Note agreement. The damage
provisions of this paragraph shall not apply to any delay caused by the
Noteholder, his agents, successors, or assigns or resulting from circumstances
reasonably beyond the Borrower's control or if in the Company's judgment the
conversion would be contrary to law.
4. Borrower is entitled, at its option, at any time when the
closing bid price of the Borrower's common stock has equaled or exceeded
US$9.00 per share for ten consecutive trading days during which market sales
occurred, upon five (5) days' prior written notice ("Notice of Mandatory
Conversion") to the holders of this Note, to require the holder of this Note to
convert all of the principal outstanding and all interest accrued thereon
through the date of the Notice of Mandatory Conversion into fully paid and
nonassessable shares of Common Stock at $3.50 per share; provided, that in the
event the Notice is issued prior to March 31, 1998 the Conversion Shares
issuable have been duly registered under the Securities Act of 1933, as
amended. Borrower shall notify the Noteholder of Borrower's intent to force
conversion by giving written notice to the holder by facsimile or other
electronic means, if possible, with original notice to follow by two-day
courier. Conversion pursuant to this Section 4 shall be effective with respect
to each holder on the fifth (5th)
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day (the "Mandatory Conversion Effective Date") following the confirmed receipt
by the holder or any other person at the holder's designated address of the
original notice referred to in the preceding sentence.
Upon the effective date of forced conversion, this Note shall
be deemed void and no longer shall constitute an obligation of Borrower or
evidence of an obligation, irrespective of when surrendered to Borrower. This
provision requires Borrower to convert all principal and interest owing under
this Note outstanding at the time of forced conversion. The Noteholder shall in
such event be required to surrender the original of this Note as promptly as
possible to Borrower, which shall mark the Note "canceled" upon receipt and
retain permanent custody of it. Upon Borrower's receipt of this Note, Borrower
shall deliver to the Noteholder the Conversion Shares called for by this
provision.
5. As promptly as practicable following the completion or
termination of the offering of promissory notes of which this Note is a part,
Borrower shall within 60 days of such completion ("Filing Date") prepare and
cause a registration statement on Form S-3, Form SB-2 or other appropriate form
to be filed with the Securities and Exchange Commission for the purpose of
registering the Conversion Shares under the Act for issuance to Noteholders
upon conversion of this Note. The Borrower shall use its best efforts to update
such registration statement to remain effective for a period of nine months
after it becomes effective. Noteholder shall, in connection with such
registration, make such representations and warranties to Borrower and furnish
such information as Borrower shall reasonably request.
No demand or request for such registration by Noteholder shall be
necessary, and such registration shall be automatic. Borrower shall use its
best efforts to cause such registration to become effective as soon as
practicable. All expenses of registering the Conversion Shares shall be borne
by Borrower. Borrower shall furnish to Subscriber and all other Noteholders
such numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request.
Borrower shall register or qualify the Conversion Shares under the
securities or "blue sky" laws of such jurisdictions as the Noteholders
reasonably request. Borrower shall not be required to register the Notes under
the Act or otherwise for resale, nor to register under the Act or otherwise for
resale any Conversion Shares obtained upon conversion of a Note prior to
effectiveness of such registration statement. Borrower will not be required to
register any Conversion Shares issued prior to an effective registration,
however such shares shall have a one-time piggyback registration right for a
period of one year from conversion other than a registration relating solely to
employee benefit plans.
If Noteholder fails to convert the Note and obtain the Conversion
Shares after the effective date of such registration statement and during the
period the registration statement remains current, Borrower shall have no
obligation to amend such registration statement or file any further
registration statement concerning such shares.
The Conversion Shares shall, upon due conversion of this Note, be
issued without restrictive legend and without entry of any stop transfer
notation in the Company's records, provided that at the time of issuance the
registration statement is effective and current and is not subject of a stop
order, and further provided that the Conversion Shares have been duly
registered or qualified under applicable state blue-sky laws.
6. In the event that such registration statement is not declared
effective within 120 days of the completion or termination of the offering of
promissory notes of which this Note is a part ("Due Date"), then the principal
payable under this Note shall increase an additional one percent (1%) from such
date for the first thirty (30) days following the Due Date and three percent
(3%) each thirty (30) day period thereafter until effectiveness of the
registration statement or until March 1, 1998.
7. If an aggregate of $1,000,000 of Notes of the offering of
which this Note is a part is sold, the Company grants each holder the right of
first refusal to purchase any equity or equity linked securities being sold for
cash for a period of 240 days from closing of the Note offering, in an amount
pro-rata of this Note to $1,000,000 but limited to the amount invested in this
Note. The right of first refusal shall not apply to the exercise of options,
warrants or the issuance of securities pursuant to existing contracts,
compensatory securities to employees and related persons, any underwritten
offering or securities related to any strategic relationships. Each Noteholder
shall have five (5) days written or facsimile notice of any subject offering
and must respond within five (5) days of receipt indicating the amount of such
offering to be subscribed and must complete such investment in accordance with
the terms of written notice. The Company's obligation to offer or sell any
securities pursuant to the right of first refusal shall be conditioned upon the
availability of an appropriate exemption from all registration requirements
applicable to such offers and sales. Failure to respond to such notice shall be
a waiver of such rights. The Company has also agreed that as long as any
portion of the Notes are outstanding, it shall not issue any security
convertible into common stock whereby the Company may be required to issue an
unlimited number of shares of common stock, i.e. there is no minimum conversion
price.
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8. If this Note becomes worn, defaced or mutilated but is still
substantially intact and recognizable, the Borrower or its agent may issue a
new Note in lieu hereof upon its surrender. Where the Noteholder claims that
the Note has been lost, destroyed or wrongfully taken, the Borrower shall issue
a new Note in place of the original Note if the Noteholder so requests by
written notice to the Borrower together with an affidavit of the Noteholder
setting forth the facts concerning such loss, destruction or wrongful taking
and such other information in such form with such proof or verification as the
Borrower may request. The Borrower in addition may require, at its sole
discretion, indemnification and/or an indemnity bond in such amount and issued
by such surety as the Borrower deems satisfactory.
9. In the event that this Note is placed with an attorney for
collection Borrower shall pay all reasonable costs, including attorneys' fees,
thereby incurred by the Noteholder. Any other controversy or claim relating to
this Note agreement or Noteholder's investment in the Notes shall be resolved
before a panel of three arbitrators selected pursuant to and run in accordance
with the rules then prevailing of the American Arbitration Association. Any
such arbitration shall be held in San Diego, California. The prevailing party
in the arbitration shall be entitled to an award of all expenses and reasonable
attorneys' fees incurred in bringing or defending the arbitration.
IN WITNESS WHEREOF, the undersigned Borrower has executed this
Promissory Note and has affixed hereto its corporate seal.
AMERICAN TECHNOLOGY CORPORATION
By __________________________________
AUTHORIZED OFFICER
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AMERICAN TECHNOLOGY CORPORATION
EXHIBIT 4.8
Form of Stock Purchase Warrant exercisable at $5.00 per share until
March 1, 2000 granted to sixteen investors for an aggregate of
50,000 common shares (Individual Stock Purchase Warrants
dated March 25, 1997 differ as to number and Optionee)
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EXHIBIT 4.8
THIS WARRANT AND THE SHARES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED
WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT
OF 1933 ("ACT"), AND THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT.
STOCK PURCHASE WARRANT
RIGHT TO PURCHASE _________ SHARES OF COMMON STOCK
THIS CERTIFIES THAT _______________ and all registered and permitted assigns
(collectively, "Holder") is entitled to purchase, on or before March 1, 2000
____________ (_________) shares of the common stock ("Common Stock") of
AMERICAN TECHNOLOGY CORPORATION (the "Corporation" or "Company") upon exercise
of this Warrant along with presentation of the full purchase price. The
purchase price of the common stock upon exercise of this Warrant ("Warrant
Shares") is equal to the Five Dollars ($5.00) per share (the "Exercise Price").
This Warrant is granted to Holder for valuable consideration received.
1. Exercise of Warrant. This Warrant may be exercised in whole or in part
on any business day on or before the expiration date listed above by
presentation and surrender hereof to the Company at its principal office of an
exercise request and the Exercise Price in lawful money of the United States of
America in the form of a wire transfer or check, subject to collection, for the
number of Warrant Shares specified in the exercise request. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant, execute and deliver a new Warrant evidencing the rights of the Holder
thereof to purchase the balance of the Warrant Shares purchasable hereunder.
Upon receipt by the Company of this Warrant and an exercise request and
representations, together with proper payment of the Exercise Price, at such
office, the Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding that the stock transfer books of the Company shall then
be closed or that certificates representing such Warrant Shares shall not then
be actually delivered to the Holder. The Company shall pay any and all transfer
agent fees, documentary stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of the Warrant Shares.
2. Adjustment of Exercise Price and Number of Shares Deliverable Upon
Exercise of Warrant. The Exercise Price and the number of Shares purchasable
upon the exercise of this Warrant are subject to adjustment from time to time
upon the occurrence of the events enumerated in this paragraph.
(a) In case the Corporation shall at any time after the date of this
Warrant:
(i) Pay a dividend of its shares of its Common Stock or make a
distribution in shares of its Common Stock with respect to its
outstanding Common Stock;
(ii) Subdivide its outstanding shares of Common Stock;
(iii) Combine its outstanding shares of Common Stock; or
(iv) Issue any other shares of capital stock by reclassification of
its shares of Common Stock;
the Exercise Price in effect at the time of the record date of such dividend,
subdivision, combination, or reclassification shall be proportionately adjusted
so that Holder shall be entitled to receive the aggregate number and kind of
shares which, if this Warrant had been exercised prior to such event, Holder
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case of any reorganization of the Corporation, or in case of any
reclassification or change of outstanding Common Stock issuable upon exercise
of this Warrant (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
split-up or combination of the Common Stock), or in case of any consolidation
or merger of the Company with or into another entity (other than a
consolidation or merger with a subsidiary or a continuing corporation), or in
case of any sale or conveyance to another entity of all or substantially all of
the property of the Corporation, then, as a condition of such reorganization,
reclassification, change, consolidation, merger, sale, or conveyance, the
Corporation or such successor or purchasing entity, as the case may be, shall
forthwith provide to Holder a supplemental warrant (the "Supplemental Warrant")
which will make lawful and
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adequate provision whereby Holder shall have the right thereafter to receive,
upon exercise of such Supplemental Warrant, the kind and amount of shares and
other securities and property which would have been received upon such
reorganization, reclassification, change, consolidation, merger, sale, or
conveyance by a holder of a number of shares of Common Stock equal to the
number of Shares issuable upon exercise of this Warrant immediately prior to
such reorganization, reclassification, change, consolidation, merger, sale, or
conveyance. Such Supplemental Warrant shall include provisions for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this paragraph. The above provisions of this paragraph shall
similarly apply to successive reorganizations, reclassifications, and changes
of Common Stock and to successive consolidations, mergers, sales, or
conveyances.
3. Representations
Holder has been advised and understands that the Warrants and the Shares
purchasable thereby are characterized as "restricted securities" under the
federal securities laws because they are being acquired from Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances.Holder further understands that
the certificates evidencing the Shares will bear the following legend: "These
securities have not been registered under the Securities Act of 1933. They may
not be sold, offered for sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the securities under such Act
or an opinion of counsel satisfactory to the Company that such registration is
not required or unless sold pursuant to Rule 144 of such Act."
The Holder understands that the Company may place, and may instruct any
transfer agent or depository for the Shares to place, a stop transfer notation
in the securities records in respect of the Shares.
4. Registration Rights
As promptly as practicable following the completion or termination of the
offering of promissory notes of which this Warrant is a part, the Company has
agreed within 60 days of such completion ("Filing Date") to prepare and cause a
registration statement on Form S-3, Form SB-2 or other appropriate form to be
filed with the Securities and Exchange Commission for the purpose of
registering under the Act the shares for issuance to noteholders upon
conversion of the promissory notes.
If the shares underlying this Warrant can be registered within the same
registration statement selected by the Company, then the Company shall include
such Warrant Shares. Otherwise such Warrant Shares shall have a one-time
piggyback registration right in a future registrations other than a
registration relating solely to employee benefit plans.
If the Warrant holder fails to exercise this warrant and obtain the Warrant
Shares after the effective date of such one time registration statement and
during the period the registration statement remains current, the Company shall
have no obligation to amend any such registration statement or file any further
registration statements concerning such Warrant Shares.
5. Assignment or Loss of Warrant.
(a) The Holder of this Warrant, without obtaining the prior written consent of
the Company, shall not transfer or assign its interest in this Warrant, or any
of the Warrant Shares prior to exercise, in whole or in part to any transferee.
(b) Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnification satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
6. Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance and delivery upon exercise or exchange of
this Warrant all shares of its Common Stock or other shares of capital stock of
the Company from time to time issuable upon exercise or exchange of this
Warrant. All such shares shall be duly authorized and, when issued upon the
exercise or exchange of the Warrant in accordance with the terms hereof, shall
be validly issued, fully paid and nonassessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale
(other than as provided in the Company's articles of incorporation and any
restrictions on sale set forth herein or pursuant to applicable federal and
state securities laws) and free and clear of all preemptive rights.
7. Arbitration. In the event that a dispute arises between the
Corporation and the holder of this Warrant as to any matter relating to this
Warrant, the matter shall be settled by arbitration in San Diego, California in
accordance with the Rules
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of the American Arbitration Association and the award rendered by such
arbitrator(s) shall not be subject to appeal and may be entered in any federal
or state court located in Oklahoma having jurisdiction thereof, and actions or
proceedings shall be brought in no other forum or venue.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers effective on this 25th day of March 1997.
AMERICAN TECHNOLOGY CORPORATION
BY________________________________
Its President
BY________________________________
Its Secretary
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