Document:

United States Securities and Exchange Commission Edgar Filing

EXHIBIT 4.14

FORM OF PLACEMENT AGENT WARRANTS

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.

WARRANT TO PURCHASE

SHARES OF COMMON STOCK

OF

AMBIENT CORPORATION 

Expires July 31, 2012

						
	No.:

	W-PA-07-06

	 
	 
	Number of Shares:

	 

	Date of Issuance:

	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

FOR VALUE RECEIVED, the undersigned, Ambient Corporation, a Delaware corporation (together with its successors and assigns, the "Issuer"), hereby certifies that _____________ or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), up to _____________________ (________) 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 is one of several placement agent warrants that has been executed and delivered to the Holder in connection with the transactions contemplated by the Securities Purchase Agreement dated as of ___________ (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 ____________ and shall expire at 6:00 p.m., eastern time, on __________ (such period being the "Term").

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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 during the Term beginning on the earlier of  (i) the effective date of a registration statement covering any shares underlying this Warrant or (ii) ________________.  

(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 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) with respect to fifty percent (50%) of the Warrant Stock represented by this Warrant, by "cashless exercise" only in accordance with the provisions of subsection (c) of this Section 2, or (iii) 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, in the event a registration statement under the Securities Act providing for the resale of all of the Warrant Stock is not in effect by the date that is one (1) year following the Original Issue Date, if 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), in lieu of exercising this Warrant by payment of cash, the Holder may exercise up to fifty percent (50%) of 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 

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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.

(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 

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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, 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 

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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 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 

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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 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 

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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 the option to 

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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 (90th) 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), 

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then (1) the number of shares of Common Stock for which this Warrant is exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (A) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (B) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Issuer and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, 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.  A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4(c) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4(b).  

(d)

Issuance of Additional Shares of Common Stock.  In the event the Issuer shall at any time following the Original Issuance Date issue any Additional Shares of Common Stock (otherwise than as provided in the foregoing subsections (b) through (c) of this Section 4), at a price per share less than the Warrant Price then in effect or without consideration, then the Warrant Price upon each such issuance shall be adjusted to the price equal to the consideration per share paid for such Additional Shares of Common Stock.

(e)

Issuance of Common Stock Equivalents.  In the event the Issuer shall at any time following the Original Issuance Date take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Issuer is the surviving corporation) issue or sell, any Common Stock Equivalents, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the Warrant Price in effect at the time of such amendment or adjustment, then the Warrant Price then in effect shall be adjusted as provided in Section 4(d).  No further adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Common Stock Equivalents.

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(f)

Other Provisions applicable to Adjustments under this Section.  The following provisions shall be ap­plicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect provided for in this Section 4:

(i)

Computation of Consideration.  To the extent that any Additional Shares of Common Stock or any Common Stock Equivalents (or any warrants or other rights therefor) shall be issued for cash consideration, the consideration received by the Issuer therefor shall be the amount of the cash received by the Issuer therefor, or, if such Additional Shares of Common Stock or Common Stock Equivalents are offered by the Issuer for subscription, the subscription price, or, if such Additional Shares of Common Stock or Common Stock Equivalents are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends and without taking into account any compensation, discounts or expenses paid or incurred by the Issuer for and in the underwriting of, or otherwise in connection with, the issuance thereof).  In connection with any merger or consolidation in which the Issuer is the surviving corporation (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Issuer shall be changed to or exchanged for the stock or other securities of another corporation), the amount of consideration therefore shall be, deemed to be the fair value, as determined reasonably and in good faith by the Board, of such portion of the assets and business of the nonsurviving corporation as the Board may determine to be attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.  The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Issuer for issuing such warrants or other rights plus the additional con­sideration payable to the Issuer upon exercise of such warrants or other rights.  The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Common Stock Equivalents shall be the consideration received by the Issuer for issuing war­rants or other rights to subscribe for or purchase such Common Stock Equivalents, plus the consideration paid or payable to the Issuer in respect of the subscription for or purchase of such Common Stock Equivalents, plus the additional consideration, if any, payable to the Issuer upon the exercise of the right of conversion or exchange in such Common Stock Equivalents.  In the event of any consolidation or merger of the Issuer in which the Issuer is not the surviving corporation or in which the previously outstanding shares of Common Stock of the Issuer shall be changed into or exchanged for the stock or other securities of another corporation, or in the event of any sale of all or substantially all of the assets of the Issuer for stock or other securities of any corporation, the Issuer shall be deemed to have issued a number of shares of its Common Stock for stock or securities or other property of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation.  In the event any consideration received by the Issuer for any securities consists of property other than cash, the fair market value thereof at the time of issuance or as otherwise applicable shall be as determined in good faith by the Board.  In the event Common Stock is issued with other shares or securities or other assets of the Issuer for consideration which covers both, the consideration computed as provided in this Section 4(f)(i) shall be allocated among such securities and assets as determined in good faith by the Board.

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(ii)

When Adjustments to Be Made.  The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which this Warrant is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one percent (1%) of the shares of Common Stock for which this Warrant is exercisable immediately prior to the making of such adjustment.  Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

(iii)

Fractional Interests.  In computing ad­justments under this Section 4, fractional interests in Common Stock shall be taken into account to the near­est one one-hundredth (1/100th) of a share.

(iv)

When Adjustment Not Required.  If the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(g)

Form of Warrant after Adjustments.  The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of this Warrant.

(h)

Escrow of Warrant Stock.  If after any property becomes distributable pursuant to this Section 4 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, and the Holder exer­cises this Warrant, any shares of Common Stock issuable upon exercise by reason of such adjustment shall be deemed the last shares of Common Stock for which this Warrant is exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for the Holder by the Issuer to be issued to the Holder upon and to the extent that the event actually takes place, upon payment of the current Warrant Price.  Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by the Issuer and escrowed property returned.

(i)

Certain Issues Excepted.  Anything herein to the contrary notwithstanding, the Maker shall not be required to make any adjustment to the Warrant Price in connection with 

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securities issued by the Maker in a Permitted Financing.

5.

Notice of Adjustments.  Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial Officer to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly after each adjustment.  Any dispute between the Issuer and the Holder of this Warrant with respect to the matters set forth in such certificate may at the option of the Holder of this Warrant be submitted to a national or regional accounting firm reasonably acceptable to the Issuer and the Holder, provided that the Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, in which case such Holder shall select another such firm and the Issuer shall have no such right of objection.  The firm selected by the Holder of this Warrant as provided in the preceding sentence shall be instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute.  Such opinion shall be final and binding on the parties hereto.  The costs and expenses of the initial accounting firm shall be paid equally by the Issuer and the Holder and, in the case of an objection by the Issuer, the costs and expenses of the subsequent accounting firm shall be paid in full by the Issuer.

6.

Fractional Shares.  No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall round the number of shares to be issued upon exercise up to the nearest whole number of shares.

7.

Ownership Caps and Certain Exercise Restrictions.  

(a)  Notwithstanding anything to the contrary set forth in this Warrant, at no time may a Holder of this Warrant exercise any portion of this Warrant if the number of shares of Common Stock to be issued pursuant to such exercise would exceed, when aggregated with all other shares of Common Stock beneficially owned by such Holder at such time, the number of shares of Common Stock which would result in such Holder beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules  thereunder) in excess of 4.99% of the then issued and outstanding shares of Common Stock; provided, however, that upon a holder of this Warrant providing the Issuer with sixty-one (61) days notice (pursuant to Section 12 hereof) (the "Waiver Notice") that such Holder would like to waive this Section 7(a) with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 7(a) will be of no force or effect with regard to all or a portion of the Warrant referenced in the Waiver Notice; provided, further, that this provision shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of this Warrant.  In all circumstances, exercise of this Warrant shall be deemed to be the Holder’s representation that such exercise conforms to the provisions of this Section 7(a) and the Issuer shall be under no obligation to verify or ascertain compliance by the Holder with this provision.

-12-

 

 

(b)

The Holder may not exercise the Warrant hereunder to the extent such exercise would result in the Holder beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of Common Stock, including shares issuable upon exercise of the Warrant held by the Holder after application of this Section; provided, however, that upon a holder of this Warrant providing the Issuer with a Waiver Notice that such holder would like to waive this Section 7(b) with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 7(b) shall be of no force or effect with regard to those shares of Warrant Stock referenced in the Waiver Notice; provided, further, that this provision shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of this Warrant.  In all circumstances, exercise of this Warrant shall be deemed to be the Holder’s representation that such exercise conforms to the provisions of this Section 7(b) and the Issuer shall be under no obligation to verify or ascertain compliance by the Holder with this provision.

8.

Definitions.  For the purposes of this Warrant, the following terms have the following meanings:

"Additional Shares of Common Stock" means all shares of Common Stock issued by the Issuer after the Original Issue Date, and all shares of Other Common, if any, issued by the Issuer after the Original Issue Date, except for those issued in a Permitted Financing.

 

“Board" shall mean the Board of Directors of the Issuer.

"Capital Stock" means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

"Certificate of Incorporation" means the Certificate of Incorporation of the Issuer as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law.

"Common Stock" means the Common Stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

"Common Stock Equivalent" means any Convertible Security or warrant, option or other right to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Security.

-13-

 

 

"Convertible Securities" means evidences of Indebtedness, shares of Capital Stock or other Securities which are or may be at any time convertible into or exchangeable for Additional Shares of Common Stock.  The term "Convertible Security" means one of the Convertible Securities.

"Governmental Authority" means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign.

"Holders" mean the Persons who shall from time to time own any Warrant.  The term "Holder" means one of the Holders.

"Independent Appraiser" means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Warrant.

"Issuer" means Ambient Corporation, a Delaware corporation, and its successors. 

"Majority Holders" means at any time the Holders of Warrants exercisable for a majority of the shares of Warrant Stock issuable under the Warrants at the time outstanding.

"Original Issue Date" means _______, 2007.

"OTC Bulletin Board" means the over-the-counter electronic bulletin board.

"Other Common" means any other Capital Stock of the Issuer of any class which shall be authorized at any time after the date of this Warrant (other than Common Stock) and which shall have the right to participate in the distribution of earnings and assets of the Issuer without limitation as to amount.

“Outstanding Common Stock” means, at any given time, the aggregate amount of outstanding shares of Common Stock, assuming full exercise, conversion or exchange (as applicable) of all options, warrants and other Securities which are convertible into or exercisable or exchangeable for, and any right to subscribe for, shares of Common Stock that are outstanding at such time.

"Person" means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature.

-14-

 

 

"Per Share Market Value" means on any particular date (a) the last closing bid price per share of the Common Stock on such date on the OTC Bulletin Board or another registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the closing bid price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on the OTC Bulletin Board or any registered national stock exchange, the last closing bid price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (c) if the Common Stock is not then reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the "Pink Sheet" quotes for the applicable Trading Days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by an Independent Appraiser selected in good faith by the Majority Holders; provided, however, that the Issuer, after receipt of the determination by such Independent Appraiser, shall have the right to select an additional Independent Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Independent Appraiser; and provided, further that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period.  The determination of fair market value by an Independent Appraiser shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and the determination of the additional Independent Appraiser, if any, or of the Independent Appraisers otherwise shall be final and binding on all parties.  In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights.

"Purchase Agreement" means the Securities Purchase Agreement dated as of July 31, 2007, among the Issuer and the Purchasers.

"Purchasers" means the purchasers of the secured convertible promissory notes and the Warrants issued by the Issuer pursuant to the Purchase Agreement.

"Securities" means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security.  "Security" means one of the Securities.

"Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute then in effect.

-15-

 

 

"Subsidiary" means any corporation at least 50% of whose outstanding Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

"Term" has the meaning specified in Section 1 hereof.

"Trading Day" means (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or (b) if the Common Stock is not traded on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

"Voting Stock" means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board of Directors (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

"Warrants" means this Warrant, and any other warrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such other Warrants. 

"Warrant Price" initially means $0.____, as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 4 hereto.

"Warrant Share Number" means at any time the aggregate number of shares of Warrant Stock which may at such time be purchased upon exercise of this Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.

"Warrant Stock" means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

9.

Other Notices.  In case at any time:

(A)

the Issuer shall make any distributions to the holders of Common Stock; or

(B)

the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or

-16-

 

 

(C)

there shall be any reclassification of the Capital Stock of the Issuer; or

(D)

there shall be any capital reorganization by the Issuer; or

(E)

there shall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or substantially all of the Issuer's property, assets or business (except a merger or other reorganization in which the Issuer shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or

(F)

there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be taken for such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place.  Such notice also shall specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be.  Such notice shall be given at least twenty (20) days prior to the action in question and not less than ten (10) days prior to the record date or the date on which the Issuer's transfer books are closed in respect thereto.  This Warrant entitles the Holder to receive copies of all financial and other information distributed or required to be distributed to the holders of the Common Stock.

10.

Amendment and Waiver.  Any term, covenant, agreement or condition in this Warrant may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by the Issuer and the Majority Holders; provided, however, that no such amendment or waiver shall reduce the Warrant Share Number, increase the Warrant Price, shorten the period during which this Warrant may be exercised or modify any provision of this Section 10 without the consent of the Holder of this Warrant.  No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Warrant unless the same consideration is also offered to all holders of the Warrants.

-17-

 

 

11.

Governing Law; Jurisdiction.  This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction.  This Warrant shall not be interpreted or construed with any presumption against the party causing this Warrant to be drafted.  The Issuer and the Holder agree that venue for any dispute arising under this Warrant will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue.  The Issuer and the Holder irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York.  The Issuer and the Holder consent to process being served in any such suit, action or proceeding by mailing a copy thereof 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 in this Section 11 shall affect or limit any right to serve process in any other manner permitted by law.  The Issuer agrees to pay all costs and expenses of enforcement of this Warrant, including, without limitation, reasonable attorneys' fees and expenses.  The parties hereby waive all rights to a trial by jury.

12.

Notices.  Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be:

If to the Company:

Ambient Corporation  

79 Chapel Street                      

Newton, Massachusetts 02458  

Attention: Chief Executive Officer 

Tel. No.: (617) 332-0004 

Fax No.: (617) 663-6191

with copies (which copies 

shall not constitute notice 

to the Company) to:

  

Aboudi & Brounstein Law Offices

3 Gavish Street

Kfar Saba Ind. Zone 44641 Israel

Attention: Mr. David Aboudi

Tel No.: +972-9-764-4833

Fax No.: +972-9-764-4834

-18-

 

 

If to any Holder:

At the last known address of such Holder contained in the Issuer’s books and records or as set forth on Exhibit A to this Warrant.

with copies (which copies 

shall not constitute notice) 

to:

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036

Attention: Christopher S. Auguste

Tel. No.: (212) 715-9100

Fax No.: (212) 715-8000

Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto.

13.

Warrant Agent.  The Issuer may, by written notice to each Holder of this Warrant, appoint an agent having an office in New York, New York for the purpose of issuing shares of Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

14.

Remedies.  The Issuer stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

15.

Successors and Assigns.  This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock.

16.

Modification and Severability.  If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency.  If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceable provision had never been contained herein.

17.

Headings.  The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

-19-

 

 

18.

Registration Rights.  The Warrant Stock shall be registered on the resale registration statement obligated to be filed by the Issuer pursuant to the Purchase Agreement.  In addition, if the Issuer shall determine to proceed with the preparation and filing of a registration statement under the Securities Act in connection with the proposed offer and sale of any of its securities by it or any of its security holders (other than a registration statement on Form S-4, S-8 or other limited purpose form), then the Issuer will give written notice of its determination to the Holder.  Upon the written request from the Holder, the Issuer will cause all shares of Common Stock issuable upon the exercise of this Warrant to be included in such registration statement, all to the extent requisite to permit the resale by the Holder of such shares of Common Stock issuable upon the exercise of this Warrant. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-20-

 

 

IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year first above written.

				
	 
	 
	AMBIENT CORPORATION 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	By: 

	 

	 
	 
	 
	Name:

	 
	 
	 
	Title:

-21-

 

 

EXERCISE FORM

WARRANT

AMBIENT CORPORATION

The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of Ambient Corporation covered by the within Warrant.

					
	Dated:

	 
	 
	Signature

	 

	 
	 
	 
	 
	 

	 
	 
	 
	Address

	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: _________________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.

The undersigned intends that payment of the Warrant Price shall be made as (check one):    

Cash Exercise_______  

Cashless Exercise_______

If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Warrant.   

If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below, which is ___________.   The Company shall pay a cash adjustment in respect of the fractional portion of the product of the calculation set forth below in an amount equal to the product of the fractional portion of such product and the Per Share Market Value on the date of exercise, which product is ____________.

X = Y - (A)(Y)

      B

Where:

The number of shares of Common Stock to be issued to the Holder __________________(“X”).

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 

-22-

___________________________ (“Y”). 

The Warrant Price ______________ (“A”). 

The Per Share Market Value of one share of Common Stock  _______________________ (“B”).

ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the said Warrant on the books of the within named corporation.

					
	Dated:

	 
	 
	Signature

	 

	 
	 
	 
	 
	 

	 
	 
	 
	Address

	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation.

					
	Dated:

	 
	 
	Signature

	 

	 
	 
	 
	 
	 

	 
	 
	 
	Address

	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

FOR USE BY THE ISSUER ONLY:

This Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of ___________, _____, shares of Common Stock issued therefor in the name of _______________, Warrant No. W-_____ issued for ____ shares of Common Stock in the name of _______________.

-23-ex_10-42.htm

    
      

      

    

    Exhibit 10.42

     

    
       

       

      STOCK
PURCHASE AGREEMENT

       

       

      BY AND
BETWEEN

       

       

      LOCATION
BASED TECHNOLOGIES, INC.

       

      AND

       

      __ ORI
Services Corp____

       

       

      Dated May
27, 2009

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE OF
CONTENTS

       

      Page

      
        	
                1.

              	
                Agreement
      to Sell and Agreement to Purchase 

              	
                1   
      

              

      

      
        	
                 
      

              	
                1.1

              	
                Purchase
      of Shares 

              	
                1   
      

              

      

      
        	
                 
      

              	
                1.2

              	
                Closing 

              	
                1   
      

              

      

       

      
        	
                2.

              	
                Consideration
      to be Paid by Buyer 

              	
                1   
      

              

      

      
        	
                 
      

              	
                2.1

              	
                Purchase
      Price for Shares 

              	
                1   
      

              

      

      
        	
                 
      

              	
                2.2

              	
                Payment
      of Purchase Price 

              	
                2   
      

              

      

       

      
        	
                3.

              	
                Representations
      and Warranties of the Company 

              	
                2   
      

              

      

      
        	
                 
      

              	
                3.1

              	
                Organization
      and Good Standing 

              	
                2   
      

              

      

      
        	
                 
      

              	
                3.2

              	
                Authorization
      of Agreement 

              	
                2   
      

              

      

      
        	
                 
      

              	
                3.3

              	
                Capitalization 

              	
                2   
      

              

      

      
        	
                 
      

              	
                3.4

              	
                Financial
      Condition 

              	
                2   
      

              

      

      
        	
                 
      

              	
                3.5

              	
                Assets
      of the Company 

              	
                3   
      

              

      

      
        	
                 
      

              	
                3.6

              	
                Material
      Contracts 

              	
                3   
      

              

      

      
        	
                 
      

              	
                3.7

              	
                Labor
      and Employment Matters 

              	
                4   
      

              

      

      
        	
                 
      

              	
                3.8

              	
                Litigation 

              	
                4   
      

              

      

      
        	
                 
      

              	
                3.9

              	
                No
      Undisclosed Liabilities 

              	
                4   
      

              

      

      
        	
                 
      

              	
                3.10

              	
                Compliance
      with Law 

              	
                4   
      

              

      

       

      
        	
                4.

              	
                Representations
      and Warranties of Buyer 

              	
                4   
      

              

      

      
        	
                 
      

              	
                4.1

              	
                Investment
      Intent 

              	
                4   
      

              

      

      
        	
                 
      

              	
                4.2

              	
                Review
      of SEC Filings 

              	
                4   
      

              

      

       

      
        	
                5.

              	
                Covenants 

              	
                4   
      

              

      

      
        	
                 
      

              	
                5.1

              	
                Form
      D 

              	
                4   
      

              

      

      
        	
                 
      

              	
                5.2

              	
                Reporting
      Status 

              	
                5   
      

              

      

      
        	
                 
      

              	
                5.3

              	
                Schedule
      13D 

              	
                5   
      

              

      

      
        	
                 
      

              	
                5.4

              	
                Use
      of Proceeds 

              	
                5   
      

              

      

      
        	
                 
      

              	
                5.5

              	
                Financial
      Information 

              	
                5   
      

              

      

      
        	
                 
      

              	
                5.6

              	
                Disclosure
      of Transaction 

              	
                5   
      

              

      

      
        	
                 
      

              	
                5.7

              	
                Conduct
      of the Business of the Company 

              	
                5   
      

              

      

       

      
        	
                6.

              	
                Indemnification 

              	
                5   
      

              

      

      
        	
                 
      

              	
                6.1

              	
                Claims
      for Indemnification 

              	
                5   
      

              

      

      
        	
                 
      

              	
                6.2

              	
                Manner
      of Indemnification 

              	
                6   
      

              

      

      
        	
                 
      

              	
                6.3

              	
                Limitations
      on Indemnification 

              	
                6   
      

              

      

      
        	
                 
      

              	
                6.4

              	
                Sole
      Basis for Recovery 

              	
                6   
      

              

      

      
        	
                 
      

              	
                6.5

              	
                Insurance 

              	
                6   
      

              

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	
                7.

              	
                Miscellaneous 

              	
                6   
      

              

      

      
        	
                 
      

              	
                7.1

              	
                Notices 

              	
                6   
      

              

      

      
        	
                 
      

              	
                7.2

              	
                Governing
      Law 

              	
                6   
      

              

      

      
        	
                 
      

              	
                7.3

              	
                Counterparts 

              	
                6   
      

              

      

      
        	
                 
      

              	
                7.4

              	
                Indemnification
      for Brokerage 

              	
                7   
      

              

      

      
        	
                 
      

              	
                7.5

              	
                Complete
      Agreement 

              	
                7   
      

              

      

      
        	
                 
      

              	
                7.6

              	
                Interpretation 

              	
                7   
      

              

      

      
        	
                 
      

              	
                7.7

              	
                Severability 

              	
                7   
      

              

      

      
        	
                 
      

              	
                7.8

              	
                Knowledge;
      Due Diligence Investigation 

              	
                7   
      

              

      

      
        	
                 
      

              	
                7.9

              	
                Expenses
      of Transactions 

              	
                7   
      

              

      

      
        	
                 
      

              	
                7.10

              	
                Amendment 

              	
                7   
      

              

      

      
        	
                 
      

              	
                7.11

              	
                Counterparts 

              	
                7   
      

              

      

      

       

      SCHEDULES

       

      Schedule
2.2                                Instructions
for Payment of Purchase Price

      Schedule
3.3                                Obligations
of the Company

      Schedule
3.4.1.1                          Financial
Statements Delivered to Buyer

      Schedule
3.4.2                           
 Changes in Financial Condition of the Company

      Schedule
3.4.3                             Defaults
of the Company

      Schedule
3.5                                Liens
of the Company

      Schedule
3.8                                Current
Litigation

      Schedule
3.9                                Undisclosed
Liabilities

      Schedule
4.1                                Stock
Certificate Legend

      Schedule
5.4                                Use
of Proceeds

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      STOCK
PURCHASE AGREEMENT

       

      This
STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of this
27th day of May, 2009 by and between the Location Based Technologies, Inc., a
Nevada corporation (the “Company”) and ORI Services Corp. of San Diego, CA
(“Buyer”).

       

      R E C I T A L
S

       

      A.           The
Company is in the business of developing, marketing and selling high quality
personal location devices through its Anaheim, California facility (the
“Business”).

       

      B.       
    The Company desires to sell to Buyer 91,743 shares of
its common restricted stock (the “Shares”), and Buyer desires to acquire the
Shares on the terms and conditions hereinafter set forth.

       

      AGREEMENT

       

      NOW,
THEREFORE, in consideration of the mutual covenants, agreements, representations
and warranties and subject to the conditions contained herein, the parties
hereto covenant and agree as follows:

       

      1.           
 Agreement to
Sell and Agreement to Purchase.

       

      1.1           Purchase of
Shares.  Simultaneously with the execution of this Agreement,
on the terms and subject to the conditions set forth herein, the Company shall
issue and sell to Buyer and Buyer shall purchase, acquire and accept from the
Company, all the Shares.  The Company shall deliver to Buyer
certificates representing the Shares against receipt of the Purchase Price
(hereafter defined).

       

      1.2           Closing.  The
closing of the transactions herein contemplated (the “Closing”) shall take place
at the offices of the Company in Anaheim, California, and be effective as of
5:00 p.m., local time, on the date hereof (the “Closing Date”).  All
actions taken and all documents delivered at the Closing shall be deemed to have
occurred simultaneously.

       

      2.           
 Consideration to
be Paid by Buyer.

       

      2.1           Purchase Price for
Shares.  The purchase price for the Shares (“Purchase Price”)
shall be $1.09 per share for an aggregate of $100,000.00.  Warrant
coverage will cover 25% of the aggregate value of the Purchase Price based on
the closing day’s value of the market on the day good funds are received ($1.24
per share) with a three (3) year term.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      2.2           Payment of Purchase
Price.  At the Closing, Buyer shall pay to the Company in
immediately available funds by wire transfer (pursuant to the instructions set
forth on Schedule 2.2) the Purchase Price against receipt of the
Shares.

       

      3.            
Representations and
Warranties of the Company.  The Company represents and warrants
to Buyer that:

       

      3.1           Organization and Good
Standing.  The Company is duly organized, validly existing and
in good standing under the laws of Nevada (the jurisdiction in which it was
formed) with full power to carry on its business as it is now and has since its
organization been conducted, and to own, lease or operate its
assets.  The Company is duly authorized to do business and is in good
standing in such other jurisdictions in which the Company is required to be so
authorized.

       

      3.2           Authorization of
Agreement.  The Company has all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby.  This Agreement and all other agreements and instruments to be
executed by the Company has been duly executed and delivered by the Company, has
been effectively authorized by all necessary action, corporate or otherwise, and
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.

       

      3.3           Capitalization.  The
authorized capital stock of the Company consists solely of (i) 300,000,000
shares of voting common stock, $0.001 par value, of which 88,244,270 shares are
issued and outstanding and (ii) 30,000,000 shares of preferred stock, $0.001 par
value, none of which shares are issued and outstanding.  All of the
outstanding shares have been duly authorized, validly issued (free of all
preemptive rights), are fully paid and nonassessable.  Any outstanding
or authorized options, warrants, subscriptions, calls, puts, conversion or other
rights, contracts, agreements, commitments or understandings of any kind
obligating the Company to issue, sell, purchase, return, redeem or pay any
distribution or dividend with respect to any shares of capital stock of the
Company or any other securities convertible into, exchangeable for or evidencing
the right to subscribe for any shares of capital stock of or other ownership
interest in the Company are listed on Schedule 3.3 hereof.

       

      3.4           Financial
Condition.

       

      3.4.1         Financial
Statements.

       

      3.4.1.1            The
Company has made available (see www.sec.gov)  to
Buyer the financial statements (collectively, the “Financial Statements”) listed
on Schedule 3.4.1.1, together with the report thereon of the Company’s
independent certified public accountants where applicable.

       

      3.4.1.2             To
the Company’s best knowledge, the Financial Statements fairly present in all
respects the financial condition and the results of operations of the Company as
at the respective dates of and for the periods referred to in such financial
statements and reflect the consistent application of accounting principles
throughout the periods involved in accordance with generally accepted accounting
principles.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      3.4.2         Absence of Certain
Changes.  Except as disclosed on Schedule 3.4.2, since November
30, 2008 (the “Balance Sheet Date”) there has not been (i) any change in the
financial condition, results of operations, assets, business, or prospects of
the Company as described in its filings with the Securities and Exchange
Commission (“SEC Filings”) or otherwise that could have a material adverse
effect on the assets, results (financial or otherwise), business or prospects of
the Company (a “Material Adverse Effect”); (ii) any damage, destruction or loss,
whether or not covered by insurance, that could have a Material Adverse Effect;
(iii) any sale or transfer of any of the assets of the Company, except sales in
the ordinary course of the business of inventory or immaterial amounts of other
tangible personal property; (iv) any commitment by the Company to any capital
expenditure to be paid after the Closing in excess of $100,000 for any
individual commitment or $500,000 in the aggregate; (v) any incurrence of
additional indebtedness for borrowed money or entering into long term contracts
or commitments by the Company to be performed after the Closing Date; (vi) any
alteration in any respect of the Company’s practices and policies relating to
the payment and collection of accounts receivable; (vii) any failure to operate
the Company in the ordinary course of business consistent with past practice;
(viii) any increase in, or commitment to increase, the compensation payable or
to become payable to any of the Company’s executive employees or any bonus
payment (other than as included as an accrued liability on the Company’s balance
sheet) or similar arrangement made to or with any of the Company’s executive
employees; (ix) any adoption of a plan or agreement or amendment to any plan or
agreement providing any new or additional fringe benefits; (x) any material
alteration in the manner of keeping the Company’s books, accounts or records,
(xi) any transaction with any affiliate of the Company; (xii) any material tax
election or establishment or increase in a reserve for taxes or other
liabilities on its books or otherwise provided therefore, except for taxes or
other liabilities relating to the ordinary course operations of the Company
since the Balance Sheet Date; (xiii) any liens claims or encumbrances placed
upon the Company’s assets; or (xiv) any material transaction entered into by the
Company not in the ordinary course of business.

       

      3.4.3         No
Default.  Except as disclosed in the Company’s balance sheet as
of the Balance Sheet Date, or on Schedule 3.4.3, the Company is not in default
with respect to any liabilities or obligations, and all such liabilities or
obligations shown and reflected in such balance sheet and such liabilities
incurred or accrued subsequent to such Balance Sheet Date have been, or are
being, paid or discharged as they become due, and all such liabilities and
obligations were incurred in the ordinary course of business.

       

      3.5           Assets of the
Company.  The Company owns, or has valid leasehold interests
in, or licenses to, all of the assets required or necessary to operate the
Business of the Company as it is now being conducted.  Except for
liens reflected on the May 31, 2008 balance sheet, or on Schedule 3.5 hereof,
the Company’s assets are free and clear of all liens.

       

      3.6           Material
Contracts.  The Company’s SEC Filings contain copies of all
material contracts to which the Company is a party, and the Company has made
copies of such contracts available to Buyer as requested by Buyer.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      3.7           Labor and Employment
Matters.  No collective bargaining agreement exists that is
binding on the Company and no proceedings have been instituted by an employee or
group of employees seeking recognition of a bargaining
representative.  No organizational effort currently is being made or
threatened by or on behalf of any labor union to organize any employees of the
Company.  The employment arrangements for executive management of the
Company are set forth in the material contracts included with the Company’s SEC
Filings.

       

      3.8           Litigation.  Except
as set forth in the Company’s SEC Filings or on Schedule 3.8 hereof, there are
no material claims or litigation pending against the company.

       

      3.9           No Undisclosed
Liabilities.  Except as and to the extent specifically
reflected or reserved against in the Company’s balance sheet as of the Balance
Sheet Date or on Schedule 3.9 hereof, the Company has no liabilities or
obligations of any kind, including, without limitation, environmental,
employment, ERISA or income tax obligations, whether absolute, accrued,
contingent or otherwise.

       

      3.10           Compliance with
Law.  To the Company’s knowledge it has not violated and its
business as presently conducted does not violate, in any material respect any
Federal, state, local or foreign laws, regulations, permits, licenses,
governmental authorizations or orders, and the Company has not received any
notice of any such violation.

       

      4.            
Representations and
Warranties of Buyer.  Buyer represents and warrants to the
Company that:

       

      4.1           Investment
Intent.  Buyer is acquiring the Shares with the intention as of
the date hereof of holding the Shares for purposes of
investment.  Buyer acknowledges that the Shares have not been, and
will not be, registered under the Securities Act of 1933, as amended (the
“Act”), or any state securities laws, and Buyer has no intention as of the date
hereof of selling the Shares in a public distribution in violation of Federal
securities laws or any applicable state securities laws.  Buyer is an
Accredited Investor (as defined in Rule 501 promulgated under the Act) and is
able to bear the risk of an investment in the Shares including risks associated
with holding the Shares for an extended period of time.  Buyer
understands that the certificates representing the Shares will bear the legend
set forth on Schedule 4.1 hereof.

       

      4.2           Investigation.  Buyer,
or its representatives, have reviewed the Company’s SEC Filings and other
business records or information deemed necessary and have had an opportunity to
ask questions of, and receive answers or requested documentation from, such
officers of the Company as it deems necessary to undertake the investment in the
Company contemplated by this Agreement.

       

      5.            
Covenants.

       

      5.1           Form
D.  The Company shall make its best efforts to timely file a
Form D to the Shares as required under Regulation D promulgated by the
Securities and Exchange Commission (“SEC”) and provide a copy thereof to
Buyer.  The Company shall also make all filings and reports relating
to the offer and sale of the Shares acquired under applicable securities laws of
the United States following the Closing Date.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      5.2           Reporting
Status.  The Company shall use its commercially reasonable best
efforts to timely file all reports required to be filed by the SEC pursuant to
the Securities Exchange Act of 1934, as amended (“34 Act”), and the Company
shall not terminate its status as an issuer required to file reports under the
34 Act even if the 34 Act or the rules and regulations thereunder would
otherwise permit such termination.

       

      5.3           Schedule
13D.  Buyer agrees to file a Schedule 13D, if applicable, with
the SEC in a timely manner, and agrees to keep it current.

       

      5.4           Use of
Proceeds.  The Company will use the proceeds from the sale of
the Shares for working capital purposes as more particularly described and in
the amounts indicated in Schedule 5.4 attached hereto and incorporated herein by
this reference.

       

      5.5           Disclosure of
Transaction.  As soon as reasonably possible following the
Closing Date, the Company shall file a Form 8-K with the SEC describing the
terms of the transactions contemplated herein.

       

      5.6           Conduct of the Business of
the Company.  After the Closing Date, the Company will continue
to conduct the operations of the business of the Company in the ordinary course
and will maintain the assets, properties and rights of the Company in at least
as good order and condition as exists on the date hereof, subject to ordinary
wear and tear.

       

      6.             Indemnification.  In
consideration of Buyer’s execution and delivery of this Agreement and acquiring
the Shares thereunder, and in addition to all of the Company’s other obligations
under the Agreement, the Company shall defend, protect, indemnify and hold
harmless Buyer from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether Buyer is a party to the action for
which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by Buyer as a
result of, or arising out of or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in the Agreement or any
other certificate, instrument or document contemplated hereby, (b) any breach of
any covenant, agreement or obligation of the Company contained in this Agreement
or any other certificate, instrument or document contemplated hereby, (c) any
cause of action, suit or claim brought or made against Buyer and arising out of
or resulting from the execution, delivery, performance or enforcement of the
Agreement in accordance with the terms hereof or any other certificate,
instrument or document contemplated hereby, or (d) any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Shares.  To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities that is permissible under applicable
law.

       

      6.1           Claims for
Indemnification.  Whenever any claim shall arise for
indemnification hereunder, Buyer shall promptly notify the Company of the claim
and, when known, the facts constituting the basis for such claim; provided
however, that a failure to provide such notice will not reduce the
indemnification obligation hereunder unless, and only to the extent that, such
failure to deliver notice materially prejudices the Company.  In the
event of any claim for indemnification hereunder resulting from or in connection
with any claim or legal proceedings by a third party, the notice to the Company
shall specify, if known, the amount or an estimate of the amount of the
liability potentially arising therefrom.  The Buyer shall not settle
or compromise any claim by a third party for which it is entitled to
indemnification hereunder, without the prior written consent of the Company,
which will not be unreasonably withheld.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      6.2           Manner of
Indemnification.  Any indemnification by the Company of the
Buyer shall be effected by payment of cash, wire transfer or delivery of a
certified or official bank check in immediately available funds in the amount of
the Indemnification Liability.

       

      6.3           Limitations on
Indemnification.  All representations and warranties made by
the Company herein or in any instrument or document furnished in connection
herewith shall survive the Closing only for a period of 12 months, except for
the representations and warranties contained in Sections 3.2 and 3.3, which
shall not expire.  Buyer shall not be entitled to assert a claim for
indemnification under this Section 6 unless (i) such claim is asserted in
writing prior to 12 months following the Closing Date, or (ii) such claim
relates to any of the matters set forth in the first sentence of this Section
6.3, which may be asserted at any time prior to the expiration of such
representations.

       

      6.4           Sole Basis for
Recovery.  The parties intend Article 6 to be the exclusive
method for compensating Buyer for claims relating to the Company and the
transactions contemplated by this Agreement.

       

      6.5           Insurance.  With
respect to any matter covered by this Article 6, the Company shall use
reasonable efforts to assert a claim under any applicable insurance policy and
any indemnification claim shall be net of any insurance proceeds received by the
Buyer.

       

      7.          
  Miscellaneous.

       

      7.1           Notices.  All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or sent by fax during
normal business hours of the recipient, the next business day if sent by a
national overnight delivery service, charges prepaid, or three days after mailed
by certified or registered mail, postage prepaid, return receipt requested, to
the parties, their successors in interest or their assignees at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid.

       

      7.2           Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE.

       

      7.3           Counterparts.  This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute but one and
the same instrument.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      7.4           Indemnification for
Brokerage.  Buyer and the Company each represent and warrant
that no broker or finder has acted on its behalf in connection with this
Agreement or the transactions contemplated hereby.  In addition to the
indemnification obligations contained in Section 6, each party hereto agrees to
indemnify and hold harmless the others from any claim or demand for commissions
or other compensation by any broker, finder or similar agent who is or claims to
have been employed by or on behalf of such ply.

       

      7.5           Complete
Agreement.  This Agreement, the Schedules hereto and the
documents delivered pursuant to this Agreement form or will form the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and shall supersede all previous oral and written and all
contemporaneous oral negotiations, commitments, and understandings.

       

      7.6           Interpretation.  The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.

       

      7.7           Severability.  Any
provision of this Agreement which is invalid, illegal, or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality, or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provision of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction.

       

      7.8           Knowledge; Due Diligence
Investigation.  All representations and warranties contained
herein which are made to the knowledge of the Company shall mean to the
knowledge of David M. Morse, Joseph Scalisi and Desiree Mejia (“Executive
Officers”).  The Executive Officers shall be deemed to have
“knowledge” of a matter for purposes of the warranties and representations
contained herein if such matter has come, or should reasonably be expected to
have come, to the attention of the Executive Officers of the Company after
conducting a reasonable investigation.

       

      7.9           Expenses of
Transactions.  All fees, costs and expenses incurred by Buyer
or the Company in connection with the transactions contemplated by this
Agreement shall be borne by the party incurring the same.

       

      7.10         Amendment.  The
terms of this Agreement can be amended only by a written agreement of the Buyer
and the Company.

       

      7.11         Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to each other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the undersigned duly execute this Agreement as of the date
first written above.

       

      COMPANY:

       

      LOCATION
BASED TECHNOLOGIES, INC.

      a
Nevada corporation

       

      
        
          	
                  By:

                	 	 	
                   

                	 
	
                  David
      M. Morse, Chief Executive Officer

                	 	 	
                   

                	 

        

      

      
         

        
          
            	
                    By:

                  	 	 	
                     

                  	 
	
                    Desiree
      Mejia, Secretary

                  	 	 	
                     

                  	 

          

        

         

      

      BUYER:

      
        
          
            
              	
                       

                    	 	 	
                       

                    	 
	
                      

                        ORI
      Services Corp.

                        4565
      Ruffin St., Ste. 201

                        San
      Diego, CA 92111

                      

                    	 	 	
                       

                    	 

            

          

           

           

          8

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