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EXHIBIT 6.6
THIS WARRANT AND THE SHARES OF CAPITAL STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY
HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF IN VIOLATION OF ANY APPLICABLE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED.
TORNADO DEVELOPMENT, INC.
Class A Common Stock Purchase Warrant
Date of Issuance: April 15, 1999 Certificate No. W-3
For Value Received, Tornado Development, Inc., a California corporation
(the "Corporation"), promises to issue to Xxxxx.xxx, Inc., a Delaware
corporation or its permitted registered assigns (the "Warrantholder") 25,000
nonassessable shares (the "Shares") of the voting Class A Common Stock, no par
value per share, of the Corporation at any time on or prior to April 15, 2002
(the "Expiration Date"), upon the payment by the Warrantholder to the
Corporation of the Purchase Price and to deliver to the Warrantholder a
certificate or certificates representing the Shares purchased. The Warrantholder
shall have the right to exercise this Warrant in whole or in part at any time or
times on or prior to the Expiration Date. Subject to the conditions hereinafter
set forth, the Warrantholder may sell, assign and transfer this Warrant, in
whole or in part, and, in the event of any such sale, assignment and transfer,
the Corporation agrees to reissue a Warrant or Warrants of like tenor for the
unexercised portion hereof. The number of Shares purchasable upon exercise of
this Warrant and the Purchase Price per share shall be subject to adjustment
from time to time as set forth herein.
1. COVENANTS OF THE CORPORATION. The Corporation will at all times
reserve and keep available out of its authorized shares of Common Stock or its
treasury shares, solely for the purpose of issue upon the exercise of this
Warrant as herein provided, such number of shares of Common Stock as shall then
be issuable upon the exercise of this Warrant. The Corporation covenants that
all shares of Common Stock which shall be so issued shall be duly and validly
issued and fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof. The Corporation will take all such
action as may be necessary to assure that all such shares of Common Stock may be
so issued without violation of any applicable requirements of any federal or
state
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securities laws or of national stock exchange upon which the shares of Common
Stock of the Corporation may be listed. The Corporation will not take any action
which results in any adjustment of the Adjustment Price if the total number of
shares of Common Stock issuable after such action upon exercise of this Warrant
would exceed the total number of shares of Common Stock then authorized by the
Corporation's Certificate of Incorporation.
2. EXERCISE OF WARRANT.
2A. DIVIDENDS. No payment or adjustment shall be made upon any exercise
of this Warrant on account of any previous cash dividends.
2B. PURCHASE PRICE. The Purchase Price shall be $3.00 per share or, in
case an adjustment of such price has taken place pursuant to the further
provisions of this paragraph 2, then the Purchase Price shall be the price as
last adjusted and in effect at the date this Warrant (or any part hereof) is
surrendered for exercise (such price or such price as last adjusted, if such
price shall have been adjusted, being referred to herein as the "Purchase
Price").
2C. ADJUSTMENT OF PURCHASE PRICE. Except as provided in paragraph 2D,
if and whenever, the Corporation shall issue or sell any shares of its Common
Stock for a consideration per share less than the Adjustment Price (as
hereinafter defined) in effect immediately prior to the time of such issue or
sale, then, forthwith upon such issue or sale, the Adjustment Price shall be
reduced to the price (calculated to the nearest cent) determined by dividing (i)
an amount equal to the sum of (a) the number of shares of all classes of Common
Stock outstanding immediately prior to such issue or sale multiplied by the then
existing Adjustment Price, and (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issue or sale. The Adjustment
Price shall be the Purchase Price or, in the case an adjustment of such price
has taken place pursuant to the provisions of this paragraph 2, then the
Adjustment Price shall be the price as last adjusted and in effect at the date
this Warrant (or any part thereof) is surrendered for exercise (such price or
such price as last adjusted, if such price shall have been adjusted, being
referred to herein as the "Adjustment Price").
If and whenever the Adjustment Price shall have been adjusted, the
Purchase Price shall be forthwith adjusted to the price (calculated to the
nearest cent) determined by multiplying the Purchase Price as then in effect by
a fraction, the numerator of which shall be the Adjustment Price as so adjusted
and the denominator of which shall be the Adjustment Price as in effect
immediately prior to such adjustment. Upon each adjustment to the Purchase
Price, the Warrantholder shall thereafter be entitled to purchase, at the
Purchase Price resulting from such adjustment, the number of shares of Common
Stock obtained by multiplying the Purchase Price in effect immediately prior to
such adjustment by the number of shares of Common Stock purchasable pursuant
hereto immediately prior to such adjustment and dividing the product thereof by
the Purchase Price resulting from such adjustment.
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No adjustment of the Adjustment Price, however, shall be made in an
amount less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which together with any adjustments so carried forward shall amount
to $.01 per share or more.
For the purposes of this paragraph 2C, the following paragraphs 2C(1)
to 2C(7), inclusive, shall also be applicable: except that this warrant shall be
deemed exercised and outstanding for all purposes and computations under this
paragraph 2 and the then current Adjustment Price shall be deemed the Purchase
Price per share.
2C(1). ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any rights to subscribe for or to purchase, or any options
for the purchase of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or not such
rights or options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such rights or options or upon conversion
or exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such rights or options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon the exercise of all
such rights or options, plus, in the case of such rights or options which relate
to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of such
rights or options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options) shall be less
than the Adjustment Price in effect immediately prior to the time of the
granting of such rights or options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such rights or options shall be (as of
the date of granting of such rights or options) deemed to be outstanding and to
have been issued for such price per share. Except as otherwise provided in
paragraph 2C(3), no adjustment of the Adjustment Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities upon
exercise of such rights or options or upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
2C(2). ISSUANCE OF CONVERTIBLE SECURITIES. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, 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
(determined by dividing (i) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (ii)
the
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total maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Adjustment
Price in effect immediately prior to the time of such issue or sale, determined
as of the date of such issue or sale of such Convertible Securities, as the case
may be, then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall (as of the date
of the issue or sale of such Convertible Securities) be deemed to be outstanding
and to have been issued for such price per share, provided that (a) except as
otherwise provided in paragraph 2C(3) below, no adjustment of the Adjustment
Price shall be made upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities, and (b) if any such issue or sale of
such Convertible Securities is made upon exercise of any rights to subscribe for
or to purchase or any option to purchase any such Convertible Securities for
which adjustments of the Adjustment Price have been or are to be made pursuant
to other provisions of this paragraph 2C, no further adjustment of the
Adjustment Price shall be made by reason of such issue or sale.
2C(3). CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening of
any of the following events, namely, if the purchase price provided for in any
right or option referred to in paragraph 2C(l), the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities
referred to in paragraph 2C(l) or 2C(2), or the rate at which any Convertible
Securities referred to in paragraph 2C(l) or 2C(2) are convertible into or
exchangeable for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution), the Adjustment Price
in effect at the time of such event shall forthwith be readjusted to the
Adjustment Price which would have been in effect at such time had such rights,
options or Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the case may be,
at the time initially granted, issued or sold; and on the expiration of any such
option or right or the termination of any such right to convert or exchange such
Convertible Securities, the Adjustment Price then in effect hereunder shall
forthwith be increased to the Adjustment Price which would have been in effect
at the time of such expiration or termination had such right, option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the Common Stock issuable
thereunder shall no longer be deemed outstanding. If the purchase price provided
for in any such right or option referred to in paragraph 2C(l), or the rate at
which any Convertible Securities referred to in paragraph 2C(l) or 2C(2) are
convertible into or exchangeable for Common Stock, shall be reduced at any time
under or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon the exercise
of any such right or option or upon conversion or exchange of any such right or
option or upon conversion or exchange of any such Convertible Securities, the
Adjustment Price then in effect hereunder shall forthwith be adjusted to such
respective amount as would have obtained had such right, option or Convertible
Security never been issued as to such Common Stock and had adjustment been made
upon the issuance of the shares of Common Stock delivered as aforesaid, but only
if as a result of such adjustment the Adjustment Price then in effect hereunder
is thereby reduced.
2C(4). STOCK DIVIDENDS. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock or Convertible Securities,
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any Common Stock or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been issued or
sold without consideration.
2C(5). CONSIDERATION FOR STOCK. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation in
connection therewith. In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, after
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any shares of Common Stock or Convertible Securities or any rights or options to
purchase such Common Stock or Convertible Securities shall be issued in
connection with any merger in which the Corporation is the surviving
corporation, the amount of consideration therefor shall be deemed to be the fair
value as determined in good faith by the Board of Directors of the Corporation
of such portion of the assets and business of the nonsurviving corporation as
such Board shall determine to be attributable to such Common Stock, Convertible
Securities, rights or options, as the case may be. In case any rights or options
to purchase any shares of Common Stock or Convertible Securities shall be issued
in connection with the issue and sale of other securities of the Corporation,
together comprising one integral transaction in which no specific consideration
is allocated to such rights or options by the parties thereto, such rights or
options shall be deemed to have been issued without consideration. In the event
of any consolidation or merger of the Corporation in which the Corporation is
not the surviving corporation or in the event of any sale of all or
substantially all of the assets of the Corporation for stock or other securities
of any corporations, the Corporation shall be deemed to have issued a number of
shares of its Common Stock for stock or securities 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 such stock or securities of the other corporation, and if
any such calculation results in adjustment of the Adjustment Price, the
determination of the number of shares of Common Stock receivable upon exercise
of this Warrant immediately prior to such merger, consolidation or sale, for
purposes of paragraph 2E, shall be made after giving effect to such adjustment
of the Adjustment Price.
2C(6). RECORD DATE. In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock or in Convertible
Securities, or (ii) to subscribe for or purchase Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
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2C(7). TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition of any such shares be
considered an issue or sale of Common Stock for the purposes of this paragraph
2C.
2D. SUBDIVISION OR COMBINATION OF STOCK. In case the Corporation shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Adjustment Price and the Purchase Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock of the Corporation
shall be combined into a smaller number of shares, the Adjustment Price and the
Purchase Price in effect immediately prior to such combination shall be
proportionately increased.
2E. NO ADJUSTMENTS FOR CERTAIN EVENTS. The Corporation shall not be
required to make any adjustment of the Current Conversion Price in the case of
(1) the granting by the Corporation from and after the date
hereof of stock options to its employees, consultants and directors to
purchase up to a maximum 1,000,000 shares of Class B Non-Voting Common
Stock of the Corporation pursuant to the 1997 Tornado, Inc. Amended and
Restated Stock Plan (effective July 2, 1997) (the "1997 Plan"), or
(2) the issuance of shares of Class B Non-Voting Common Stock
pursuant to the exercise of stock options granted pursuant to the 1997
Plan, whether granted prior to or subsequent to the date of this Note,
or
(3) the issuance of shares of Common Stock pursuant to the
conversion of (i) the Series A Preferred Stock of the Corporation or
(ii) that certain Convertible Promissory Note (the "Note") of even date
herewith in the original principal amount of $1,000,000.00 payable by
the Corporation to Xxxxx.xxx, Inc. a Delaware corporation, or (iii)
upon exercise of that certain warrant or those certain warrants (the
"Service Warrants") for the purchase of up to 63,333 shares of the
Common Stock of the Corporation to be granted by the Corporation to
Xxxxx & Company or its principals for services rendered to the
Corporation, or
(4) the issuance of such additional shares of Class B
Non-Voting Common Stock as may be issuable upon the exercise of stock
options granted pursuant to the 1997 Plan, or the issuance of such
additional shares of Common Stock as may be issuable upon the
conversion of the Series A Preferred Stock of the Corporation, or the
issuance of such additional shares of Common Stock as may be issuable
upon the conversion of the Note, in each case, as a result of
adjustment in the number of shares covered thereby for stock dividends,
stock splits or other changes in the capitalization of the Corporation.
2F. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any capital reorganization or reclassification of the capital stock of the
Corporation, or any consolidation or merger of the Corporation with another
corporation, or the sale of all or substantially all of its assets
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to another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, exercise, merger or sale, lawful and adequate
provisions shall be made whereby the holder of this Warrant shall thereafter
have the right to receive, upon the basis and upon the terms and conditions
specified herein, and in lieu of the shares of Common Stock of the Corporation
immediately theretofore receivable upon the exercise of this Warrant, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore receivable upon
the exercise of this Warrant had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of such holder
to the end that the provisions hereof (including without limitation provisions
for adjustments of the Adjustment Price) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights (including an
immediate adjustment, by reason of such consolidation or merger, of the
Adjustment Price to the value for the Common Stock reflected by the terms of
such consolidation or merger if the value so reflected is less than the
Adjustment Price in effect immediately prior to such consolidation or merger).
In the event of a merger or consolidation of the Corporation with or into
another corporation as a result of which a greater or lesser number of shares of
common stock of the surviving corporation are issuable to holders of Common
Stock of the Corporation outstanding immediately prior to such merger or
consolidation, then the Adjustment Price and Purchase Price in effect
immediately prior to such merger or consolidation shall be adjusted in the same
manner as though there were a subdivision or combination of the outstanding
shares of Common Stock of the Corporation. The Corporation will not effect any
such consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument executed and mailed or delivered to the registered holder
hereof at the last address of such holder appearing on the books of the
Corporation, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to receive. If a purchase, tender or exchange offer is
made to and accepted by the holders of more than 50% of the outstanding shares
of Common Stock of the Corporation, the Corporation shall not effect any
consolidation, merger or sale with the Person having made such offer or with any
Affiliate of such Person, unless prior to the consummation of such
consolidation, merger or sale the holder hereof shall have been given a
reasonable opportunity to then elect to receive, upon exercise of this Warrant,
either the stock, securities or assets then issuable with respect to the Common
Stock of the Corporation or the stock, securities or assets, or the equivalent,
issued to previous holders of the Common Stock in accordance with such offer.
2G. NOTICE OF ADJUSTMENT. Upon any adjustment of the Adjustment Price
and the Purchase Price, then and in each such case the Corporation shall give
written notice thereof, which notice shall state the Adjustment Price and the
Purchase Price resulting from such adjustment, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
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2H. OTHER NOTICES. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in stock;
(2) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any
class or other rights;
(3) there shall be any capital reorganization, or
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of all or
substantially all of its assets to, another Corporation; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation; then, in any one or more
of said cases, the Corporation shall give, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, and (b) in the case of any such
reorganization, reclassification, consolidation, merger sale,
dissolution, liquidation or winding up, at least 20 days' prior written
notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution or subscription rights, the
date on which the holders of Common Stock shall be entitled thereto,
and such notice in accordance with the foregoing clause (b) shall also
specify the date on which the holders of Common Stock shall be entitled
to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may
be.
2I. DEFINITION OF COMMON STOCK. As used in this paragraph 2, the term
"Common Stock" shall mean and include all of Corporation's authorized common
stock, no par value per share, of any class as constituted on the effective date
hereof, and shall also include any capital stock of any class of the Corporation
thereafter authorized which shall not be limited to a fixed sum or percentage of
par value in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
2J. LISTING. If any shares of Common Stock required to be reserved for
purposes of exercise of this Warrant require listing on any national securities
exchange, before such shares may be issued upon exercise, the Corporation will
at its expense and as expeditiously as possible, use its best efforts to cause
such shares to be duly approved for listing or listed on such national
securities exchange.
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2K. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the holder hereof
for any issuance tax in respect thereof, provided that the Corporation shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the holder of this Warrant.
2L. CLOSING OF BOOKS. The Corporation will not close its books against
the transfer of any shares of Common Stock issued or issuable upon the exercise
of this Warrant.
3. TRANSFERABILITY AND STANDOFF PROVISIONS. The Warrantholder agrees
not to make any disposition of all or any portion of this Warrant or the Shares
unless and until: (i) there is then in effect a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), covering such
proposed disposition (and such disposition is registered or qualified under all
applicable state securities laws) and such disposition is made in accordance
with such registration statement and all requirements of applicable federal and
state securities laws; or (ii) (A) the Warrantholder shall have notified the
Corporation of the proposed disposition and shall have furnished the Corporation
with a detailed statement of the circumstances surrounding the proposed
disposition, and (B) if requested by the Corporation, the Warrantholder shall
have furnished the Corporation with an opinion of counsel, satisfactory in form
and substance to the Corporation, that such disposition will not require
registration or qualification under the Securities Act or any state securities
laws.
In the discretion of the Corporation, the Corporation may
condition any transfer of all or any portion of this Warrant or the Shares
(other than a disposition satisfying the conditions set forth in clause (i)
above) upon the transferee's delivery to the Corporation of a written agreement,
in form and substance satisfactory to the Corporation, whereby the transferee
(i) makes such representations and warranties to and for the benefit of the
Corporation as are comparable to the representations and warranties of the
Purchaser of this Warrant as set forth in investor letter delivered to the
Corporation by the Purchaser on the Issue Date, as and to the extent applicable
to the proposed disposition, and (ii) agrees to be bound by the transfer
restrictions set forth in this paragraph. Subject to the foregoing, this Warrant
and all rights hereunder are transferable, in whole or in part, to any Person.
The Warrantholder upon transfer of the Warrant must deliver to the Corporation a
duly executed Warrant Assignment in the form of Exhibit II hereto, with funds
sufficient to pay any transfer tax imposed in connection with such assignment
(if any) and upon surrender of this Warrant to the Corporation. The Corporation
shall execute and deliver a new Warrant in the form of this Warrant with
appropriate changes to reflect such Assignment, in the name or names of the
assignee or assignees specified in the fully executed Warrant Assignment or
other instrument of assignment and, if the Warrantholder's entire interest is
not being transferred or assigned, in the name of the Warrantholder, and this
Warrant shall promptly be canceled. Any transfer or exchange of this Warrant
Certificate shall be without charge to the Warrantholder (except as provided
above with respect to income and transfer taxes, if any) and any new Warrant
issued shall be dated the date hereof. The terms "Warrant" and "Warrantholder"
as used herein include all Warrants into which this Warrant (or any successor
Warrant) may be exchanged or issued in connection with the transfer or
assignment of this Warrant any successor Warrant) and the holders of those
Warrants, respectively.
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Each certificate for Shares issued upon exercise of this
Warrant, unless at the time of exercise the Shares are registered under the
Securities Act, shall bear the following legend (in addition to any legend
required by any state securities laws):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES LAWS. THIS SECURITY AND MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY
IN FORM AND SUBSTANCE TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UNDER A
CERTAIN STOCK PURCHASE WARRANT ISSUED BY THE COMPANY ON APRIL
15, 1999.
Any certificate for Shares issued at any time in exchange or
substitution for any certificate bearing such legend (unless at that time such
Shares is registered under the Securities Act) shall also bear such legend
unless, in the written opinion of counsel selected by the holder of such
certificate, which counsel and opinion (in form and substance) shall be
reasonably acceptable to the Corporation, the Shares represented thereby need no
longer be subject to restrictions on resale under the Securities Act. The
Corporation is authorized to notify its transfer agent of the status of any
securities bearing the foregoing legend(s) and to take such other action as
shall be reasonable and proper to prevent any violation of the Securities Act or
any state securities laws.
Each Warrantholder hereby agrees that, if requested, it will
not, without the prior written consent of the managing underwriter, during the
period commencing on the date of the final prospectus relating to the
Corporation's initial underwritten public offering of Common Stock (the "Initial
Offering") and ending on the date specified by the Corporation and the managing
underwriter (such period not to exceed 90 days) (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (whether such shares or any such securities are then owned by the
Warrantholder or are thereafter acquired, excluding however, shares of Common
Stock issued by the Corporation to the underwriters in the Initial Offering), or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing provisions of this Section paragraph shall only be
applicable to the Initial Offering. The underwriters in connection with the
Corporation's Initial
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Offering are intended third party beneficiaries of this paragraph and shall have
the right, power and authority to enforce the provisions hereof as though they
were a party hereto.
4. NOTICE. Any notice or other document required or permitted to be
given or delivered to the Warrantholder(s) and holder(s) of shares issued upon
exercise of this Warrant shall be sent by certified or registered mail, return
receipt requested, to the Warrantholder at the address as it appears in the
records of the Corporation, or at such other address as the holder(s) shall
furnish to the Corporation in writing. Any notice or other document required or
permitted to be given or delivered to the Corporation at its address stated
above or such other address as shall have been furnished to the Warrantholder(s)
and holder(s) of Shares by the Corporation.
5. EXERCISE OF WARRANT. In order to exercise this Warrant, the
Warrantholder shall deliver to the Corporation (i) a written notice specifying
the number of shares of Common Stock to be purchased, of such holder's election
to exercise this Warrant, and (ii) payment in cash or by a certified or
cashier's check or by credit of an amount equal to the aggregate purchase price
of the Shares being purchased (as if the amount had been prepaid) against the
principal balance of any obligation due from the Corporation held by the
Warrantholder(s). The Corporation may require the Warrantholder to furnish a
written statement that the Shares are being purchased for its own account and
not with a view to the distribution thereof. Upon receipt of written notice, the
Corporation shall as promptly as practicable execute or cause to be executed and
deliver to such holder a certificate or certificates representing the aggregate
number of Shares purchased. If this Warrant shall have been exercised only in
part, the Corporation shall also deliver a new Warrant of like tenor evidencing
the rights of such holder to purchase the remaining Shares called for by this
Warrant.
6. LIMITATION OF LIABILITY. No provisions hereof, in the absence of
affirmative action by the Warrantholder to purchase shares hereunder, and no
mere enumeration herein of the rights or privileges of the Warrantholder shall
give rise to any liability of such holder for the Purchase Price or as a
shareholder of the Corporation (whether such liability is asserted by the
Corporation or creditors of the Corporation).
7. CONDITIONAL CANCELLATION OF WARRANT. Notwithstanding any other
provision hereof to the contrary, if Xxxxx.xxx, Inc., a Delaware corporation
("Xxxxx.xxx"), does not, subject to the terms and conditions of that certain
Convertible Promissory Note (the "Note") of even date herewith in the original
principal amount of $1,000,000.00 payable by the Corporation to the order of
Xxxxx.xxx, and provided that no Event of Default (as defined in the Note) has
occurred and is continuing, make, or cause to be made, the second advance of
$500,000.00 pursuant to the Note, then, in such event, this Warrant shall be
automatically cancelled and shall thereafter be of no further force or effect.
If such second advance is not made because an Event of Default has occurred and
is continuing, then this Warrant shall remain in full force and effect in
accordance with its terms.
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed by its President or a Vice President, thereunto duly authorized, on and
effective for all purposes as of the date of issuance set forth above.
TORNADO DEVELOPMENT, INC.
ATTEST:
By: By:
-------------------------------- --------------------------------
Secretary President
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