THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER ANY
APPLICABLE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER SUCH STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION AND/OR QUALIFICATION IS NOT REQUIRED.
TORNADO GOLD INTERNATIONAL CORP.
SPECIAL WARRANT TO ACQUIRE SHARES OF COMMON STOCK
No. SW-00001 July 14, 2006
5,000,000 Special Warrants to Acquire
Shares of Common Stock
FOR VALUE RECEIVED, Tornado Gold International Corp., a Nevada corporation
with its principal office located at 0000 Xxxxxxxxxx Xxx, Xxxxx 000, Xxxx,
Xxxxxx 00000 (the "Company"), hereby certifies that Credit Suisse Client Nominee
(UK) Limited, its successor or permitted assigns (the "Holder"), holds that
number of Special Warrants set forth above and is entitled, subject to the
provisions of this Special Warrant certificate, to acquire from the Company, at
the times specified herein and without payment of additional consideration, one
(1) fully paid and non-assessable share of Common Stock of the Company, par
value $.001 per share (the "Common Stock"), for each Special Warrant, subject to
adjustments as set forth herein.
Notwithstanding anything contained herein to the contrary, the Warrant
represented by this certificate shall not be exercisable by the Holder, in whole
or in part, and the Company shall not give effect to any such exercise of the
Warrant, if, after giving effect to such exercise, the Holder, together with any
Affiliate of the Holder (including any person or company acting jointly or in
concert with the Holder) would in the aggregate beneficially own, or exercise
control or direction over that number of voting securities of the Company which
is 9.99% or greater of the total issued and outstanding voting securities of the
Company, immediately after giving effect to such exercise; provided, however,
that upon a holder of this Warrant providing the Company with sixty-one (61)
days notice (the "Waiver Notice") that such Holder would like to waive this
paragraph with regard to any or all shares of Common Stock issuable upon
exercise of this Warrant, this paragraph will be of no force or effect with
regard to all or a portion of the Warrant referenced in the Waiver Notice. For
the purposes of this paragraph, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended.
1. Definitions. (a) The following terms, as used herein, have the
following meanings:
"Affiliate" shall have the meaning given to such term in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934, as amended.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of Reno, Nevada, are authorized by law to
close.
"Common Stock" means the Common Stock, par value $.001 per share, of the
Company.
"Duly Endorsed" means duly endorsed in blank by the Person or Persons in
which whose name a stock certificate is registered or accompanied by a duly
executed stock assignment separate from the certificate with the signatures(s)
thereon guaranteed by a commercial bank or trust company or a member of a
national securities exchange act or of the National Association of Securities
Dealers, Inc.
"Exercise Date" means the date a Warrant Exercise Notice is delivered to
the Company in the manner provided in Section 8 below.
"Expiry Date" is July 14, 2016.
"Initial Warrant Exercise Date" means the date hereof.
"Person" means an individual, partnership, corporation, trust, joint stock
company, association, joint venture, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Principal Market" means the National Association of Securities Dealers
electronic over-the-counter bulletin board ("OTCBB"), or if not quoted on the
OTCBB, the primary securities exchanges or market on which such security may at
the time be listed or quoted for trading.
"Securities Act" means the Securities Act of 1933, as amended.
"Subscription Agreement" means the Subscription Agreement dated July 13,
2006, between the original holder of this Warrant and the Company.
"Warrant Shares" means the shares of Common Stock deliverable upon
exercise of this Warrant, as adjusted from time to time.
2. Exercise of Special Warrant.
(a) Voluntary Exercise. The Holder is entitled to exercise these
Special Warrants in whole or in part at any time on or after the Initial Warrant
Exercise Date until the Expiration Date. To exercise this Warrant, the Holder
shall execute and deliver to the Company a Warrant Exercise Notice substantially
in the form annexed hereto. No earlier than five (5) days after delivery of the
Warrant Exercise Notice, the Holder shall deliver to the Company this Warrant
Certificate, including the Warrant Exercise Subscription Form forming a part
hereof duly executed by the Holder, together with payment of the applicable
Exercise Price. Upon such delivery and payment, the Holder shall be deemed to be
the holder of record of the Warrant Shares subject to such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Warrant Shares shall not then be
actually delivered to the Holder.
(b) Mandatory Exercise. If any Special Warrants have not been
voluntarily exercised by the holders thereof prior to the Expiry Time, then such
Special Warrants will be deemed to have been exercised, delivered and
surrendered by the holder thereof immediately prior to the Expiry Time without
any further action on the part of the holder. The Company shall issue Warrant
Shares upon such deemed exercise without notice or surrender of this Warrant
Certificate.
(c) If the Holder exercises this Warrant in part, this Warrant
Certificate shall be surrendered by the Holder to the Company and a new Warrant
Certificate of the same tenor and for the unexercised number of Warrant Shares
shall be executed by the Company. The Company shall register the new Warrant
Certificate in the name of the Holder or in such name or names of its transferee
pursuant to paragraph 5 hereof as may be directed in writing by the Holder and
deliver the new Warrant Certificate to the Person or Persons entitled to receive
the same.
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(d) In the event of any exercise of the rights represented by these
Special Warrants in accordance with and subject to the terms and conditions
hereof, certificates for the shares of Warrant Shares 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").
(e) Upon surrender of this Warrant Certificate in conformity with
the foregoing provisions, the Company shall transfer to the Holder of this
Warrant Certificate appropriate evidence of ownership of the shares of Warrant
Shares or other securities or property to which the Holder is entitled,
registered or otherwise placed in, or payable to the order of, the name or names
of the Holder or such transferee as may be directed in writing by the Holder,
and shall deliver such evidence of ownership and any other securities or
property to the Person or Persons entitled to receive the same.
3. Restrictive Legend and Registration.
(a) Certificates representing shares of Common Stock issued pursuant
to this Warrant shall bear a legend substantially in the form of the legend set
forth on the first page of this Warrant Certificate to the extent that and for
so long as such legend is required pursuant to applicable law.
(b) The Company agrees to reissue these Special Warrants or
certificates representing any of the Warrant Shares, without the legend if at
such time, prior to making any transfer of any such securities, the Holder shall
give written notice to the Company upon the occurrence of: (a) either (i) the
Company has received an opinion of counsel reasonably satisfactory to the
Company, 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 Company with the Securities and Exchange
Commission and has become effective under the Securities Act, (iii) the Company
has received other evidence reasonably satisfactory to the Company that such
registration and qualification under the Securities Act and state securities
laws are not required, or (iv) the Holder provides the Company with reasonable
assurances that such security can be sold pursuant to Rule 144 under the
Securities Act; and (b) either (i) the Company has received an opinion of
counsel reasonably satisfactory to the Company, 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 Company will respond to any such
notice from a holder within three (3) business days. In the case of any proposed
transfer under this Section 3(b), the Company will use reasonable efforts to
comply with any such applicable state securities or "blue sky" laws, but shall
in no event be required, (x) to qualify to do business in any state where it is
not then qualified, (y) to take any action that would subject it to tax or to
the general service of process in any state where it is not then subject, or (z)
to comply with state securities or "blue sky" laws of any state for which
registration by coordination is unavailable to the Company. The restrictions on
transfer contained in this Section 3(b) 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 Certificate.
4. Covenants of the Company.
-3-
(a) The Company hereby agrees that at all times there shall be
reserved for issuance and delivery upon exercise of these Special Warrants such
number of its authorized but unissued shares of Common Stock or other securities
of the Company from time to time issuable upon exercise of these Special
Warrants as will be sufficient to permit the exercise in full of these Special
Warrants. All such shares shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and non-assessable, free and clear
of all liens, security interests, charges and other encumbrances or restrictions
on sale and free and clear of all preemptive rights.
(b) The Company shall not by any action, including, without
limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of these Special Warrants, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to protect
the rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (i) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of these Special
Warrants and (ii) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under these Special Warrants.
(c) Before taking any action which would result in an adjustment in
the number of shares of Common Stock for which these Special Warrants are
exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
(d) The Company covenants that during the period these Special
Warrants is outstanding, it will use its best efforts to comply with any and all
reporting obligations under the Securities Exchange Act of 1934, as amended.
(e) The Company will take all such reasonable action as may be
necessary (i) to maintain a Principal Market for its Common Shares in the United
States and (ii) to assure that such Warrant Stock may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Principal Market upon which the Common Stock may be listed.
(f) The Company shall preserve and maintain its corporate existence
and all licenses and permits that are material to the proper conduct of its
business and it shall refrain from changing its name.
(g) The Company will not close its shareholder books or records in
any manner which prevents the timely exercise of these Special Warrants.
5. Exchange, Transfer or Assignment of Warrant; Registration
(a) Each taker and holder of this Warrant Certificate by taking or
holding the same, consents and agrees that the registered holder hereof may be
treated by the Company and all other persons dealing with this Warrant
Certificate as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby.
-4-
(b) The Holder agrees that it will not transfer, hypothecate, sell,
assign, pledge or encumber any Special Warrants or Warrant Shares unless such
securities are registered under the Securities Act and registered or qualified
under any applicable state securities laws or such transfer is effected pursuant
to an available exemption from registration.
(c) The Holder of these Special Warrants has been granted certain
registration rights by the Company. The registration rights are set forth in
that certain Subscription Agreement; the terms of the Subscription Agreement are
incorporated herein by this reference. A copy of the Subscription Agreement is
available for inspection at the principal offices of the Company upon written
request.
6. Anti-Dilution Provisions. The Exercise Price in effect at any time and
the number and kind of securities purchasable upon the exercise of these Special
Warrants shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the number of Warrant
Shares shall be proportionately adjusted to reflect such dividend, distribution,
subdivision, reclassification or combination. For example, if the Company
declares a 2-for-1 stock split and the number of Warrant Shares immediately
prior to such event was 200,000, the number of Warrant Shares immediately after
such event would be 400,000. Such adjustment shall be made successively whenever
any event listed above shall occur.
(b) In the event that at any time, as a result of an adjustment made
pursuant to this Section 6, the Holder of these Special Warrants thereafter
shall become entitled to receive any shares of the Company, other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
these Special Warrants shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in this Section 6.
(c) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of these Special Warrants,
Special Warrants theretofore or thereafter issued may continue to express the
same number and kind of shares as are stated in this Warrant Certificate.
(d) In case at any time or from time to time conditions arise by
reasons of action taken by the Company, which in the reasonable opinion of its
Board of Directors, are not adequately covered by the provisions of Section 6
hereof, and which might materially and adversely affect the exercise rights of
the Holder hereof, the Board of Directors shall appoint a firm of independent
certified public accountants, which may be the firm regularly retained by the
Company, which will give their opinion upon the adjustment, if any, on a basis
consistent with the standards established in the other provisions of Section 6
necessary with respect to the number of shares of Common Stock for which these
Special Warrants are exercisable, so as to preserve, without dilution, the
exercise rights of the Holder. Upon receipt of such opinion, the Board of
Directors shall forthwith make the adjustments described therein.
7. Loss or Destruction of Special Warrant. Upon receipt by the Company of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the loss, theft, destruction or mutilation of this Warrant Certificate, and (in
the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Warrant
Certificate, if mutilated, the Company shall execute and deliver a new Warrant
Certificate of like tenor and date.
-5-
8. Notices. Any notice, demand or delivery authorized by this Warrant
Certificate shall be in writing and shall be given to the Holder or the Company,
as the case may be, at its address (or fax number) set forth below, or such
other address (or fax number) as shall have been furnished to the party giving
or making such notice, demand or delivery:
If to the Company:
Tornado Gold International Corp.
Attention: Chief Executive Officer
0000 Xxxxxxxxxx Xxx, Xxxxx 000
Xxxx, Xxxxxx 00000
Fax number: 000-000-0000
with a copy to:
(which shall not constitute notice)
Xxxxx Xxxx LLP
Attention: Xxxxxxx X. Xxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Fax number: 000-000-0000
If to the Holder:
RAB Special Situations (Master) Fund Limited
RAB Special Situations LP
c/o RAB Capital Limited
Xx. 0 Xxxx Xxxxxx
Xxxxxx X0XX 0XX
Xxxxxx Xxxxxxx
with a copy to:
(which shall not constitute notice)
Xxxxxx & Xxxxxxx LLP
Attention: Xxxxxxx Xxx
Republic Plaza Building, Suite 0000
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-5647
Fax number: 000-000-0000
Each such notice, demand or delivery shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the intended recipient confirms the receipt of such telecopy or (ii)
if given by any other means, when received at the address specified herein.
9. Rights of the Holder. Prior to exercise of any of these Special
Warrants, the Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder of the Company, including, without limitation, the right to vote, to
receive dividends or other distributions, to exercise any preemptive right or
any notice of any proceedings of the Company except as may be specifically
provided for herein.
-6-
10. GOVERNING LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING
HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF NEVADA, AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND
ENFORCED IN ACCORDANCE WITH SUCH LAWS.
11. Amendments; Waivers. Any provision of this Warrant Certificate may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, bin the case of an amendment, by the Holder and the Company, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
12. Company Reorganization. In the even of any sale of substantially all
the assets of the Company or any reorganization, reclassification, merger or
consolidation of the Company where the Company is not the surviving entity, then
as a condition to the Company entering into such transaction, the entity
acquiring such assets or the surviving entity, as the case may be, shall agree
to assume the Company's obligations hereunder.
-7-
IN WITNESS WHEREOF, the Company has duly caused these Special Warrants to
be signed by its duly authorized officer and to be dated as of July 14, 2006.
TORNADO GOLD INTERNATIONAL CORP.
By:
------------------------------------
Xxxx Xxxxxx, Chief Executive Officer
-8-
SPECIAL WARRANT EXERCISE FORM
(To be delivered prior to exercise of the Warrant
by execution of the Warrant Exercise Subscription Form)
To: Tornado Gold International Corp.
The undersigned hereby tenders for exercise ___________ Special Warrants
to acquire shares of Common Stock, par value $.0001 per share, of Tornado Gold
International Corp.
Date:____________________
--------------------------------
(Signature of Owner)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
Securities to be issued to:
---------------------------------------------------
Please insert social security or identifying number:
--------------------------
Name:
-------------------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State and Zip Code:
-----------------------------------------------------
Any unexercised portion of the Special Warrants evidenced by the within Warrant
Certificate to be issued to:
--------------------------------------------------
Please insert social security or identifying number:
Name:
-------------------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State and Zip Code:
-----------------------------------------------------
-9-
SPECIAL WARRANT ASSIGNMENT FORM
Dated ___________ ___, _____
FOR VALUE RECEIVED, _______________________ hereby sells, assigns and
transfers unto (the "Assignee"),
----------------------------------------
(please type or print in block letters)
------------------------------------------------------------------------------
(insert address)
its right to purchase up to shares of Common Stock represented by this Warrant
Certificate and does hereby irrevocably constitute and appoint
_______________________ Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
Signature:______________________________
-10-
Holder Information
--------------------------------------------------------------------------------
Holder Information Registration Information
RAB Special Situations (Master) Fund Registration of the certificates
Limited representing the Securities should be
c/o RAB Capital Plc made exactly as follows (if space is
0 Xxxx Xxxxxx insufficient, attach a list):
London WC2N 6LE Credit Suisse Client Nominees (UK)
United Kingdom Limited
Phone: 00 00 0000 0000 One Cabot Square
Fax: 00 00 0000 0000 London, United Kingdom
email: xxxxx@xxxxxx.xxx E14 4QJ
--------------------------------------------------------------------------------
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Delivery of Certificates
The certificates representing the Securities are to be delivered as
follows (if different from the address(es) set forth above):
-------------------------------------------------
Xxxxxx Feast
Street Address: Prime Brokerage Settlements
City, State, Postal/Zip Code: CSFB (Europe) Ltd.
Contact Name/Phone No.: Xxx Xxxxx Xxxxxx
Xxxxxx X00 0XX
Xxxxxx Xxxxxxx
Phone: 00 00 0000 0000
Fax: 00 00 0000 0000
--------------------------------------------------------------------------------
Notation: RAB Special Situations (Master) Fund Limited
--------------------------------------------------------------------------------
Copy of Notices to:
Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxxx Xxxxx
000 Xxxxxxxxxxx Xx.
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxx
Fax number: 000-000-0000
-11-
