1
EXHIBIT 10.6
The Warrant and the securities issuable upon exercise of this Warrant (the
"Securities") have not been registered under the Securities Act of 1933 (the
"Securities Act") or under any state securities or Blue Sky laws ("Blue Sky
Laws"). No transfer, sale, assignment, pledge, hypothecation or other
disposition of this Warrant or the Securities or any interest therein may be
made except (a) pursuant to an effective registration statement under the
Securities Act and any applicable Blue Sky Laws or (b) if the Company has been
furnished with both an opinion of counsel for the holder, which opinion and
counsel shall be reasonably satisfactory to the Company, to the effect that no
registration is required because of the availability of an exemption from
registration under the Securities Act and applicable Blue Sky Laws, and
assurances that the transfer, sale, assignment, pledge, hypothecation or other
disposition will be made only in compliance with the conditions of any such
registration or exemption.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF CAFE ODYSSEY, INC.
WARRANT NO. FP-1 Bloomington, Minnesota
August 24, 1999
This certifies that, for value received, FAIRVIEW PARTNERS, or its
successors or assigns (the "Holder") is entitled to purchase from Cafe Odyssey,
Inc. (the "Company") Five Hundred Thousand (500,000) fully paid and
nonassessable shares (the "Shares") of the Company's Common Stock, $.01 par
value (the "Common Stock") at an exercise price of $2.50 per share (the
"Exercise Price"), subject to adjustment as herein provided. This Warrant may be
exercised by Holder at any time after the date hereof; provided that, Holder
shall in no event have the right to exercise this Warrant or any portion thereof
later than August 24, 2004.
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise of Warrant. The rights represented by this Warrant may be
exercised by the Holder, in whole or in part (but not as to a fractional share
of Common Stock), by the surrender of this Warrant (properly endorsed, if
required, at the Company's principal office in Bloomington, Minnesota, or such
other office or agency of the Company as the Company may designate by notice in
writing to the Holder at the address of such Holder appearing on the books of
the Company at any time within the period above named), and upon payment to it
by certified check, bank draft or cash of the purchase price for such Shares.
The Company agrees that the Shares so purchased shall have and are deemed to bez
issued to the Holder as the record owner of such Shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such Shares as aforesaid. Certificates for the Shares of Common
Stock so purchased shall be delivered to the Holder within a reasonable time,
not exceeding ten (10) days, after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant
representing the number of Shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be delivered to the Holder within
such time. The Company may require that any such new Warrant or any certificate
for Shares purchased upon the exercise hereof bear a legend substantially
similar to that which is contained on the face of this Warrant.
2. Transferability of this Warrant. This Warrant is issued upon the
following terms, to which Holder consents and agrees:
2
a. Until this Warrant is transferred on the books of the Company,
the Company will treat the Holder of this Warrant registered as such on
the books of the Company as the absolute owner hereof for all purposes
without being affected by any notice to the contrary.
b. This Warrant may not be exercised, and this Warrant and the
Shares underlying this Warrant shall not be transferable, except in
compliance with all applicable state and federal securities laws,
regulations and orders, and with all other applicable laws, regulations
and orders.
c. The Warrant may not be transferred, and the Shares underlying
this Warrant may not be transferred, without the Holder obtaining an
opinion of counsel satisfactory in form and substance to the Company's
counsel stating that the proposed transaction will not result in a
prohibited transaction under the Securities Act of 1933, as amended
("Securities Act"), and applicable Blue Sky laws. By accepting this
Warrant, the Holder agrees to act in accordance with any conditions
reasonably imposed on such transfer by such opinion of counsel.
d. Neither this issuance of this Warrant nor the issuance of the
Shares underlying this Warrant have been registered under the
Securities Act.
3. Certain Covenants of the Company. The Company covenants and agrees
that all Shares which may be issued upon the exercise of the rights represented
by this Warrant, upon issuance and full payment for the Shares so purchased,
will be duly authorized and issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue hereof, except those that
may be created by or imposed upon the Holder or its property, and without
limiting the generality of the foregoing, the Company covenants and agrees that
it will from time to time take all such actions as may be requisite to assure
that the par value per share of the Common Stock is at all times equal to or
less than the effective purchase price per share of the Common Stock issuable
pursuant to this Warrant. The Company further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved free of preemptive or
other rights for the exclusive purpose of issue upon exercise of the purchase
rights evidenced by this Warrant, a sufficient number of shares of its Common
Stock to provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Exercise Price and Number of Shares. The Exercise
Price and number of Shares are subject to the following adjustments:
a. Adjustment of Exercise Price for Stock Dividend, Stock Split or
Stock Combination. In the event that (i) any dividends on any class of
stock of the Company payable in Common Stock or securities convertible
into or exercisable for Common Stock ("Common Stock Equivalents") shall
be paid by the Company, (ii) the Company shall subdivide its then
outstanding shares of Common Stock into a greater number of shares, or
(iii) the Company shall combine its outstanding shares of Common Stock,
by reclassification or otherwise, then, in any such event, the Exercise
Price in effect immediately prior to such event shall (until adjusted
again pursuant hereto) be adjusted immediately after such event to a
price (calculated to the nearest full cent) determined by dividing (a)
the number of shares of Common Stock outstanding immediately prior to
such event, multiplied by the then existing Exercise Price, by (b) the
total number of shares of Common Stock outstanding immediately after
such event, and the resulting quotient shall be the adjusted Exercise
Price per share. No adjustment of the Exercise Price
2
3
shall be made if the amount of such adjustment shall be less than $.05
per share, but in such case any adjustment that would otherwise be
required then to be made shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried forward, shall
amount to not less than $.05 per share.
b. Adjustment of Number of Shares Purchasable on Exercise of
Warrants. Upon each adjustment of the Exercise Price pursuant to this
Section, the Holder shall thereafter (until another such adjustment) be
entitled to purchase at the adjusted Exercise Price the number of
shares, calculated to the nearest full share, obtained by multiplying
the number of shares specified in such Warrant (as adjusted as a result
of all adjustments in the Exercise Price in effect prior to such
adjustment) by the Exercise Price in effect prior to such adjustment
and dividing the product so obtained by the adjusted Exercise Price.
c. Notice as to Adjustment. Upon any adjustment of the Exercise
Price and any increase or decrease in the number of shares of Common
Stock purchasable upon the exercise of the Warrant, then, and in each
such case, the Company within thirty (30) days thereafter shall give
written notice thereof, by first class mail, postage prepaid, addressed
to each Holder as shown on the books of the Company, which notice shall
state the adjusted Exercise Price and the increased or decreased number
of shares purchasable upon the exercise of the Warrants, and shall set
forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
d. Effect of Reorganization, Reclassification, Merger, etc. If
at any time while this Warrant is outstanding there should be (i) any
capital reorganization of the capital stock of the Company (other than
the issuance of any shares of Common Stock in subdivision of
outstanding shares of Common Stock by reclassification or otherwise and
other than a combination of shares provided for in Section 4(a)
hereof), (ii) any consolidation or merger of the Company with another
corporation, or any sale, conveyance, lease or other transfer by the
Company of all or substantially all of its property to any other
corporation, which is effected in such a manner that the holders of
Common Stock shall be entitled to receive cash, stock, securities, or
assets with respect to or in exchange for Common Stock, or (iii) any
dividend or any other distribution upon any class of stock of the
Company payable in stock of the Company of a different class, other
securities of the Company, or other property of the Company (other than
cash), then, as a part of such transaction, lawful provision shall be
made so that Holder shall have the right thereafter to receive, upon
the exercise hereof, the number of shares of stock or other securities
or property of the Company, or of the successor corporation resulting
from such consolidation or merger, or of the corporation to which the
property of the Company has been sold, conveyed, leased or otherwise
transferred, as the case may be, which the Holder would have been
entitled to receive upon such capital reorganization, reclassification
of capital stock, consolidation, merger, sale, conveyance, lease or
other transfer, if this Warrant had been exercised immediately
prior to such capital reorganization, reclassification of capital
stock, consolidation, merger, sale, conveyance, lease or other
transfer. In any such case, appropriate adjustments (as determined by
the Board of Directors of the Company) shall be made in the application
of the provisions set forth in this Warrant (including the adjustment
of the Exercise Price and the number of Shares issuable upon the
exercise of the Warrant) to the end that the provisions set forth
herein shall thereafter be applicable, as near as reasonably may be, in
relation to any shares or other property thereafter deliverable upon
the exercise of the Warrant as if the Warrant had been exercised
immediately
3
4
prior to such capital reorganization, reclassification of capital
stock, such consolidation, merger, sale, conveyance, lease or other
transfer and the Holder had carried out the terms of the exchange as
provided for by such capital reorganization, consolidation or merger.
The Company shall not effect any such capital reorganization,
consolidation, merger or transfer unless, upon or prior to the
consummation thereof, the successor corporation or the corporation to
which the property of the Company has been sold, conveyed, leased or
otherwise transferred shall assume by written instrument the obligation
to deliver to the Holder such shares of stock, securities, cash or
property as in accordance with the foregoing provisions such Holder
shall be entitled to purchase.
5. No Rights as Stockholders. This Warrant shall not entitle the
Holder as such to any voting rights or other rights as a stockholder of the
Company.
6. Registration Rights.
a. Piggyback Registration Rights. Provided that the Shares are not
then included in a current registration statement of the Company, if
the Company, at any time before the fifth anniversary of the issuance
of this Warrant, shall file a registration statement with the
Securities and Exchange Commission ("SEC") under the Securities Act of
1933, as amended, for the purpose of registering shares of Common Stock
for sale to the public, the Company shall give to the Holder at least
twenty (20) days advance written notice of its intention to file such
registration statement and Holder shall have the right to have included
in such registration statement such number of the Shares as it shall
designate to the Company within ten (10) days after the date of such
notice, provided that the number of Shares to be included in such
registration statement, when added to all the other shares to be
included therein, does not exceed the number of shares which the
Company and its underwriters, if any, reasonably fix for inclusion. If
the number of Shares to be included in such registration statement is
less than the total number of Shares which the Holder has requested to
be included, then the Holder and other holders of shares of Common
Stock or other securities of the Company entitled to include shares of
Common Stock in such registration shall participate in the underwriting
pro rata based upon the total number of shares of Common Stock
requested to be registered by all of such holders. The Holder shall
furnish the Company with such information as may be required in
connection with such registration statement and will cooperate to cause
such registration to become effective at the earliest practicable time.
If the shares to which such registration relates are to be sold in an
underwritten offering, the Holder, as a condition to the inclusion of
the shares in the registration statement, shall agree that its Shares
will be sold only as a part of such underwritten offering and at the
price and upon the terms fixed by the Company and its underwriters,
subject to the right of the Holder to withdraw the Shares therefrom.
b. Demand Registration Rights. On a one-time basis only, during
the three year period commencing two years after the date of this
Warrant, upon request by the Holder or Holders of a majority in
interest of this Warrant, and of any Shares, the Company will promptly
take all necessary steps to register or qualify, under the 1933 Act and
the securities laws of such states as the holders may reasonably
request, such number of Shares issued and to be issued upon conversion
of the Warrants and shares of common stock of the Company
4
5
owned at such time by such holders pursuant to the conversion of that
certain $2,000,000 Senior Convertible Note issued as of the date of
this Warrant requested by such holders in their request to the Company.
The Company shall keep effective and maintain any registration,
qualification, notification, or approval specified in this section for
such period as may be reasonably necessary for such Holder or Holders
of this Warrant and/or such Shares to dispose thereof and from time to
time shall amend or supplement the prospectus used in connection
therewith to the extent necessary in order to comply with applicable
law.
7. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Minnesota.
8. Amendments and Waivers. The provisions of this Warrant may not be
amended, modified or supplemented, and waiver or consents to departures from the
provisions hereof may not be given, unless the Company agrees in writing and has
obtained the written consent of the Holder.
9. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the Holder
shall be mailed, delivered, or telefaxed and confirmed to the Holder at his or
her address set forth on the records of the Company; or if sent to the Company
shall be mailed, delivered, or telefaxed and confirmed to Cafe Odyssey, Inc.,
4801 West 81st Street, Suite 112, Bloomington, MN 55437 or to such other address
as the Company or the Holder shall notify the other as provided in this Section.
[The remainder of this page has been intentionally left blank.]
5
6
IN WITNESS WHEREOF, Cafe Odyssey, Inc. has caused this Warrant to be
signed by its duly authorized officer in the date set forth above.
CAFE ODYSSEY, INC.
By
----------------------------------
Its
---------------------------------
6
7
SUBSCRIPTION FORM
To be signed only upon exercise of Warrant.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, of the shares of Common Stock of Cafe
Odyssey, Inc. (the "Shares") to which such Warrant relates and herewith makes
payment of $ therefor in cash, certified check or bank draft and
requests that a certificate evidencing the Shares be delivered to,
, the address for whom is set forth below the
signature of the undersigned:
Dated:
----------------------
---------------------------------------
(Signature)
---------------------------------------
---------------------------------------
(Address)
X X X
ASSIGNMENT FORM
To be signed only upon authorized transfer of Warrant.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the right to purchase
shares of Common Stock of Cafe Odyssey, Inc. to which the within Warrant relates
and appoints attorney, to transfer said right on the books
of with full power of substitution in the premises.
Dated:
----------------------
---------------------------------------
(Signature)
---------------------------------------
---------------------------------------
(Address)
7