Exhibit 4.2(b)
NEITHER THIS WARRANT NOR ANY OF
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933
ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO SEC
RULE 144 OR UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT AND THE SECURITIES LAWS OF THE APPLICABLE STATES
COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE 1933 ACT AND THE SECURITIES LAWS OF
THE STATES.
Warrant No. 23,
December 14, 2000
COMMON STOCK PURCHASE
WARRANT
Tully’s Coffee Corporation, a
Washington corporation (the “Company”), hereby grants
to KWM INVESTMENTS LLC, a Washington limited liability company, or
its registered assigns or transferees (each being referred to
herein as a “holder” and collectively as the
“holders”) the right to purchase, at any time and from
time to time on and after the date hereof until the Expiration Date
(as defined below), up to 240,000 fully paid and non-assessable
shares of Common Stock of the Company (the “Common
Stock”), on the terms and subject to the conditions set forth
below
1. Exercise, Vesting and
Expiration of Warrant.
1.1 Exercise.
Subject to adjustment as
hereinafter provided, the rights represented by this Warrant are
exercisable on and after the date hereof (the “Exercise
Date”) until the Expiration Date, at a price per share (the
“Exercise Price”) of the Common Stock issuable
hereunder (hereinafter, “Warrant Shares”) of One cent
($0.01) per Warrant Share. The total Exercise Price shall be
payable in cash by certified or official bank check or immediately
available funds. Alternatively, as provided in Section 8, the
Holder hereof may surrender this certificate (with the form of
Notice of Exercise duly executed) and direct the Company to issue
the net number of Warrant Shares issuable pursuant to a Net
Exercise (as defined in Section 8) of this Warrant, in whole
or in part from time to time.
1.2 Procedure.
Upon surrender of this Warrant
with a duly executed Notice of Exercise in the form of Annex A
attached hereto, together with payment of the total Exercise Price
for the Warrant Shares purchased (or, if applicable, instructions
with respect to a Net Exercise in accordance with Section 8),
at the Company’s principal executive offices presently
located at 3100 Airport Way South, Seattle, WA, 98134, or at such
other address as the Company shall have advised the holder in
writing (the “Designated Office”), the holder shall be
entitled to receive a certificate or certificates for the Warrant
Shares so purchased. The Company agrees that the Warrant Shares
shall be deemed to have been issued to the holder as of the close
of business on the date on which this Warrant shall have been
surrendered together with the Notice of Exercise and payment for
such Warrant Shares.
1.3 Vesting.
This Warrant is fully vested
and is not callable or redeemable by the Company.
1.4 Term of
Warrant. This Stock
Purchase Warrant (hereinafter, this “Warrant”) shall
expire and be of no further force or effect upon the earlier
of:
(a) the tenth
(10 th ) anniversary of the date
hereof (the “Expiration Date”); or
(b) the completion by the
Company of a “Qualified Public Offering” (as defined
herein) provided, that the Company shall deliver to the Holder
notice of the Qualified Public Offering, and the Holder’s
right to exercise the Warrants, no less than thirty (30) days
before the date scheduled for the effectiveness of the Registration
Statement relating thereto. For purposes of this subsection 1.4(b),
“Qualified Public Offering” shall mean the consummation
of the Corporation’s first sale of its Common Stock to the
public pursuant to a registration statement on Form S-1
or
Form SB-2 (or any successor form)
under the Securities Act of 1933, as amended, at an aggregate price
to the public of at least $15 million and a per share price to
the public of at least $5 (as adjusted for stock splits,
combinations, recapitalizations and the like).
2. Transfer; Issuance of
Stock Certificates: Restrictive Legends.
2.1 Transfer.
Subject to compliance with the
restrictions on transfer set forth in this Section 2 and the
legends set forth below, each transfer of this Warrant and all
rights hereunder, in whole or in part, shall be registered on the
books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the Designated Office, together with a
written assignment of this Warrant in the form of Annex B attached
hereto duly executed by the holder or its agent or attorney. Upon
such surrender and delivery, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees
and in the denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, if any. A
Warrant, if properly assigned in compliance with the provisions
hereof, may be exercised by the new holder for the purchase of
Warrant Shares without having a new Warrant issued. Prior to due
presentment for registration of transfer thereof, the Company may
deem and treat the registered holder of this Warrant as the
absolute owner hereof (notwithstanding any notations of ownership
or writing thereon made by anyone other than a duly authorized
officer of the Company) for all purposes and shall not be affected
by any notice to the contrary. All Warrants issued upon any
assignment of Warrants shall be the valid obligations of the
Company, evidencing the same rights, and entitled to the same
benefits as the Warrants surrendered upon such registration of
transfer or exchange.
2.2 Stock
Certificates. Certificates for the Warrant Shares shall
be delivered to the holder within a reasonable time after the
rights represented by this Warrant shall have been exercised
pursuant to Section 1 (but in any event no later than twenty
(20) business days thereafter), and a new Warrant representing
the shares of Common Stock, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to
the holder within such time period. The issuance of certificates
for Warrant Shares upon the exercise of this Warrant shall be made
without charge to the holder hereof including, without limitation,
any documentary, stamp or similar tax that may be payable in
respect thereof; provided, however, that the Company shall not be
required to pay any income tax to which the holder hereof may be
subject in connection with the issuance of this Warrant or the
Warrant Shares.
2.3 Restrictive
Legends.
2.3.1 Share
Legends. Except as
otherwise provided in this Section 2, each certificate for
Warrant Shares initially issued upon the exercise of this Warrant,
and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following
form:
THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE
SECURITIES LAWS OF ANY STATE. THESE SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR EXEMPTION
THEREFROM UNDER SAID ACT AND LAWS.
2.3.2 Warrant
Legends. Except as
otherwise provided in this Section 2, each Warrant issued upon
transfer shall be stamped or otherwise imprinted with a legend in
substantially the following form:
NEITHER THIS WARRANT NOR ANY OF THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933
ACT”), OR THE SECURITIES LAWS OF ANY STATE,
2
AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO SEC RULE 144 OR UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND
THE SECURITIES LAWS OF THE APPLICABLE STATES COVERING SUCH
SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF THE 1933 ACT AND THE SECURITIES LAWS OF THE STATES.
2.3.3 Removal of
Legends. Notwithstanding the foregoing, the legend
requirements of Sections 2.3.1 and 2.3.2 shall terminate as to any
particular Warrant or Warrant Share when the Company shall have
received from the holder thereof an opinion of counsel in form and
substance satisfactory to the Company that such legend is not
required in order to ensure compliance with the Securities Act.
Whenever the restrictions imposed by this Section 2 shall
terminate, the holder hereof or of Warrant Shares, as the case may
be, shall be entitled to receive from the Company, without cost to
such holder, a new Warrant or certificate for Warrant Shares of
like tenor, as the case may be, without such restrictive
legend.
3. Adjustment of Number of
Shares; Exercise Price: Nature of Securities Issuable Upon Exercise
of Warrants.
3.1 Exercise Price:
Adjustment of Number of Shares. The Exercise Price set forth in
Section 1 hereof and the number of shares purchasable
hereunder shall be subject to adjustment from time to time as
hereinafter provided.
3.1.1 Stock Splits, Stock
Dividends and Reverse Stock Splits. In case at any time the Company shall
split or subdivide the outstanding shares of Common Stock into a
greater number of shares, or shall declare and pay any stock
dividend with respect to its outstanding stock that has the effect
of increasing the number of outstanding shares of Common Stock, the
Exercise Price in effect immediately prior to such subdivision or
stock dividend, shall be proportionately reduced and the number of
Warrant Shares purchasable pursuant to this
