EXHIBIT 10.16
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
Warrant No.____
Warrant to Purchase 500,000 Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
of
CASE FINANCIAL, INC.
Void after March 25, 2007
This certifies that, for value received,_____________________ or
registered assigns ("Holder") is entitled, subject to the terms set forth below,
to purchase from Case Financial, Inc. (the "Company" or "Case"), a Delaware
corporation, shares of Common Stock of the Company, as constituted on the date
hereof (the "Warrant Issue Date"), upon surrender hereof, at the principal
office of the Company referred to below, with the subscription form attached
hereto duly executed, and simultaneous payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The number, character and Exercise Price of such
shares of Common Stock are subject to adjustment as provided below. The term
"Warrant" as used herein shall include this Warrant, and any warrants delivered
in substitution or exchange therefor as provided herein.
1. Term of Warrant. Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable, in whole or in part, during the term
commencing on the Warrant Issue Date and ending at the earlier of the
following two dates:
(a) The warrant shall expire at 5:00 p.m., Pacific Standard Time, on
March 25, 2007.
(b) After March 25, 2006, if the Company common stock closing price is
$0.20 or greater (the "Closing Price"), as adjusted from time to
time pursuant to Section 11, for a period of 30 calendar days, then
the holder of the Warrant shall have 45 days from the end of that 30
day period in which to exercise the warrant.
The warrant shall be void thereafter.
2. Exercise Price. The "Exercise Price" at which this Warrant may be
exercised shall be $0.10 per share of Common Stock, as adjusted from time
to time pursuant to Section 11 hereof.
3. Exercise of Warrant.
(a) The purchase rights represented by this Warrant re-exercisable by
the Holder in whole or in part, but not for less than 15,000 shares
at a time (or such lesser number of shares which may then constitute
the maximum number purchasable; such number being subject to
adjustment as provided in Section 11 below), at any time, or from
time to time, during the term hereof as described in Section 1
above, by the surrender of this Warrant and the Notice of Exercise
annexed hereto duly completed and executed on behalf of the Holder,
at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at
the address of the Holder appearing on the books of the Company),
upon payment in cash or by check acceptable to the Company.
(b) This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the
shares of Common Stock issuable upon such exercise shall be treated
for all purposes as the holder of record of such shares as of the
close of business on such date. As promptly as practicable on or
after such date and in any event within ten (10) days thereafter,
the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates
for the number of shares issuable upon such exercise. In the event
that this Warrant is exercised in part, the Company at its expense
will execute and deliver a new Warrant of like tenor exercisable for
the number of shares for which this Warrant may then be exercised.
4. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In
lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a prompt cash payment equal to the Fair
Market Value of a share of Common Stock multiplied by such fraction.
5. Replacement of Warrant. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the
Company or, in the case of mutilation, on surrender and cancellation of
this Warrant, the Company at its expense shall execute and deliver, in
lieu of this Warrant, a new warrant of like tenor and amount.
6. Rights of Stockholders. Subject to Sections 9 and 11 of this Warrant, the
Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company that may at
any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock to no
par value, consolidation, merger, conveyance, or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised as provided herein.
7. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or
Holders. Any Holder of this Warrant or any portion thereof may
change his or her address as shown on the Warrant Register by
written notice to the Company requesting such change. Any notice or
written communication required or permitted to be given to the
Holder may be delivered or given by mail to such Holder as shown on
the Warrant Register and at the address shown on the Warrant
Register. Until this Warrant is transferred on the Warrant Register
of the Company, the Company may treat the Holder as shown on the
Warrant Register as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary.
(b) Warrant Agent. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register
referred to in Section 7(a) above, issuing the Common Stock or other
securities then issuable upon the exercise of this Warrant,
exchanging this Warrant, replacing this Warrant, or any or all of
the foregoing. Thereafter, any such registration, issuance,
exchange, or replacement, as the case may be, shall be made at the
office of such agent.
(c) Transferability and Non-negotiability of Warrant. This Warrant may
not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by
the transferor and the transferee (including the delivery of
investment representation letters and legal opinions reasonably
satisfactory to the Company, if such are requested by the Company).
Subject to the Provisions of this Warrant with respect to compliance
with the Securities Act of 1933, as amended (the "Act"), title to
this Warrant may be transferred by endorsement (by the Holder
executing the Assignment Form annexed hereto) and delivery in the
same manner as a negotiable instrument transferable by endorsement
and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant
for exchange, properly endorsed on the Assignment Form and subject
to the provisions of this Warrant with respect to compliance with
the Act and with the limitations on assignments and transfers
contained in this Section 7, the Company at its expense shall issue
to or on the order of the Holder a new warrant or warrants of like
tenor, in the name of the Holder or as tile Holder (on payment by
the Holder of any applicable transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.
(e) Compliance with Securities Laws
(i) The Holder of this Warrant, by acceptance hereof, acknowledges
that this Warrant and the shares of Common Stock to be issued
upon exercise hereof or conversion thereof 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 Warrant or any
shares of Common Stock to be issued upon exercise hereof or
conversion thereof except under circumstances that will not
result in a violation of the Act or any state securities laws.
Upon exercise of this Warrant, the Holder shall, if requested
by the Company, confirm in writing, in a form satisfactory to
the Company, that the shares of Common Stock so purchased are
being acquired solely for the Holder's own account and not as
a nominee for any other party, for investment, and not with a
view toward distribution or resale.
(ii) This Warrant and all shares of Common Stock issued upon
exercise hereof or conversion thereof shall be stamped or
imprinted with a legend in substantially the following form
(in addition to any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT AND APPLICABLE LAWS. COPIES OF THE AGREEMENT COVERING
THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR
TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE
COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
8. Reservation of Stock. The Company covenants that during the term this
Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the
issuance of Common Stock upon the exercise of this Warrant and, from time
to time, will take all steps necessary to amend its Certificate of
Incorporation (the "Certificate") to provide sufficient reserves of shares
of its Common Stock for issuance. The Company further covenants that all
shares that may be issued upon the exercise of rights represented by this
Warrant and payment of the Exercise Price, all as set forth herein, will
be free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
The Company agrees that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant.
9. Notices.
(a) Whenever the Exercise Price or number of shares purchasable
hereunder shall be adjusted pursuant to Section 11 hereof, the
Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Exercise Price and number of
shares purchasable hereunder after giving effect to such adjustment,
and shall cause a copy of such certificate to be mailed (by
first-class mail, postage prepaid) to the Holder of this Warrant.
(b) In case:
(i) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable
upon the exercise of this Warrant) for the purpose of
entitling them to receive any dividend or other distribution,
or any right to subscribe for or purchase any shares of stock
of any class or any other securities, or to receive any other
right, or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of
the assets of the Company to another corporation, or
(iii) of any voluntary dissolution, liquidation or winding-up of the
Company, then, and in each such case, the Company will mail or
cause to be mailed to the Holder or Holders a notice
specifying, as the case may be, (A) the date on which a record
is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such
dividend, distribution or right, or (B) the date on which such
reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such stock or securities
at the time receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or
such other stock or securities) for securities or other
property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be
mailed at least 30 days prior to the date therein specified.
(c) All such notices, advices and communications shall be deemed to have
been received (i) in the case of personal delivery, on the date of
such delivery and (ii) in the case of mailing, on the third business
day following the date of such mailing.
10. Amendments. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought.
11. Adjustments. The Exercise Price, Closing Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as
follows:
(a) Merger, Sale of Assets, etc. If at any time while this Warrant, or
any portion thereof, is outstanding and unexpired there shall be (i)
a reorganization (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein),
(ii) a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity, or a
reverse triangular merger in which the Company is the surviving
entity but the shares of the Company's capital stock outstanding
immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash,
or otherwise, or (iii) a sale or transfer of the Company's
properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so
that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified
herein and upon payment of the Exercise Price then in effect, the
number of shares of stock or other securities or property of the
successor corporation resulting from such reorganization, merger,
consolidation, sale or transfer that a holder of the shares
deliverable upon exercise of this Warrant would have been entitled
to receive in such reorganization, consolidation, merger, sale or
transfer if this Warrant had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject
to further adjustment as provided in this Section 11. The foregoing
provisions of this Section 11(a) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to
the stock or securities of any other corporation that are at the
time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the holder hereof for shares in connection
with any such transaction is in a form other than cash or marketable
securities, then the value of such consideration shall be determined
in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests
of the Holder after the transaction, to the end that the provisions
of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
(b) Reclassification, etc. If the Company, at any time while this
Warrant, or any portion hereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this Warrant exist into
the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities
that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the
Exercise Price and Closing Price therefor shall be appropriately
adjusted, all subject to further adjustment as provided in this
Section 11.
(c) Split, Subdivision or Combination of Shares. If the Company at any
time while this Warrant, or any portion hereof, remains outstanding
and unexpired shall split, subdivide or combine the securities as to
which purchase rights under this Warrant exist, into a different
number of securities of the same class, the Exercise Price and the
Closing Price for such securities shall be proportionately decreased
in the case of a split or subdivision or proportionately increased
in the case of a combination or reverse split.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
If while this Warrant, or any portion hereof, remains outstanding
and unexpired, the holders of the securities as to which purchase
rights under this Warrant exist at the time shall have received, or,
on or after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive, without payment
therefor, other or additional stock or other securities or property
(other than cash) of the Company by way of dividend, then and in
each case, this Warrant shall represent the right to acquire, in
addition to the number of shares of the security receivable upon
exercise of this Warrant, and without payment of any additional
consideration therefor, the amount of such other or additional stock
or other securities or property (other than cash) of the Company
that such holder would hold on the date of such exercise had it been
the holder of record of the security receivable upon exercise of
this Warrant on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such
exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving effect to
all adjustments called for during such period by the provisions of
this Section 11.
(e) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 11, the Company
at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each
Holder of this Warrant a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the
written request, at any time, of any such Holder, furnish or cause
to be furnished to such Holder a like certificate setting forth: (i)
such adjustments and readjustments; (ii) the Exercise Price and the
Closing Price at the time in effect; and (iii) the number of shares
and the amount, if any, of other property that at the time would be
received upon the exercise of the Warrant.
(f) No Impairment. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the
provisions of this Section 11 and in the taking of all such action
as may be necessary or appropriate in order to protect the rights of
the Holder of this Warrant against impairment.
(g) Liquidation; Dissolution. If the Company shall dissolve, liquidate
or wind up its affairs, the Holder shall have the right, but not the
obligation, to exercise this Warrant effective as of the date of
such dissolution, liquidation or winding up. If any such
dissolution, liquidation or winding up results in any cash
distribution to the Holder in excess of the aggregate Exercise Price
for the shares of Common Stock for which this Warrant is exercised,
then the Holder may, at its option, exercise this Warrant without
making payment of such aggregate Exercise Price and, in such case,
the Company shall, upon distribution to the Holder, consider such
aggregate Exercise Price to have been paid in full, and in making
such settlement to the Holder, shall deduct an amount equal to such
aggregate Exercise Price from the amount payable to Holder.
12. Miscellaneous.
(a) Governing Law and Modification. This Warranty shall be deemed to be
made under, and shall be governed by, the laws of the State of
California in all respects, including matters of construction,
validity, and performance, and its terms and provisions may not be
waived, altered, modified, or amended except in writing duly signed
by an authorized officer of the Company and by the Holder.
(b) Attorneys' Fees and Costs. In addition to the amounts guaranteed
under this agreement, the Company agrees to pay legal interest from
the date of this Warrant, reasonable attorneys' fees and all other
costs and expenses incurred by the Holder in enforcing this Warrant
in any action or proceeding arising out of, or relating to, this
Warrant.
(c) Saturdays, Sundays and Holidays. If the expiration date for this
Warrant falls on a Saturday, Sunday or a day on which banks in the
State of California are authorized or required by law to close, then
the exercise date will be on the following business day.
(d) Remedies. The Company stipulates that the remedies at law of the
Holder in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate to the fullest extent
permitted by law, and that 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.
(e) Nonwaiver; Cumulative Remedies. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder
shall operate as a waiver of such right or otherwise prejudice the
rights, powers or remedies of the Holder. No single or partial
waiver by the Holder of any provision of this Warrant or of any
breach or default hereunder or of any right or remedy shall operate
as a waiver of any other provision, breach, default right or remedy
or of the same provision, breach, default, right or remedy on a
future occasion. The rights and remedies provided in this Warrant
are cumulative and are in addition to all rights and remedies which
the Holder and each Shareholder may have in law or in equity or by
statute otherwise.
(f) Successors and Assigns. This Warrant shall be binding upon, the
Company and any person or entity succeeding the Company be merger,
consolidation or acquisition of all or substantially all of the
Company's assets, and all of the obligations of the Company with
respect to the shares of Common Stock issuable upon exercise of this
Warrant, shall survive the exercise, expiration or termination of
this Warrant and all of the covenants and agreements of the Company
shall inure to the benefit of the Holder and its successors and
assigns. The Company shall, at the time of exercise of this Warrant,
in whole or in party, upon request of the Holder but at the
Company's expense, acknowledge in writing its continuing obligations
hereunder with respect to rights of the Holder to which it shall
continue to be entitled after such exercise in accordance with the
terms hereof; provided that the failure of the Holder to make any
such request shall not affect the continuing obligation of the
Company to the Holder in respect of such rights.
(g) Integration. This Warrant and that certain Stock Purchase Agreement
to which the Company and the original Holder of this Warrant are
parties replace all prior and contemporaneous agreements and
supersede all prior and contemporaneous negotiations between the
parties with respect to the transactions contemplated herein and
constitute the entire agreement of the parties with respect to the
transactions contemplated herein.
(f) Survival of Representations and Warranties. The representations and
warranties of the Company in this Warrant shall survive the
execution and delivery of this Warrant and the consummation of the
transactions contemplated hereby, notwithstanding any investigation
by the Holder or its agents.
IN WITNESS WHEREOF, CASE FINANCIAL, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: March 25, 2005
CASE FINANCIAL, INC. HOLDER
By: By:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
NOTICE OF EXERCISE
To: CASE FINANCIAL, INC.
By:
(1) The undersigned hereby: (A) elects to purchase shares of Common
Stock of CASE FINANCIAL, INC. pursuant to the provisions of Section 3(a) of the
attached Warrant, and tenders herewith payment of the purchase price for such
shares in full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock thereof are being acquired solely
for the account of the undersigned and not as a nominee for any other party, and
for investment, and that the undersigned will not offer, sell or otherwise
dispose of any such shares of Common Stock except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended, or any
applicable state securities laws.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
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(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
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(Name)
Dated:
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ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint ____________________ to make
such transfer on the books of CASE FINANCIAL, INC., maintained for the purpose,
with full power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended, or any applicable state
securities laws. Further, the Assignee has acknowledged that upon exercise of
this Warrant, the Assignee shall, if requested by the Company, confirm in
writing, in a form satisfactory to the Company, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated:
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