Exhibit 10.5
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF
1933, AS AMENDED (THE ACT), OR APPLICABLE BLUE SKY LAWS, AND ARE SUBJECT TO
CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES MAY NOT BE SOLD, OFFERED
FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE
ACT, AND THE APPLICABLE BLUE SKY LAWS, OR AN EXEMPTION THEREFROM.
WARRANT AGREEMENT
CAPSOURCE FINANCIAL, INC.
(A Colorado Corporation)
This Warrant Agreement dated July 1, 2001 certifies that _____________,
("Warrantholder") is entitled to purchase _________________________, (***,***)
shares of Common Stock of CapSource Financial, Inc., a Colorado corporation
("Company"), subject to the terms and conditions hereinafter set forth.
Section 1.
1.1 Grant.
Upon the terms and provisions contained herein, and subject to
adjustments provided for in Section 2 hereof, the Warrantholder hereby granted
the right to purchase shares of the Company's no par value Common Stock ("Common
Stock"), at an initial exercise price of __________________, ($*.**) per share
("Exercise Price"). The Exercise Price maybe adjusted from time to time as more
fully set forth below.
1.2 Exercise of Warrants
1.2.1 Subject to the Company's rights of redemption
("Redemption Rights") set forth in Section V, this Warrant Agreement may be
exercised in whole or in part, in the manner provided for in Subsection 1.2(b)
hereof, at any time on or after __________________, through ________________,
("Expiration Date").
1.2.2 The Warrant may be exercised in whole or in part by
delivering to the Company a completed and duly executed Subscription Notice, in
the form attached hereto and made a part hereof, together with payment in full,
in lawful money of the United States, of the Exercise Price for each share of
Common Stock with respect to which the Warrant is exercised.
1.2.3 As soon as practicable after the exercise of the
Warrant, in whole or in part, the Company shall cause to be issued to the
Warrantholder a certificate for the number of shares of Common Stock purchased
pursuant to such exercise.
1.2.4 All shares of Common Stock issued upon the exercise of
the Warrant shall be validly issued, fully paid and nonassessable.
1.2.5 The Warrantholder in whose name any such certificate for
shares of Common Stock is issued pursuant to the exercise of the Warrant shall
for all purposes be deemed to have become the holder of record of such shares at
the close of business on the date upon which the Warrant was exercised and
payment of the Exercise Price was made irrespective of the date of issue or
delivery of such stock certificate(s) except that, if the date of such surrender
and payment is a date when the stock transfer books of the Company are closed,
such person shall be deemed to have become the holder of such shares at the
opening of business on the next succeeding date on which the stock transfer
books are open.
1.2.6 In the event the Warrant is exercised in part only, the
Company shall cause to be issued and delivered to the Warrantholder a new
Warrant Certificate in the name of the Warrantholder evidencing his right to
purchase the number of shares purchasable hereunder as to which the Warrant has
not been exercised.
1.3 Termination of Warrant
If the subscription rights represented hereby shall not be exercised by
the Expiration Date, the Warrant shall be void and of no further force and
effect and all rights represented hereby shall cease and expire. The Warrant
shall not be exercised by the Warrantholder in any state where such exercise
would be unlawful.
1.4 Fractional Shares
No fractional shares will be issued upon the exercise of the Warrant
hereunder; however, in the event any adjustments pursuant to Section 11 would
result in the issuance of fractional shares, upon exercise of the Warrant such
fractional shares shall be rounded to the nearest whole share. The
Warrantholder, by his acceptance of the Warrant, waives any right to receive any
fractional share of Common Stock upon its exercise.
Section 2.
2.1 Stock Dividends
If prior to the expiration of the Warrant, by exercise or by its terms
the Company issues shares of Common Stock as a stock dividend or shall subdivide
the number of outstanding shares of Common Stock into a greater number of
outstanding shares of Common Stock, then at the beginning of business on the
date following the date fixed for the determination of shareholders entitled to
receive such dividend or greater number of shares the number of shares issuable
upon exercise of the Warrant shall be increased to reflect proportionately the
change in the number of outstanding shares of Common Stock, and the Exercise
Price shall be correspondingly decreased. The purpose of this subsection is to
place the Warrantholder in the same position he would have been had he held all
of the shares issuable upon exercise of the Warrant.
2.2 Consolidation of Shares
If prior to the expiration of the Warrant by exercise or by its terms
the Company decreases the number of outstanding shares of Common Stock by a
combination, consolidation, or reclassification of shares, then, after the
effective date of such combination, consolidation, or reclassification, the
number of shares issuable upon the exercise of the Warrant shall be decreased to
reflect proportionately such decrease in outstanding shares and the Exercise
Price shall be correspondingly increased. The purpose of this subsection is to
place the Holder in the same position after such combination, consolidation or
reclassification as he would have been had he held all the shares issuable upon
exercise of the Warrant immediately prior to such combination, consolidation or
reclassification.
2.3 Stock Splits
If prior to termination of the Warrant by exercise or by its terms the
Company increases the number of outstanding shares of Common Stock by a split-up
of shares, then on the day following the date fixed for the determination of
shareholders entitled to receive shares resulting from such split-up, the number
of shares issuable upon exercise of the Warrant shall be increased to reflect
proportionately such increase in outstanding shares and the Exercise Price shall
be correspondingly decreased. The purpose of this subsection is to place the
Holder in the same position, immediately after such stock split, as he would
have been had he held all the shares issuable upon exercise of the Warrant
immediately prior to such stock split.
2.4 Special Stock Dividends
If prior to the termination of the Warrant by exercise or by its terms
the Company issues shares of any class of the Company's stock (other than Common
Stock) or securities convertible into shares of the Company's Common Stock by
way of a stock dividend on outstanding Common Stock then commencing with the day
following the date
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fixed for the determination of shareholders entitled to receive such stock
dividend in addition to any share of Common Stock receivable upon exercise of
the Warrant, the Warrantholder shall, upon such exercise of the Warrant, be
entitled to receive, as nearly as practicable, the same number of shares such
dividend stock, plus any shares issued upon any subsequent change, replacement,
subdivision, or combination there ' of to which the Warrantholder would have
been entitled had the Warrant been exercised prior to such stock dividend. No
adjustment in the Exercise Price shall be made merely by virtue of the happening
of any event specified in this Section 2.4.
2.5 Reorganization, Merger, Sale, Etc.
If prior to the expiration of the Warrant by exercise or by its terms
there is effected any (i) capital reorganization or reclassification of the
Common Stock, or (ii) consolidation or merger into or with another corporation,
or (iii) sale or all or substantially all of the Company's assets to another
corporation or entity (any such other corporation being included to mean any
"successor corporation" including any consolidation, merger or sale of all or
substantially all of the property of any such other corporation or
corporations), then, as a condition of such event, the Company shall make lawful
and fair provisions whereby the Warrantholder shall thereafter have the right to
purchase and receive on the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
purchasable and receivable upon exercise of the 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 Common Stock which would have been purchasable upon exercise of
the Warrant immediately prior to such event. In any case, the Company shall make
appropriate provision with respect to the rights and interests of the
Warrantholder, so that the provisions contained in the Warrant (including
without limitation provisions for adjustment of the Exercise Price and the
number of shares issuable upon exercise of the Warrant), shall thereafter be
applicable, as nearly as practicable in relation to any share of stock,
security, or asset thereafter deliverable upon the exercise of the Warrant. The
Company shall not effect any such consolidation, merger, or sale unless prior to
the consumption thereof the successor corporation or entity (if other than the
Corporation) resulting from the such consolidation or merger, or the corporation
purchasing such assets, shall assume by written instrument executed and
delivered to the Warrantholder the obligation to deliver to the Warrantholder,
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, such Warrantholder may be then entitled to purchase.
2.6 Additional Issuances of Shares
If, prior to the expiration of the Warrant by exercise or by its terms
the Company shall at any time or from time to time hereunder issue or sell any
Common Stock without consideration or for consideration per share less than the
current market price immediately prior to such sale, the Exercise Price shall be
adjusted to a price computed to the nearest cent determined by dividing the (i)
sum of the Common Stock outstanding immediately prior to such issue or sale
multiplied by the existing price in effect immediately prior to such issue or
sale plus the consideration, if any, received by the Company upon such issue or
sale, by (ii) the total number of shares of Common Stock outstanding immediately
after such issue or sale,
2.7 Notice of Adjustment
Upon any adjustment of the Exercise Price of the number of share of
Common Stock issuable upon exercise of the Warrant, then in each case the
Company shall give written notice thereof to the Warrantholder which notice
shall state the Exercise Price and the number of shares of Common Stock issuable
upon exercise of the Warrant as established by such adjustment. The notice shall
also set forth in reasonable detail the method of calculation and the facts upon
which such adjustment is based. The notice may be accompanied by a certificate
of a firm of independent public accountants selected by the Company confirming
the calculations and adjustments in which event such certificate shall be
conclusive evidence of the correctness of such matters. Failure to give such
notice or any defect therein shall not affect the legality or validity of the
adjustments.
2.8 Other Notices
In case at any time:
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2.8.1 The Company shall take any action which would result in
an adjustment under Sections 2.1 through 2.6;
2.8.2 The Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
2.8.3 There shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale or all or substantially all of its assets to
another corporation; or
2.8.4 There shall be a voluntary or involuntary liquidation,
dissolution or winding up of the Company, then in any one or more of such cases,
the Company shall give written notice to the Warrantholder, of the date on which
(i) the books of the Company shall close or record shall be taken for such
dividend, distribution or subscription rights, or (ii) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place. Such notice shall be given at least twenty (20)
days prior to the action in question and not less than twenty (20) days to the
record date or the date on which the Company's transfer books are closed with
respect thereto. Such notice shall specify the date as of which the record is to
be taken; the purpose for which such record is to be taken; the number, amount,
price and nature of the securities and/or assets which will be deliverable upon
exercise of the Warrant after the action for which such record will be taken has
been consummated. Failure to give said notice or the defect therein shall not
affect the legality or validity of any of the matters set forth in the foregoing
(a) though (d), both inclusive.
Section 3.
3.1 No Rights as Shareholders Conferred
The Warrant does not entitle the Warrantholder to any rights of a
shareholder of the Company until or unless and except to the extent that the
Warrant shall be exercised.
3.2 Reservation of Common Stock
The Company shall at all times reserve and keep available a number of
its authorized but unissued treasury shares that will be sufficient to permit
the exercise in full of the Warrant. The Subscription Notice attached hereto,
duly completed and signed, shall constitute sufficient evidence of the number of
shares of Common Stock which have been issued upon exercise of the Warrant
hereunder, require listing upon any national securities exchange before such
shares may be issued upon exercise, the Company will in good faith and as
expeditiously as possible, endeavor to cause such shares to be duly listed and
will do all acts necessary to keep such listing in effect.
Section 4.
4.1 Restriction Upon Stock Underlying Warrant
Neither the Warrant or the Common Stock issuable upon exercise of the
Warrant have been registered under the Act or registered or qualified under any
state securities laws. The Common Stock purchased upon exercise of the Warrant
must be held indefinitely unless subsequently registered under the Act and
qualified under applicable state securities laws or unless and exemption to such
registration requirements is available. A restrictive ledged in substantially
the form set forth below will be placed on the certificates representing the
Common Stock and stop transfer instructions will be issued to prevent illegal
sale of the Common Stock.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, 15 U.S.C. SEC. 77A ET SEQ., ("SECURITIES
ACT"), THE COLORADO SECURITIES LAWS OR ANY OTHER
APPLICABLE
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STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
ASSIGNED, TRADED, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF WITHOUT REGISTRATION UNDER AND IN
COMPLIANCE WITH THE SECURITIES ACT, THE COLORADO
SECURITIES LAWS AND ANY OTHER APPLICABLE STATE
SECURITIES LAWS, OR WITHOUT WRITTEN OPINION LETTERS
OF LEGAL COUNSEL FOR BOTH THE SELLER AND THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT, THE COLORADO LAWS AND ANY OTHER
APPLICABLE STATE SECURITIES LAWS.
4.2 Investment Representations
By accepting the Warrant the Warrantholder represents and warrants that
the Warrant acquired hereby, and any purchase of Common Stock by exercise of the
Warrant will be for his own account for the purpose of investment and with no
view to resale or other distribution of any kind. The Warrantholder also agrees
that in order to exercise the Warrant he must execute the Subscription Notice
and other instrument(s) reasonable satisfactory to the Company.
Section 5.
5.1 Redemption of Warrants
The Company may redeem ("Warrant Redemption") the Warrants at a price
equal to $.05 per Warrant upon thirty (3 0) days written notice ("Redemption
Notice") to the Warrantholder at any time prior to the Expiration Date if the
reported average bid price or reported last sale price of the Company's common
stock on NASDAQ or any recognized securities exchange for the thirty (30) day
period immediately preceding such notice is greater than one hundred twenty
percent (120%) of the then Exercise Price.
5.2 Warrantholder's Rights Upon Redemption
The Warrantholder shall have all rights to purchase the common stock of
the Company as set forth in Section 1.2 during the thirty (30) period after the
issuance of the Redemption Notice.
Section 6.
6.1 Notices
All notices which are required or may be given pursuant to the terms of
this Warrant Agreement shall be in writing and shall be delivered personally, by
certified mail or facsimile as follows:
If intended for the Company, to:
CapSource Financial, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If intended for the Warrantholder, to:
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The Company or the Warrantholder may change the address to which
notices intended for it shall be sent to the other party by notice given in the
manner specified in this Section V.
IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
signed by its duly authorized officers.
Dated: __________________ CAPSOURCE FINANCIAL, INC.
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Attest:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
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