EXHIBIT 10.16
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.
COMMON STOCK PURCHASE WARRANT
To Purchase 880,000 Shares of Common Stock of
FLEETCLEAN SYSTEMS, INC.
THIS CERTIFIES that, for value received, Six Eighteen Corp. (the
"Holder") is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or before December 31, 2007 (the "Termination Date")
to subscribe for and purchase from Fleetclean Systems, Inc., a Texas corporation
(the "Company"), up to Eight Hundred Eighty Thousand (880,000) shares (the
"Warrant Shares") of Common Stock, $.01 par value, of the Company (the "Common
Stock"). The purchase price of one share of Common Stock (referred to as the
"Exercise Price") under this Warrant shall be Twenty Cents ($.20).
1. TITLE TO WARRANT. Prior to and including the Termination Date and
subject to compliance with applicable laws, this Warrant and all rights
hereunder are freely transferable, in whole or in part, at the office or agency
of the Company by Holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.
2. EXERCISE OF WARRANT. Except as provided herein, exercise of the
purchase rights represented by this Warrant may be made at any time or times on
or before the close of business on the Termination Date. Exercise of this
Warrant or any part hereof shall be effected by (i) the surrender of this
Warrant and the Notice of Exercise Form annexed hereto duly executed, 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 registered Holder hereof at the address of
such Holder appearing on the books of the Company) and (ii) payment of the
Exercise Price of the shares thereby purchased by wire transfer or cashier's
check drawn on a United States bank. Upon exercise of this Warrant, the holder
of this Warrant shall be entitled to receive a certificate for the number of
shares of Common Stock so purchased. Certificates for shares purchased hereunder
shall be delivered to the holder hereof within three (3) Trading Days, or as
soon as practical, after the date on which this Warrant shall have been
exercised as aforesaid. This Warrant shall be deemed to have been exercised and
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such certificate or certificates shall be deemed to have been issued, and Holder
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price.
3. CASHLESS EXERCISE.
If there is no registration statement that has been declared
effective covering the sale of shares of Common Stock underlying this Warrant by
the Holder, then at the election of the Holder, the Warrant may be automatically
converted by means of a "cashless exercise" in which the holder shall be
entitled to receive a certificate for the appropriate number of shares as
determined in accordance with Section 5(b) below. If a registration statement
covering the sale of shares of Common Stock underlying this Warrant by the
Holder has been declared effective, then the Holder shall pay in accordance with
Section 2.
4. PARTIAL EXERCISE. If this Warrant shall have been exercised in part,
the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new warrant evidencing the
rights of Holder to purchase the unpurchased shares of Common Stock called for
by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.
5. LAST DAY AUTOMATIC EXERCISE.
(a) If on the last day of the term of this Warrant, the
exercise price of the Warrant is less than the current fair market value of the
Company's Common Stock (as quoted on the OTCBB or other recognized securities
exchange), the Warrant shall be automatically converted by means of a "cashless
exercise" in which the holder shall be entitled to receive a certificate for the
appropriate number of shares as determined in accordance with Section 5(b)
below.
(b) If this Warrant is exercised pursuant to Section 3(a)
above or automatically exercised pursuant to Section 5(a) above, the holder of
this Warrant will automatically receive shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the holder hereof a number of shares of
Common Stock computed using the following formula:
Y (A - B)
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X = A
Where:
X -- The number of shares of Common Stock to be issued to the
holder of this Warrant.
Y -- The number of shares of Common Stock purchasable under
this Warrant.
A -- The fair market value of one share of the Company's
Common Stock.
B -- The Exercise Price (as adjusted to the date of such
calculations).
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For purposes of this Section5(b), the fair market value of Common Stock shall
mean the average of the closing bid and asked prices of the Common Stock quoted
in the over-the-counter market in which the Common Stock is traded or the
closing price quoted on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western Edition of THE WALL STREET
JOURNAL for the ten (10) trading days prior to the date of determination of fair
market value (or such shorter period of time during which such stock was traded
over-the-counter or on such exchange). If the Common Stock is not traded on the
over-the-counter market or on an exchange, the fair market value shall be the
price per share that the Company could obtain from a willing buyer for shares of
registered Common Stock, as appropriate, sold by the Company from authorized but
unissued shares, as such prices shall be determined in good faith by the
Company's Board of Directors. Notwithstanding the foregoing, if this Warrant is
being exercised pursuant to this Section 5(b) in connection with the acquisition
of the Company such that immediately after such transaction (or series of
related transactions) the shareholders of the Company immediately prior to such
transaction(s) own less than 50% of the surviving entity, the fair market value
shall be the price at which shares are being purchased in such transaction(s)
and such exercise shall be conditioned on the closing of such transaction(s).
6. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the Exercise Price.
7. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant.
8. CLOSING OF BOOKS. The Company will not close its shareholder books
or records in any manner which prevents the timely exercise of this Warrant.
9. TRANSFER, DIVISION AND COMBINATION.
(a) Subject to compliance with any applicable securities laws,
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 principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the holder of this Warrant or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination or 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, and this Warrant shall promptly be cancelled.
The Warrant, if properly assigned, may be exercised by a new holder for the
purchase of shares of Common Stock without having a new Warrant issued.
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(b) This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the holder or its agent or attorney.
Subject to compliance with this Section 10, as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 9.
(d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the Warrants.
10. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof. Upon the surrender of this Warrant
and the payment of the aggregate Exercise Price, the Warrant Shares so purchased
shall be and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the later of the date of such surrender or
payment.
11. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
12. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
13. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) RECLASSIFICATION; MERGER. In case of any reclassification,
capital reorganization or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination), the Company shall
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and substance satisfactory to the holder of this Warrant), so that the holder of
this Warrant shall have the right to receive, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the shares of the Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
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securities, money and property receivable upon such reclassification, capital
reorganization or change by a holder of the number of shares of Common Stock
then purchasable under this Warrant. Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 13. The Company shall provide the
holder of this Warrant with at least thirty (30) days' prior written notice of
the terms and conditions of any potential (i) sale, lease, exchange, conveyance
or other disposition of all or substantially all of the Company's property or
business, or (ii) its merger into or consolidation with any other corporation
(other than a wholly-owned subsidiary of the Company), or any transaction
(including a merger or other reorganization) or series of related transactions,
in which the holders of the outstanding voting securities of the Company then
hold less than 50% of the voting securities of the acquiring corporation.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company, at
any time while this Warrant remains outstanding, shall conduct a stock split to
subdivide or combine its outstanding shares of Common Stock, the Exercise Price
shall be proportionately decreased in the case of a subdivision (i.e., forward
split), but shall not be increased in the case of a combination (i.e., reverse
split), effective at the close of business on the date the subdivision or
combination becomes effective.
(c) STOCK DIVIDENDS AND OTHER DISTRIBUTIONS. If the Company at
any time while this Warrant is outstanding and unexpired shall (i) pay a
dividend with respect to the Common Stock payable in Common Stock, or (ii) make
any other distribution with respect to Common Stock (except any distribution
specifically provided for in Sections 13(a) and 13(b)), of Common Stock, then
the Exercise Price shall be adjusted, from and after the date of determination
of shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or
distribution.
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
the Exercise Price, the number of Shares of Common Stock purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by
multiplying the number of Shares purchasable immediately prior to such
adjustment in the Exercise Price by a fraction, the numerator of which shall be
the Exercise Price immediately prior to such adjustment and the denominator of
which shall be the Exercise Price immediately thereafter. If there is no
adjustment in the Exercise Price, then there shall be no adjustment in the
number of Shares of Common Stock purchasable hereunder.
14. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
15. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 14 hereof,
the Company shall make a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
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amount of the adjustment, the method by which such adjustment was calculated,
and the Exercise Price and the number of Shares purchasable hereunder after
giving effect to such adjustment, and shall cause copies of such certificate to
be mailed (by first class mail, postage prepaid) to the Holder of this Warrant.
16. NOTICE OF CORPORATE ACTION. If at any time:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in any one or more of such
cases, the Company shall give to Holder (i) at least 30 days' prior written
notice of the date on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 30 days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be entitled to any
such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
19(d).
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17. AUTHORIZED SHARES. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants 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 the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares 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.
The Company shall not by any action, including, without
limitation, amending its Articles of Incorporation, modifying or supplementing
its Certificate of Designation 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 this Warrant, 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 (a) not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefore upon such exercise
immediately prior to such increase in par value, (b) 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
this Warrant, and (c) use all commercially reasonable 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 this Warrant.
Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant and
the obligations of the Company hereunder.
Before taking any action which would cause an adjustment
reducing the current Exercise Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of the Warrants, the Company shall
take any corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Common
Stock at such adjusted Exercise Price.
Before taking any action which would result in an adjustment
in the number of shares of Common Stock for which this Warrant is 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.
All Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance pursuant to the terms and
conditions herein, be fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issue thereof. During the period within
which the rights represented by this Warrant may be exercised, the Company will
at all times have authorized, and reserved for the purpose of the issue upon
exercise of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock.
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18. MISCELLANEOUS.
(a) JURISDICTION. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall be governed by, and
construed in accordance with the laws of the State of California.
(b) RESTRICTIONS. The holder hereof acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal securities laws.
(c) NONWAIVER AND LITIGATION COSTS. No course of dealing or
any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company willfully fails to comply with any material provision of
this Warrant, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder, in addition to any
other relief to which it or they may be entitled.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Securities Purchase
Agreement.
(e) LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by Holder to purchase shares of Common Stock, and
no enumeration herein of the rights or privileges of Holder hereof, shall give
rise to any liability of Holder for the purchase price of any Common Stock or as
a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
(f) REMEDIES. Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(g) SUCCESSORS AND ASSIGNS. Subject to applicable securities
laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors of the Company and the
successors and permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant Shares.
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(h) INDEMNIFICATION. The Company agrees to indemnify and hold
harmless Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of any failure by the
Company to perform or observe in any material respect any of its covenants,
agreements, undertakings or obligations set forth in this Warrant; provided,
however, that the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder's bad faith or
willful misconduct in its capacity as a stockholder or warrant holder of the
Company.
(i) AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(j) SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(k) DESCRIPTIVE HEADINGS. The headings used in this Warrant
are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
(l) ENTIRE AGREEMENT; MODIFICATION. This Warrant, the
Securities Purchase Agreement and the Registration Rights Agreement constitute
the entire agreement between the parties pertaining to the subject matter
contained herein and supersedes all prior and contemporaneous agreements,
representations, and undertakings of the parties, whether oral or written, with
respect to such subject matter.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: June 11, 2003
Fleetclean Systems, Inc.
By: /s/ Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
Title: President
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