Exhibit 10.16
08/11-001
CHIEF CONSOLIDATED MINING COMPANY.
(A Arizona Corporation)
 
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
 
Effective                     , 2008
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES
LAWS. THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR
OTHERWISE DISPOSED OF OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS.
     THIS CERTIFIES THAT, for value received,
                                                            , or its registered
assigns (“Holder”), is entitled to purchase, subject to the conditions set forth
below, at any time or from time to time during the Exercise Period (as defined
in subsection 1.2 below),
                                                            
(                    ) shares (“Shares”) of fully paid and non-assessable common
stock, par value $0.001 per share (the “Common Stock”), of Chief Consolidated
Mining Company., a Arizona corporation (the “Company”), at the per share
purchase price (the “Warrant Price”) set forth in subsection 1.1 below, subject
to the further provisions of this Warrant.

1.   EXERCISE OF WARRANT

     The terms and conditions upon which this Warrant may be exercised, and the
Shares subject hereto may be purchased, are as follows:
     1.1 Warrant Price. The Warrant Price shall be $0.15 per Share, subject to
adjustment as provided in Section 4 below.
Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in
part, beginning on the effective date of this Warrant and for two (2) years from
such date of effectiveness, or such later date as the Company may in its sole
discretion determine (the “Exercise Period”), by the surrender of this Warrant
(with the exercise form attached hereto as Exhibit A duly executed) at the
principal office of the Company, and by the payment to the Company of an amount
of consideration therefore equal to the Warrant Price in effect on the date of
such exercise multiplied by the number of Shares with respect to which this
Warrant is then being exercised, payable at such Holder’s election by certified
or official bank check or by wire transfer to an account designated by the
Issuer

 

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     1.2 Issuance Of Shares and New Warrant. If the purchase rights evidenced by
this Warrant are exercised in whole or in part, one or more certificates for the
purchased Shares shall be issued as soon as practicable thereafter to Holder. If
the purchase rights evidenced by this Warrant are exercised only in part, the
Company shall also deliver to Holder at such time a new Warrant evidencing the
purchase rights regarding the number of Shares (if any) for which the purchase
rights under this Warrant remain unexercised and continue in force and effect.
All new Warrants issued in connection with the provisions of this Section 1.2
shall bear the same date as this Warrant and shall be substantially identical in
form and provisions to this Warrant except for the number of Shares purchasable
thereunder. Each person in whose name any certificate for Shares is to be issued
shall for all purposes be deemed to have become the holder of record of such
Shares on the date on which this Warrant was surrendered and payment of the
Warrant Price was made, irrespective of the date of delivery of such stock
certificate, 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 close of business on the
next succeeding date on which the stock transfer books are open.

2.   TRANSFERS

     2.1 Transfers. This Warrant and all rights hereunder are transferable in
whole or in part by the Holder subject to the provisions of Section 7 below. The
transfer shall be recorded on the books of the Company upon (i) the surrender of
this Warrant (together with a duly executed and endorsed copy of the form of
transfer certificate attached hereto as Exhibit B) to the Secretary of the
Company at its principal offices, and (ii) the payment to the Company of all
transfer taxes and other governmental charges imposed on such transfer. In the
event of a partial transfer, the Company shall issue to the several holders one
or more appropriate new Warrants.
     2.2 Registered Holder. Each holder of this Warrant agrees that until such
time as any transfer pursuant to subsection 2.1 above is recorded on the books
of the Company; the Company may treat the registered Holder of this Warrant as
the absolute owner.
     2.3 Form Of New Warrants. All new Warrants issued in connection with
transfers of this Warrant shall bear the same date as this Warrant and shall be
substantially identical in form and provisions to this Warrant except for the
number of Shares purchasable thereunder.

3.   NO FRACTIONAL SHARES

     Notwithstanding any adjustment (as required hereby) to the number of Shares
purchasable upon the exercise of this Warrant, the Company shall not be required
to issue any fraction of a Share upon exercise of this Warrant. If, by reason of
any change made pursuant to Section 4 below, the Holder would be entitled, upon
the exercise of any rights evidenced hereby, to receive a fractional interest in
a Share, the Company shall, upon such proper exercise of this Warrant, purchase
such fractional interest for an amount in cash equal to the Fair Market Value of
such fractional interest, determined as of the date of such exercise of this
Warrant. For purposes of the Section 3, the term “Fair Market Value” means
(a) if the primary market for the Shares is a National Securities Exchange, the
NASDAQ National Market System, or any other market or quotation system in which
last sale transactions are reported on a contemporaneous basis, the last
reported sales price of such Shares, as of the time of authorization of the
transaction giving rise to the right to receive such Shares; or (b) if the
primary market for such Shares is not an exchange or quotation system, the fair
value thereof as shall be determined in good faith by the Board of Directors of
the Company at the time of authorization of the transaction giving rise to the
right to receive such Shares.

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4.   ANTIDILUTION PROVISIONS

     4.1 Stock Splits And Combinations. If the Common Stock shall at any time be
subdivided into a greater number of shares, then the number of Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be
proportionately increased; and, conversely, if the Common Stock shall at any
time be combined into a smaller number of shares, then the number of Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be
proportionately reduced. Any adjustments under this subsection 4.1 shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
     4.2 Reclassification, Exchange and Substitution. If the Common Stock shall
be changed into shares of any other class or classes of stock or other
securities of the Company, whether by capital reorganization, reclassification,
or otherwise, Holder shall, upon exercise of this Warrant, be entitled to
purchase for the same aggregate consideration, in lieu of the Shares that Holder
would have become entitled to purchase but for such change, a number of shares
of such other class or classes of stock or other securities of the Company
equivalent to the number of Shares that would have been subject to purchase by
Holder on exercise of this Warrant immediately before that change. Any
adjustments under this subsection 4.2 shall become effective at the close of
business on the date such change of the Common Stock into shares of any other
class or classes of stock or other securities of the Company becomes effective.
     4.3 Reorganizations, Mergers, Consolidations Or Sale Of Assets. If at any
time there shall be a reorganization involving the Common Stock (other than a
stock split, combination, reclassification, exchange, or subdivision of shares
provided for in subsections 4.1 and 4.2 above) or a merger or consolidation of
the Company with or into another corporation, or the sale of all or
substantially all of the Company’s assets to any other person, then, as a part
of such reorganization, merger, consolidation or sale, lawful provision shall be
made so that Holder shall thereafter be entitled to receive upon exercise of
this Warrant, in accordance with the terms hereof, in lieu of the Shares that
Holder would have become entitled to purchase but for such event, such other
securities or property of the Company, or of the successor corporation resulting
from such event, to which Holder would have been entitled in such
reorganization, merger, consolidation or sale if this Warrant had been exercised
immediately before that reorganization, merger, consolidation or sale. In any
such case, 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 Holder after the
reorganization, merger, consolidation, or sale to the end that the provisions of
this Warrant (including adjustment of the Warrant Price then in effect and
number of Shares purchasable upon exercise 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.
     4.4 Adjustments of Other Distributions. If the Company shall at any time
declare and pay or deliver to the holders of Common Stock a distribution payable
in securities of other persons, evidences of indebtedness issued by the Company
or other persons, assets (excluding cash dividends) or options or rights, in any
case of a kind not referred to above, then, upon exercise of this Warrant,
Holder shall be entitled to receive a proportionate share of any such
distribution as though Holder was the holder of the number of shares of Common
Stock into which this Warrant may be exercised as of the record date fixed for
the determination of the holders of Common Stock entitled to receive such
distribution.
     4.5 Certificate as to Adjustments. In the case of each adjustment
(including a readjustment) under this Section 4, the Company will promptly, and
in any event within thirty (30) days after the event requiring the adjustment,
compute such adjustment in accordance with the terms hereof and deliver or cause
to be delivered to Holder a certificate describing in reasonable detail the
event requiring the adjustment and setting forth such adjustment and the
calculations and results of such adjustment.

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     4.6 Reservation of Stock Issuable Upon Exercise. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock such number of shares of Common Stock as shall from time to time be
sufficient to effect the exercise of this Warrant. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the exercise of this Warrant, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
     4.7 Method of Calculation. All calculations under this Section 4 shall be
made to the nearest one hundredth of a share.
5. RIGHTS PRIOR TO EXERCISE OF WARRANT
     This Warrant does not entitle Holder to any of the rights of a stockholder
of the Company, including (without limitation) the right to receive dividends or
other distributions, to vote or consent, or to receive notice as a stockholder
of the Company. If, however, at any time prior to the expiration of this Warrant
and prior to its exercise,
     (a) the Company shall declare any dividend payable in any securities upon
outstanding shares of Common Stock or make any other distribution (other than a
regular cash dividend) to the holders of shares of Common Stock;
     (b) the Company shall offer to the holders of shares of Common Stock any
additional shares of Common Stock or securities convertible into or exchangeable
for shares of Common Stock or any right to subscribe for or purchase any
thereof; or
     (c) a dissolution, liquidation or winding-up of the Company (other than in
connection with a reorganization, consolidation, merger, or sale of all or
substantially all of its assets as an entirety) shall be approved by the
Company’s Board of Directors,
then, in any one or more of such events the Company shall give notice in writing
of such event to Holder, at its address as it shall then appear on the Company’s
records, at least twenty (20) days prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the stockholders
entitled to such dividends, distribution, or subscription rights, or for the
determination of stockholders entitled to vote on such proposed dissolution,
liquidation or winding-up. Such notice shall specify such record date or the
date of closing the transfer books, as the case may be.
     Any failure to give such notice or any defect therein, however, shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or such proposed dissolution, liquidation
or winding-up.

6.   SUCCESSORS AND ASSIGNS

     The terms and provisions of this Warrant shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and Holder and its
successors and permitted assigns.

7.   RESTRICTED SECURITIES

     To enable the Company to comply with the Securities Act and applicable
state securities laws, the Company may require Holder, as a condition of the
transfer or exercise of this Warrant, to give written assurance satisfactory to
the Company that this Warrant, or in the case of an exercise hereof the Shares,
are being acquired for its own account, for investment only, with no view to the
distribution of the same in

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violation of the Securities Act or applicable state securities laws. Any
disposition of all or any portion of this Warrant or the Shares shall not be
made unless and until:
     (a) There is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
     (b) Holder has (i) notified the Company of the proposed disposition and
furnished the Company with a detailed statement of the circumstances surrounding
the proposed disposition, and (ii) furnished the Company with an opinion of
counsel, satisfactory to the Company, that such disposition will not require
registration of such securities under the Securities Act and applicable state
securities laws.
     Holder acknowledges that this Warrant is, and each of the Shares issuable
upon the exercise hereof will be, a restricted security, and that the
certificate or certificates evidencing such Shares will bear a legend
substantially similar to the following:
“The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or under the securities laws of any state.
They may not be sold, transferred or otherwise disposed of in the absence of an
effective registration statement covering these securities under such Act or
laws, or an opinion of counsel satisfactory to the Company and its counsel that
registration is not required thereunder.”

8.   LOSS OR MUTILATION

     Upon receipt by the Company of satisfactory evidence of the ownership of
and the loss, theft, destruction, or mutilation of this Warrant, and (i) in the
case of loss, theft, or destruction, upon receipt by the Company of indemnity
satisfactory to it, or (ii) in the case of mutilation, upon receipt of this
Warrant and upon surrender and cancellation of this Warrant, the Company shall
execute and deliver in lieu thereof a new Warrant representing the right to
purchase an equal number of Shares.

9.   OWNERSHIP CAP

     The Holder may not exercise the Warrant hereunder to the extent such
exercise would result in the Holder beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 9.99% of the then issued and outstanding shares of Common Stock,
including shares issuable upon exercise of the Warrant held by the Holder after
application of this Section; provided, however, that upon a holder of this
Warrant providing the Issuer with a Waiver Notice that such holder would like to
waive this Section 9 with regard to any or all shares of Common Stock issuable
upon exercise of this Warrant, this Section 9 shall be of no force or effect
with regard to those shares of Warrant Stock referenced in the Waiver Notice;
provided, further, that this provision shall be of no further force or effect
during the sixty-one (61) days immediately preceding the expiration of the term
of this Warrant.

10.   NOTICES

     All notices, requests, demands and other communications under this Warrant
shall be in writing and shall be deemed to have been duly given on the date of
receipt (or refusal of receipt) if delivered personally or by courier by the
party to whom notice is to be given, or on the earlier of the third business day
after the date of mailing or receipt if mailed to the party to whom notice is to
be given by first class mail, registered or certified, postage prepaid, and
properly addressed as follows: if to Holder, at its address as shown in the
Company’s records; and if to the Company, at its principal office. Either party
may change

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its address for purposes of this Section 10 by giving the other party written
notice of the new address in the manner set forth above.

11.   GOVERNING LAW

     This Warrant and any dispute, disagreement or issue of construction or
interpretation arising hereunder, whether relating to its execution, its
validity, the obligations provided herein or performance, shall be governed or
interpreted according to the laws of the State of Arizona, without regard to
conflicts of law.
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DATED AS OF                                         , 2008.

            Chief Consolidated Mining Company.
      By:                                                                    ,
Chief Executive Officer           

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EXHIBIT “A”
SUBSCRIPTION
Chief Consolidated Mining Company
Suite 890-999 West Hastings Street
Vancouver, B.C.
Canada
V6C 2W2
Gentlemen:
The undersigned,                            , hereby elects to purchase,
pursuant to the provisions to the foregoing Warrant held by the undersigned,
                    shares of the Common Stock, par value $0.001 (the “Common
Stock”), of Chief Consolidated Mining Company
The undersigned herewith encloses the Warrant and:
     Cash or a certified or cashier’s check (drawn in favor of the Company) in
the amount of $                     in payment of the Warrant Price.
DATED:                     ,                     .

       
 
  Signature:  
 
     
 
  Address:  
 
     

 

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EXHIBIT “B”
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 this Warrant, with respect to the number of Shares of
Common Stock set forth below:

          No. of Shares Name and Address of Assignee   Common Stock  

and does hereby irrevocably constitute and appoint as Attorney
                                                             
                    to register such transfer on the books of
                                                                    
             maintained for the purpose, with full power of substitution in the
premises.
Dated:                                                             ,           
          .

       
 
     
 
     
 
     
 
     
 
     

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alternation or enlargement or any change whatsoever.