EXHIBIT 10.18
WARRANT TO PURCHASE COMMON STOCK OF
DALECO RESOURCES CORPORATION
THIS WARRANT AND THE COMMON STOCK OBTAINABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY OTHER SECURITIES
AUTHORITIES. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE ACT. THEY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF THOSE SECURITIES LAWS.
NO. OF SHARES 1,700,000 DATE: NOVEMBER 16, 2001
1. WARRANT. This Warrant ("Warrant") is issued to Sumitomo Corporation of
America, a New York corporation ("Holder") in accordance with that certain Stock
Purchase Agreement dated November 16, 2001 ("Stock Purchase Agreement"). This
Warrant certifies that, subject to the terms hereinafter set forth, the Holder,
or permitted assigns, is entitled to purchase up to One Million Seven Hundred
Thousand shares (1,700,000)("Shares" or "Warrant Shares") of fully paid and
non-assessable common stock of the Company, par value $0.01 ("Common Stock").
2. GRANT OF WARRANT. The Warrant is granted as additional consideration
for the for Holder's purchase of Common Stock under the Stock Purchase
Agreement.
3. EXERCISE PRICE. The exercise price ("Exercise Price") shall be:
(a) FIRST 850,000 SHARES. The exercise price for the first 850,000
shares OF Common Stock acquired by Holder through its exercise of this Warrant
shall be $2.00 per share ("First Tranche").
(b) SECOND 510,000 SHARES. The exercise price for the next 510,000
shares of Common Stock acquired by Holder through the exercise of this Warrant
after exercise of the First Tranche shall be $2.50 per share ("Second Tranche").
(c) REMAINING 340,000 SHARES. The exercise price for the remaining
340,000 shares of Common Stock acquired by Holder through the exercise of this
Warrant after exercise of the First Tranche and Second Tranche shall be $3.00
per share ("Third Tranche").
4. EXERCISE OF WARRANT. This Warrant may be exercised, in whole at any
time or in part from time to time, commencing the date hereof, and prior to 5:00
P.M., Eastern Time, on November 16, 2006, by the Holder of this Warrant by
the surrender of this Warrant (with the subscription form at the end hereof duly
executed) to the Company, together with proper payment of the Exercise Price.
Payment for Warrant Shares shall be made by certified or official bank check
payable to the order of the Company or wire transfer. If this Warrant is
exercised in part, this Warrant must be exercised for a minimum of 200,000
Shares of Common Stock, and the Holder is entitled to receive a new Warrant
covering the number of Warrant Shares in respect of which this Warrant has not
been exercised. Upon such surrender of this Warrant, the Company will (a) issue
a certificate or certificates in the name of the Holder for the number of Shares
of the Common Stock to which the Holder shall be entitled and (b) deliver a
revised Warrant to the Holder for the remaining Shares covered by this Warrant
if this Warrant is exercised in part.
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5. DELIVERY OF STOCK CERTIFICATES. Within five (5) business days after the
date of receipt of the Notice of Exercise, the Company will, at its expense,
cause to be issued to the Holder a certificate for the Shares to which the
Holder shall be entitled upon such exercise.
6. LEGENDS. The Shares issued upon exercise of this Warrant will contain
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED PURSUANT TO THE SECURITIES ACT OF 1933, as amended ("1933 Act")
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE 1933 ACT AND AN EFFECTIVE
REGISTRATION OR QUALIFICATION OF SUCH SECURITIES FOR SALE UNDER ANY
APPLICABLE STATE SECURITIES LAW; OR (ii) AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION AND QUALIFICATION
IS NOT REQUIRED.
7. ANTI- DILUTION PREMISES.
(a) ADJUSTMENTS FOR STOCK SPLITS. Should the Company undergo a stock
split, stock dividend or other combination or subdivision that does not involve
payment of consideration for such shares, the applicable Exercise Price in
effect immediately preceding such change shall be proportionately decreased and
the number of Shares of Common Stock purchasable upon the exercise of the
unexercised portion of this Warrant immediately prior to such subdivision shall
be proportionately increased. In the event the Company shall at any time combine
its outstanding common stock, the applicable Exercise Price in effect
immediately prior to such
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combination shall be proportionately increased and the number of Shares of
Common Stock purchasable upon the exercise of the unexercised portion of this
Warrant immediately prior to such combination shall be proportionately
decreased. Any such adjustment shall become effective at the close of business
on the last business day immediately preceding the day any such subdivision or
combination shall become effective.
(b) ADJUSTMENT FOR CONSOLIDATION, MERGER, REORGANIZATION, ETC. In
case the Company shall: (i) consolidate with or merge into any other corporation
and shall not be the continuing or surviving corporation of such consolidation
or merger, or (ii) permit any other corporation to consolidate with or merge
into the Company and the Company shall be the continuing or surviving
corporation but, in connection with such consolidation or merger, the Common
Stock shall be changes into or exchanged for securities or property of the
Company or any other corporation; or (iii) effect a capital reorganization or
reclassification of the Common Stock, then and in each such case, proper
provision shall be made so that on the terms and in the manner provided in this
Section, the Holder of this Warrant upon the exercise thereof at any time after
the consummation of such consolidation, merger, transfer, reorganization or
reclassification, shall be entitled to receive, in lieu of the Common Stock
issuable upon such exercise prior to such consummation, the securities and
property to which such Holder would have been entitled upon such consummation if
such holder had so exercised this Warrant immediately prior thereto.
(c) NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
its Articles of Incorporation 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 to be
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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 and in
the taking of all such action as may be necessary or appropriate in order to
protect the exercise privilege of the holder of this Warrant against impairment.
(d) CERTIFICATE AS TO ADJUSTMENTS. In the case of each adjustment or
readjustment of the Exercise Price pursuant to this Section the Company will
promptly compute such adjustment in accordance with the terms hereof and cause a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based to be delivered to
the Holder of this Warrant. The Company will, upon the written request at any
time of the Holder of this Warrant, furnish or cause to be furnished to such
Holder a certificate setting forth (i) such adjustments and readjustments; (ii)
the Exercise Price at the time in effect; and (iii) the number of shares of
Common Stock and the amount, if any, of other property at the time receivable
upon the exercise of this Warrant.
(e) RESERVATION OF STOCK ISSUABLE ON EXERCISE. The Company will at
all times reserve and keep available, solely for issuance and delivery upon the
exercise of this Warrant, all shares of Common Stock from time to time issuable
upon the exercise of this Warrant. All shares of Common Stock issuable upon
exercise of this Warrant shall be duly authorized and, when issued, validly
issued, fully paid and non-assessable with no liability on the part of the
Holder thereof.
8. REGISTRATION RIGHTS.
(a) If, at any time after the Warrant becomes exercisable in
accordance with its terms, the Company shall decide to proceed with the
preparation and filing of a registration statement under the Securities Act
utilizing either Form S-1 or SB-1 in connection with the proposed offer and sale
of any of its securities by it, the Company
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shall give written notice thereof the to Holder. Upon the written request of the
Holder, given within fifteen days after receipt of any such notice from the
Company, the Company shall, except as herein provided, cause all shares of
Common Stock which the Holder shall request be included in such registration
statement to be so included, at the Company's sole expense; provided, however,
that nothing herein shall prevent the Company from abandoning or delaying any
registration at any time; provided, further, that if the Company decides not to
proceed with a registration after the registration statement has been filed with
the SEC and the Company's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by the Company,
the Company shall promptly complete the registration for the benefit of the
Holder if the Holder agrees to bear all additional and incremental expenses
incurred by the Company as the result of such registration after the Company has
decided not to proceed.
(b) If any registration pursuant to this Section shall be
underwritten in whole or in part, the Holder may require that any shares of
Common Stock requested for inclusion pursuant to this Section be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through underwriters; provided, however, that any "over allotment" in such
underwriting shall be proportionately allocated to the Holder's shares included
in such registration, with the number of Holder's shares constituting the
numerator and the denominator being the total number of shares covered by the
registration.
(c) The Company does not currently anticipate that it will file a
registration statement to register shares of Common Stock under the Securities
Act. The Holder understands and agrees that it has no right to demand that the
Company file a registration statement, except as may be set forth in that
certain Registration Rights
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Agreement attached to and made a part of the Stock Purchase Agreement.
(d) With respect to any registration of Common Stock in which the
Holder participates pursuant to this Section 8:
(1) the Company shall indemnify and hold harmless the Holder,
any underwriter (as defined in the Securities Act) for the Holder, and each
person, if any, who controls the Holder or such underwriter within the meaning
of the Securities Act, from and against any and all loss, damage , liability,
cost and expense to which the Holder or any such underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement filed by the Company, any prospectus or preliminary
prospectus contained therein, or any amendment or supplement thereto, or arise
out of or are contained therein, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damages, liability, cost, or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission so made in conformity with information furnished by the Holder, such
underwriter, or such controlling person in writing specifically for use in the
preparation thereof; and
(2) the Holder shall indemnify and hold harmless the Company,
any underwriter (as defined in the Securities Act) for the Company, and each
person, if any, who controls the Company or such underwriter within the meaning
of the Securities Act, from and against any and all loss, damage, liability,
cost and expense to which the
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Company or any such underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses are caused by any untrue statement or alleged untrue statement
of any material fact, which was provided to the Company by the Holder, contained
in any registration statement filed by the Company , any prospectus or
preliminary prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are contained therein, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading; provided, however, that the Holder will not be
liable in any such case to the extent that any such loss, damages, liability,
cost, or expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission so made in conformity with information furnished by
the Company, such underwriter, or such controlling person in writing
specifically for use in the preparation thereof.
9. REPRESENTATIONS AND WARRANTIES OF HOLDER. Holder represents and
warrants to Company as follows:
(a) INVESTMENT INTENT; EXPERIENCE. The Holder is acquiring the
Warrant, and any Common Stock obtainable upon conversion of the Warrant, for its
own account and for investment purposes and not for sale or with a view to
distribution of all or any part of such Warrant or the Common Stock issuable
upon the conversion thereof. The Holder has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the prospective investment. The Holder, by virtue of its business and
financial expertise, has the capacity to protect its own interest in connection
with the transaction, or has
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consulted with tax, financial, legal or business advisors as to the
appropriateness of an investment in the Warrant and the Common Stock.
(b) NO IMMEDIATE NEED FOR LIQUIDATION. The Holder is aware that
there are legal and practical limits on the Holder's ability to sell or dispose
of the securities, and therefore, that the Holder must bear the economic risk of
the investment for an indefinite period of time.
(c) EXEMPT TRANSACTION. The Holder understands that this Warrant and
the Common Stock subject to the exercise of this Warrant being offered and sold
in reliance on specific exemptions from the registration requirements of federal
and state securities laws, and that the representations, Warranties, agreements,
acknowledgements and understandings set forth herein are being relied upon by
the Company in determining the applicability of such exemptions and the
suitability of the Holder to acquire such securities.
10. MISCELLANEOUS PROVISIONS.
(a) REPLACEMENT. 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 any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company at its expense will execute and deliver, in lieu of this Warrant, a new
Warrant of like tenor.
(b) WARRANT AGENT. The Company, may, on written notice to the holder
of this Warrant, appoint an agent for the purpose of issuing Common Stock or
other securities upon the exercise of this Warrant and of replacing or
exchanging this Warrant, and after that appointment any such issuance,
replacement, or exchange shall be made by that agent.
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(c) NO RIGHTS AS SHAREHOLDER. No Holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be considered a shareholder of
the Company for any purpose, nor shall anything in this Warrant be construed to
confer on any Holder of this Warrant as such, any rights of a shareholder of the
Company or any right to vote, give or withhold consent to any corporate action,
to receive notice of meeting of shareholders, to receive dividends or
subscription rights or otherwise.
(d) SALE; ASSIGNMENT. This Warrant may not be sold or assigned, in
whole or in part, except as set forth in Article IV of the Stock Purchase which
provisions are incorporated for all purposes by reference as thought set forth
at length herein.
(e) MODIFICATION. This Warrant and any of its terms may be changed,
waived, or terminated only by a written instrument signed by the party against
whom enforcement of that change, waiver, or termination is sought.
(f) TITLES AND SUBTITLES. The titles and subtitles used in this
Warrant are for convenience of reference only, and shall not be used in
construing the rights and obligations of the parties to this Warrant.
(g) GOVERNING LAW. This Warrant shall be governed by, construed, and
enforced in accordance with the internal laws of the Commonwealth of
Pennsylvania, without regard to the conflict of law.
(h) TERMINATION. This Warrant shall terminate upon November 16,
2006.
(i) CONFLICTS. Any conflicts or inconsistencies between the terms of
this Warrant and the provisions of the Stock Purchase Agreement shall be
resolved in favor of the Stock Purchase Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the date
first above written.
DALECO RESOURCES CORPORATION
/s/ Xxxx X. Xxxxxxxxx
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By: Xxxx X. Xxxxxxxxx, President
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EXHIBIT ONE
EXERCISE FORM
(TO BE SIGNED ONLY UPON EXERCISE OF THE WARRANT)
TO: DALECO RESOURCES CORPORATION:
The undersigned, the holder of the attached Warrant, hereby irrevocably elects
to exercise the purchase right represented by that Warrant for, and to purchase
under that Warrant __________________________________ Shares of Common Stock of
DALECO RESOURCES CORPORATION (the "Company") at an Exercise Price for the First
Tranche $2.00 per share, Second Tranche at $2.50 per share and the Third Tranche
at $3.00 per share. The undersigned hereby: makes payment of
$_______________________ for those Shares;
And requests that the certificates for those Shares be issued in its name, and
delivered to the following address:
Sumitomo Corporation of America
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
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Date Signature of _________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant.)
Address:
Sumitomo Corporation of America
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000 Xxxxx Xxxxxx
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Xxx Xxxx, XX 00000-0000
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