EXHIBIT 10.17
WARRANT AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION ("BLUE SKY LAWS"), AND
CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE ACT. THE
WARRANT SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF.
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE FIVE HUNDRED THOUSAND SHARES OF
DALECO RESOURCES CORPORATION COMMON STOCK
DATED: September 20, 2001
This certifies that, for valuable consideration received:
Name: Terra Silex Holdings, Ltd. Co. whose address is:
000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx, 00000 (Terra Silex")
or its registered permitted assigns are entitled to purchase
from Daleco Resources Corporation (the "Company), having its
principal office at 000 Xxxxx Xxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxxxx (Facsimile: 610-429-0810)) fully paid and
nonassessable shares of Common Stock, $.01 par value, of the
Company (the "Common Stock"), subject to the terms set forth
herein. This Warrant is issued pursuant to that certain Stock
Purchase Agreement by and between Terra Silex and the Company
dated September 18, 2001 ("Stock Purchase Agreement"). Any
capitalized terms not defined herein are as defined in the Stock
Agreement. This Warrant shall be execrable during the time
periods set forth in Section I hereof, at the price indicated
therein. The holder of this Warrant shall be referred to herein
as the "Warrantholder".
1. The purchase rights to Five Hundred Thousand (500,000)
shares of Common Stock as represented by this Warrant may be
exercised by the Warrantholder or its duly authorized attorney
or representative upon payment to the Company in cash or by
certified check or bank draft of $1.25 per share of Common Stock
purchased (the "Warrant Price"), as follows:
a. After the First Traunche Closing and before
December 31, 2006 ("Expiration Date"),, Terra Silex may exercise
the Price Warrant for up to 125,000 shares of Common Stock (in
multiples of not less than 50,000 shares).
b. After the Second Traunche Closing and before the
Expiration Date, Terra Silex may exercise the Price Warrant up
to a maximum of 250,000 shares in the aggregate (in multiples of
not less than 50,000 shares).
c. After the Third Traunche Closing and before the
Expiration Date, Terra Silex may exercise the Price Warrant up
to a maximum of 500,000 shares in the aggregate (in multiples of
not less than 50,000 shares).
2. The issuance and delivery of shares of Common Stock
pursuant to the terms of this Warrant shall be subject to and
comply with all relevant provisions of law including, without
limitation, the Act and the rules and regulations promulgated
thereunder, the Securities and Exchange Act of 1934, as amended
and the rules and regulations promulgated thereunder, and any
applicable state securities or "Blue Sky" law or laws, and the
requirements of any stock exchange upon which the Common Stock
may then be listed.
3. The Company agrees that the Warrantholder will be
deemed the record owner of any shares purchased pursuant to
Section 1 hereof as of the close of business on the date on
which the Warrant shall have been presented and payment shall
have been tendered for such shares as aforesaid. Certificates
for the shares of Common Stock so purchased shall be delivered
to the Warrantholder within a reasonable time, not exceeding 20
days, after the exercise in full of the rights represented by
this Warrant.
4. The number of shares purchasable upon exercise is
subject to adjustment from time to time as follows:
a. In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution on or in respect
of the Common Stock in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue by reclassification of its
shares of Common Stock other securities of the Company number of
shares (excluding any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation) purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and number
of shares of Common Stock or other securities of the Company
which the Warrantholder would have owned or have been entitled
to receive at the happening of any of the events described
above, had such Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto.
An adjustment made pursuant to this Section 4(a) shall become
effective immediately after the effective date of such event
retroactive to the record date, if any, for such event. Such
adjustments shall be made successively.
b. Whenever the number of shares of Common Stock
purchasable upon the exercise of this Warrant is adjusted, as
herein provided, the aggregate Warrant Price shall remain
unchanged (the Warrant Price calculated on a per share basis,
however, shall be adjusted by multiplying such per share Warrant
Price immediately prior to such adjustment by a fraction, of
which the numerator shall be the number of shares of Common
Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and of which the denominator shall be
the number of shares of Common Stock so purchasable immediately
thereafter).
In the event of any adjustment pursuant to this
Section 4, no fractional shares of Common Stock shall be issued
in connection with the exercise of this Warrant, but the Company
shall, in lieu of such fractional shares, make such cash payment
therefor on the basis of the currant market price on the date
immediately prior to exercise. Irrespective of any adjustments
pursuant to this Section 4 to the number of shares or other
securities or other property obtainable upon exercise of this
Warrant, this Warrant may continue to state the price and the
number of shares obtainable upon exercise as the same price and
number of shares stated herein.
5. This Warrant shall be void after 5:00 P.M. Eastern Time
on the Expiration Date, except for the provision of Section 9
which shall survive the termination of this Warrant and as
provided in paragraph 5 a, below.
(a) Should Terra Silex not have fully exercised the
Price Warrant by the Expiration Date and should the five day
closing average for the Common Stock for the five business days
immediately preceding the Expiration Date ("Closing Price") be
less than $1.25, then the Expiration Date shall be extended by a
period equal to:
5 years (The term of the Price Warrant) x $1.25
Closing Price
6. The Company covenants and agrees that:
a. During the period during which this Warrant may be
exercised, the Company will at all times reserve and keep
available, free from preemptive rights out of the aggregate of
its authorized but unissued Common Stock, for the purpose of
enabling it to satisfy any obligation to issue shares of Common
Stock upon the exercise of this Warrant, the number of shares of
authorized Common Stock deliverable upon exercise of this
Warrant. If at any time the number of shares of authorized
Common Stock shall not be sufficient to effect the exercise of
this Warrant, the Company will take such corporate actions as
may be necessary to increase its authorized but unissued Common
Stock to such number of shares as shall be sufficient for such
purpose;
b. All Common Stock that may be issued upon exercise
of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid, nonassessable, and free from all
taxes, liens, and charges with respect to the issue thereof, and
c. All original issue taxes payable with respect to
the issuance of shares upon the exercise of the rights
represented by this Warrant will be borne by the Company but in
no event will the Company be responsible or liable either for
income taxes or for transfer taxes upon the transfer of any
Warrant.
7. Until exercised, this Warrant shall not entitle the
Warrantholder to any voting rights or other rights as a
stockholder of the Company.
8. This Warrant and the Common Stock issuable upon the
exercise hereof may not be sold, transferred, assigned, pledged,
or hypothecated unless the Company shall have been supplied with
evidence reasonably satisfactory to it that such transfer is not
in violation of the Act, any applicable state laws, and any
provision of this Warrant.
The Company may place a legend referencing the transfer
restrictions on this Warrant or any replacement Warrant and on
any certificates representing shares upon exercise of this
Warrant.
9. a. If at any time during the period during which this
Warrant may be exercised, the Company proposes to register under
the Act and/or any applicable state securities law any of its
Common Stock for sale for cash in an offering in which other
shareholders will be participating, to the extent not limited by
either existing contractual arrangements or by this Warrant, the
Warrantholder shall have the right to include any part or all of
the shares of Common Stock for which Warrantholder possesses
exercisable purchase rights pursuant to this Warrant in any such
registration.
b. Notwithstanding (a) above, the Company shall
include in any registration made pursuant to this Section 9 only
those shares of Common Stock covered by this Warrant as to which
it has received assurances reasonably satisfactory to it that
all exercise rights as to the Warrant will be exercised and that
such Warrant will be converted to Common Stock on or prior to
the date on which a registration statement has become effective
or the sale thereof to underwriters has been consummated so that
only Common Stock shall be distributed to the public under such
registration statement.
In the event that Common Stock is proposed to be
registered pursuant to Section 9(a), the Company shall give
written notice to the Warrantholder of the proposed filing not
later than one week prior to the date of its intention to do so
and, upon the written request of the Warrantholder given to the
Company not more than four calendar days later (which request
shall state the intended method of disposition of such of its
securities to be included in the registration statement by the
Warrantholder), the Company shall cause such number of shares of
the Common Stock acquired or to be acquired by the Warrantholder
pursuant to this Warrant (but not the Warrant itself) to be
included in the registration statement to be registered under
the Act as provided above.
Any request of the Warrantholder for inclusion in
any registration of Common Stock pursuant to this Section 9
shall also include the agreement of the Warrantholder to sell
the applicable amount of Common Stock only through the
underwriters, if applicable, and at the price and upon the terms
fixed by the agreement among the Company and the underwriters or
brokers for such transaction. Additionally, in connection with
any such registration, participation by the Warrantholder will
be conditioned upon its execution of the underwriting documents
(which shall include standard indemnification provisions)
negotiated by the Company or the other selling stockholders, and
the execution by the Warrantholder of a lockup of up to 120 days
for any shares owned by it and not sold in the offering.
c. Any registration of shares pursuant to Section 9(a)
shall be effected at the Company's expense, exclusive of
underwriting discounts and commissions and of legal fees and
expenses for counsel to the Warrantholder.
d. In connection with any registration of shares
pursuant to this Section 9, the persons whose shares are being
registered shall furnish the Company with such information
concerning such persons and the proposed sale or distribution as
shall, in the opinion of counsel for the Company, be required
for use in the preparation of the registration statement, and
such person shall cooperate sully in the preparation and filing
of the registration statement. In addition, Warrantholder shall
indemnity the Company, its officers and directors ("Indemnified
Persons") against all claims, losses or damages Indemnified
Persons incur as a result of any information supplied by such
Warrantholder that was included in the registration statement
which either contained any untrue statement or alleged untrue
statement of material fact or failed to disclose material facts
required to make those stated not misleading.
e. The rights represented by this Section 9 shall
expire for any shares registered pursuant to this Section 9 or
otherwise.
f. The obligations of the Company and the
Warrantholder under this Section 9 shall survive the expiration
of this Warrant.
10. If this Warrant is lost, stolen, mutilated or
destroyed, the Company shall, on such terms as the Company may
reasonable impose, including a requirement that the
Warrantholder obtain a bond, issue a new Warrant of like
denomination, tenor, and date. Any such new Warrant shall
constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or
destroyed Warrant shall be at any time enforceable by anyone.
11. Any Warrant issued pursuant to the provisions of
Section 10 shall set forth each provision set forth in Sections
1 through 17, inclusive, of this Warrant as each such provision
is set forth herein, and shall be duly executed on behalf of the
Company by an executive officer.
12. Upon surrender of this Warrant or upon the exercise
hereof, this Warrant shall be canceled by the Company, shall not
be reissued by the Company, and no Warrant shall be issued in
lieu thereof.
13. This Warrant shall inure to the benefit and be binding
upon the Warrantholder, the Company, and their respective
successors and assigns, except as provided otherwise herein.
14. All notices required hereunder shall be in writing and
shall be deemed received when actually received, and may be hand
delivered, sent by overnight courier, or certified mail, return
receipt requested, or by facsimile transmission with the
originally executed document being delivered by 5:00 p.m. the
next business day following the date of facsimile notice, to the
Company or the Warrantholder, at the address or facsimile number
of such party as set forth on the first page of this Warrant or
at such other address or facsimile number of which the Company
or Warrantholder has been advised by notice hereunder.
15. In the case of any change in the Common Stock through
merger, consolidation, reclassification, reorganization,
recapitalization, or other change in the capital structure of
the Company or in the case of a sale or other transfer of its
property, assets, or business substantially as an entirety to
another corporation, appropriate adjustment shall be made so
that the Warrantholder shall have the right thereafter to
receive upon the exercise of this Warrant the amount of shares
of Common Stock which such holder would have been entitled to
receive if immediately prior to such event, such holder had held
the number of shares of Common Stock which were then purchasable
upon exercise of this Warrant. Appropriate adjustment shall be
made in the application of the provisions of this Warrant so
that the provision set forth herein shall thereafter be
applicable, as nearly as reasonable, to any shares of stock
thereafter deliverable upon the exercise! of this Warrant.
16. The validity, interpretation, and performance of this
Warrant and of the terms and provisions hereof shall be governed
by and construed in accordance of the internal laws of the State
of Nevada without giving effect to the principles of conflict of
laws.
17. This Warrant may not be modified, amended or
supplemented without the approval of the holder of the Warrant
and except upon the execution and delivery of a written
agreement executed by the Company and the Warrantholder.
IN WITNESS WHEREOF, the Company has caused this Warrant to
be duly executed effective as of September 20, 2001.
Daleco Resources Corporation
By:_______________________________
President
PURCHASE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned hereby exercises the right to purchase
_______ shares of Common Stock, evidenced by the attached
Warrant, according to the terms and conditions thereof, and
herewith makes payment of the purchase price in full. The
Undersigned requests that the certificate(s) for such shares
shall be issued in the name set forth below.
DATED: _________________ NAME OF HOLDER:___________________
SIGNATURE:________________________
ADDRESS:__________________________
__________________________
__________________________
Employer Identification Number,
Social Security Number or other
identifying number:_______________
