COMMON STOCK PURCHASE WARRANT DYNARESOURCE, INC.
Exhibit
4.6
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
DYNARESOURCE, INC.
|
Warrant Shares:
2,306
|
Initial Issuance
Date: May 13, 2020
|
THIS
COMMON STOCK PURCHASE WARRANT (this “Warrant”)
certifies that, for value received, Golden Post Rail, LLC or its
assigns (the “Holder”) is
entitled, upon the terms and subject to the limitations on exercise
and the conditions hereinafter set forth, at any time on or after
the date hereof (the “Initial Issuance
Date”) and on or prior to the close of business on the
seven (7) year anniversary of the Initial Issuance Date (the
“Termination
Date”) but not thereafter, to subscribe for and
purchase from DynaResource, Inc., a Delaware corporation (the
“Company”), up
to 2,306 shares (as subject to adjustment hereunder, the
“Warrant
Shares”) of the Company’s common stock, par
value $0.01 per share (the “Common
Stock”). The purchase price of one Warrant Share of
Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Securities Purchase
Agreement (the “Purchase
Agreement”), dated May 6, 2015, by and between the
Company and the Holder.
Section
2. Exercise.
(a) Exercise
of Warrant. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Issuance Date and on or before the
Termination Date by delivery to the Company (or such other office
or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of the Holder appearing on
the Warrant Register (as defined below) of the Company) of a duly
executed facsimile or electronic copy of the Notice of Exercise in
the form attached hereto as Exhibit A and within three (3)
Trading Days of the date said Notice of Exercise is delivered to
the Company, the Company shall have received payment of the
aggregate Exercise Price of the Warrant Shares thereby purchased by
wire transfer or cashier’s check drawn on a United States
bank. No ink-original Notice of Exercise shall be required, nor
shall any medallion guarantee (or other type of guarantee or
notarization) of any Notice of Exercise form be required.
Notwithstanding anything herein to the contrary, the Holder shall
not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available
hereunder and this Warrant has been exercised in full, in which
case, the Holder shall surrender this Warrant to the Company for
cancellation within three (3) Trading Days of the date the final
Notice of Exercise is delivered to the Company. Partial exercises
of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the number of Warrant Shares
purchased. The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of
Exercise within one (1) Business Day of receipt of such notice.
The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
“Business Day”
shall mean any day other than Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized or
required by law to remain closed.
“Trading Day”
shall mean 9:30 a.m. to 3:59 p.m. on any day on which the Common
Stock is traded on the over-the-counter market on the electronic
bulletin board or a securities exchange, or, if the Common Stock is
not so traded, a Business Day.
(b) Exercise Price. The exercise
price per Warrant Share of Common Stock under this Warrant shall be
$2.05, subject to adjustment hereunder (the “Exercise
Price”).
1
(c)
Mechanics of
Exercise.
(i) Delivery of Warrant Shares Upon
Exercise. The Company shall, promptly upon receipt of a
Notice of Exercise (but in any event, not less than one (1) Trading
Day after receipt of such Notice of Exercise), (i) send, via
facsimile, e-mail or other electronic means, a confirmation of
receipt of such Notice of Exercise to the Holder and the
Company’s transfer agent, which confirmation shall constitute
an instruction to the Company’s transfer agent to process
such Notice of Exercise in accordance with the terms herein, and
(ii) on or before the third (3rd) Trading Day following the date of
receipt by the Company of such Notice of Exercise and the aggregate
Exercise Price (such date, the “Warrant Share Delivery
Date”), the Company shall credit the aggregate number
of Warrant Shares to which the Holder shall be entitled to such
Holder’s or its designee’s balance account with The
Depository Trust Company via its Deposit Withdrawal Agent
Commission system (“DWAC”) if the
Company is then a participant in such system and either (A) there
is an effective Registration Statement permitting the issuance of
the Warrant Shares to, or resale of the Warrant Shares by, the
Holder or (B) the Warrant Shares are eligible for resale by the
Holder without volume or manner-of-sale limitations and without the
need for the Company to be in compliance with the current public
information requirements pursuant to Rule 144 promulgated under the
Securities Act (“Rule 144”),
and otherwise by physical delivery to the address specified by the
Holder in such Notice of Exercise on or before the Warrant Share
Delivery Date. The Warrant Shares 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
Warrant Shares for all purposes, as of the date this Warrant has
been exercised, with payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant
to Section 2(c)(vi) prior to the issuance of such Warrant Shares,
having been paid. If the Company fails for any reason to deliver to
the Holder the Warrant Shares pursuant to a Notice of Exercise
following receipt of the Exercise Price by the Warrant Share
Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Warrant
Shares subject to such exercise (based on the VWAP on the date of
the applicable Notice of Exercise), $10 per Trading Day (increasing
up to a maximum of $180 for each $1,000 of Warrant Shares subject
to such exercise) for each Trading Day after such Warrant Share
Delivery Date until such Warrant Shares are delivered or Holder
rescinds such exercise.
“VWAP” shall
mean the dollar volume-weighted average price for the Common Stock
on the over-the-counter market on the electronic bulletin board, or
if the Common Stock becomes listed on an exchange, such exchange,
during the period beginning at 9:30:01 a.m., New York City time,
and ending at 4:00:00 p.m., New York City time, as reported by
Bloomberg, L.P. (“Bloomberg”).
If the VWAP cannot be calculated for the Common Stock on such date
on the foregoing basis, the VWAP of the Common Stock on such date
shall be the last reported closing sales price for such date. All
such determinations shall be appropriately adjusted for any stock
splits, stock dividends, stock combinations, recapitalizations or
other similar transactions during the relevant period.
(ii) Delivery
of New Warrants Upon Exercise. If this Warrant shall have
been exercised in part, the Company shall, at the request of the
Holder and upon surrender of this Warrant certificate, at the time
of delivery of the Warrant Shares, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this
Warrant.
(iii) Rescission
Rights. If the Company fails to cause its transfer agent to
transmit to the Holder the Warrant Shares pursuant to Section
2(c)(i) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise.
(iv) Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon
Exercise. In addition to any other rights available to the
Holder, if the Company fails to cause its transfer agent to
transmit to the Holder the Warrant Shares pursuant to an exercise
on or before the Warrant Share Delivery Date, and if after such
date the Holder is required by its broker to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a
“Buy-In”), then
the Company shall (A) pay in cash to the Holder the amount, if any,
by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue by (2) the
price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of this Warrant and the equivalent
number of Warrant Shares for which such exercise was not honored
(in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have
been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of Warrant
Shares with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit the Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver Warrant Shares upon
exercise of this Warrant as required pursuant to the terms
hereof.
2
(v) 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 the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up
to the next whole share.
(vi) Charges,
Taxes and Expenses. The issuance of Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder;
provided, that in the event
that Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by
the Holder and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto. The Company shall pay all transfer agent fees
required for same-day processing of any Notice of Exercise and all
fees to the Depository Trust Company (or another established
clearing corporation performing similar functions) required for
same-day electronic delivery of the Warrant Shares.
(vii) Closing
of Books. The Company will not close its stockholder books
or records in any manner that prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
(d)
Holder’s Exercise
Limitations. The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the
Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates and Attribution
Parties shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such
determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) exercise of the
remaining, nonexercised portion of this Warrant beneficially owned
by the Holder or any of its Affiliates or Attribution Parties and
(ii) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without
limitation, any other Common Stock Equivalents) subject to a
limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 2(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is
not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained
in this Section 2(d) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates and Attribution Parties)
and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of
Exercise shall be deemed to be the Holder’s determination of
whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and
Attribution Parties) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For purposes of
this Section 2(d), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most
recent periodic or annual report filed with the U.S. Securities and
Exchange Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the transfer agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within one Trading Day
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial Ownership
Limitation” shall be 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this
Warrant. The Holder, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 2(d); provided that the Beneficial Ownership Limitation in
no event exceeds 19.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(d) shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not
be effective until the 61st day after such notice is delivered to
the Company. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(d) to correct this paragraph (or
any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give
effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this
Warrant.
3
Section
3. Certain
Adjustments.
(a) Stock Dividends and Splits. If
the Company, at any time while this Warrant is outstanding: (i)
makes or issues or sets a record date for the determination of
holders of Common Stock entitled to receive a dividend or other
distribution payable in Common Stock, (ii) makes or issues or sets
a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in
securities or property other than Common Stock, (iii) effects a
stock split of the outstanding shares of Common Stock or (iv)
combines the outstanding shares of Common Stock, then in each case
the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding
immediately after such event, and the number of Warrant Shares
issuable upon exercise of this Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this
Section 3(a) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination
or re-classification.
(b) Subsequent Equity Sales. If the
Company or any Subsidiary thereof, as applicable, at any time while
this Warrant is outstanding, shall sell or grant any option to
purchase, or sell or grant any right to reprice, or otherwise
dispose of or issue, including, without limitation, (i) any
issuance as a result of the settlement or resolution (by judgment
or otherwise) of any litigation or threatened litigation or (ii)
the issuance of Common Stock or Common Stock Equivalents to any
Subsidiary after the Initial Issuance Date, or announce any offer,
sale, grant or any option to purchase or other disposition, any
Common Stock or Common Stock Equivalents other than Excluded
Securities (such issuances collectively, a “Dilutive
Issuance”), then simultaneously with the consummation
of each Dilutive Issuance the Exercise Price shall be multiplied
according to the following equation:
where:
A = the
aggregate number of shares of Common Stock outstanding prior to the
Dilutive Issuance, on a fully-diluted basis;
B = the
number of new shares of Common Stock or Common Stock Equivalents
issued in the Dilutive Issuance, on a fully-diluted
basis;
C = the
aggregate number of shares of Common Stock into which this Warrant
is exercisable prior to the Dilutive Issuance; and
X = the
number by which to multiply the Exercise Price in effect
immediately prior to the Dilutive Issuance.
In
addition, simultaneously with the consummation of each Dilutive
Issuance, the number of Warrant Shares issuable hereunder shall be
increased such that the aggregate Exercise Price payable hereunder,
after taking into account the decrease in the exercise Price, shall
be equal to the aggregate Exercise Price prior to such adjustment.
The Company shall notify the Holder, in writing, no later than the
Trading Day following the issuance or deemed issuance of any Common
Stock or Common Stock Equivalents subject to this Section 3(b),
indicating therein the calculation of the equation in this Section
3(b) (such notice, the “Dilutive Issuance
Notice”). For purposes of clarification, whether or
not the Company provides a Dilutive Issuance Notice pursuant to
this Section 3(b), upon the occurrence of any Dilutive Issuance,
the Holder is entitled to receive a number of Warrant Shares based
upon the adjusted Exercise Price regardless of whether the Holder
accurately refers to the adjusted Exercise Price in the Notice of
Exercise.
4
“Excluded
Securities” shall mean (i) shares of Common Stock or
Common Stock Equivalents issued in the transactions contemplated by
the Purchase Agreement, including pursuant to the Company’s
Certificate of Designations of Series C Senior Convertible
Preferred Stock (the “Certificate of
Designations”) other than Common Stock Equivalents
issued pursuant to the antidilution adjustment provisions in
Section 6(d)(iv) and Section 6(d)(vi) of the Certificate of
Designations, and (ii) any of the Company’s equity securities
issued to a holder of shares of the Company’s Series C
Preferred Stock pursuant to the preemptive rights provided by the
Certificate of Designations.
In the
event the Company shall issue or sell any shares of preferred stock
of the Company that are not convertible into Common Stock, then an
appropriate adjustment to the securities to be received upon
exercise of this Warrant (by adjustments of the Exercise Price or
otherwise) shall be made, as the Holder and the Company shall
mutually agree.
(c) Subsequent Equity Issuances of
Subsidiary. If at any time while this Warrant is
outstanding, (i) the Company’s ownership of DynaMexico Shares
shall decrease (by forfeiture or shifting of ownership or
otherwise) or (ii) DynaResource de Mexico S.A. de C.V. (the
“Mexican
Subsidiary”) shall issue or sell any DynaMexico Shares
or DynaMexico Share Equivalents to any person other than the
Company, in each case including, without limitation, as a result of
the settlement or resolution (by judgment or otherwise) of any
litigation or threatened litigation (such decreases or issuances
collectively, a “Subsidiary Dilutive
Event”), then simultaneously with the consummation of
each Subsidiary Dilutive Event the Exercise price shall be
multiplied according to the following equation:
where:
A = the
aggregate number of shares of Common Stock outstanding prior to the
Subsidiary Dilutive Event, on a fully-diluted basis;
B = the
aggregate number of shares of Common Stock for which this Warrant
is exercisable prior to the Subsidiary Dilutive Event;
C = the
number of shares in the Mexican Subsidiary held by the Company
following the Subsidiary Dilutive Event;
D = the
aggregate number of shares in the Mexican Subsidiary outstanding
following the Subsidiary Dilutive Event;
E = the
number of shares in the Mexican Subsidiary held by the Company
prior to the Subsidiary Dilutive Event;
F = the
aggregate number of shares in the Mexican Subsidiary outstanding
prior to the Subsidiary Dilutive Event; and
X = the
number by which to multiply the Exercise Price in effect
immediately prior to the Subsidiary Dilutive Event; provided, however, that if X is less
than or equal to zero (0), then X shall equal .001.
In
addition, simultaneously with the consummation of each Subsidiary
Dilutive Event, the number of Warrant Shares issuable hereunder
shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the exercise
Price, shall be equal to the aggregate Exercise Price prior to such
adjustment. The Company shall notify the Holder, in writing, no
later than the Trading Day following the Subsidiary Dilutive Event,
indicating therein the calculation of the equation in this Section
3(c) (such notice, the “Subsidiary Dilution
Notice”). For purposes of clarification, whether or
not the Company provides a Subsidiary Dilution Notice pursuant to
this Section 3(c), upon the occurrence of any Subsidiary Dilution
Event, the Holder is entitled to receive a number of Warrant Shares
based upon the adjusted Exercise Price regardless of whether the
Holder accurately refers to the adjusted Exercise Price in the
Notice of Exercise.
5
“DynaMexico
Shares” means the Fixed Capital “Series A”
Shares or the Variable Capital “Series B” Shares issued
by the Mexican Subsidiary.
“DynaMexico Share
Equivalent” means any rights, warrants or options to
purchase or other securities convertible into or exchangeable or
exercisable for, directly or indirectly, any (1) DynaMexico Shares
or (2) securities convertible into or exchangeable or exercisable
for, directly or indirectly, DynaMexico Shares.
(d) Subsequent Rights Offerings. If
the Company, at any time while this Warrant is outstanding, shall
issue rights, options or warrants to all holders of Common Stock
entitling them to subscribe for or purchase shares of Common Stock
(the “Purchase
Rights”), then, upon any exercise of this Warrant, the
Holder will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights that the Holder
could have acquired if the Holder had held the number of Warrant
Shares issued upon such exercise of this Warrant (without regard to
any limitations on exercise hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date on
which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights
(provided,
however, that, to
the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (or beneficial
ownership of such shares of Common Stock as a result of such
Purchase Right to such extent) and such Purchase Right to such
extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation). For the term of this Warrant,
the Company shall hold such Purchase Rights for the benefit of the
Holder until the Holder exercises this Warrant or any portion
thereof.
(e) Pro Rata Distributions. If the
Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock evidences of its
indebtedness or assets (including cash and cash dividends) or
rights or warrants to subscribe for or purchase any security other
than the Common Stock (a “Distribution”),
then, upon any exercise of this Warrant, the Holder shall be
entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had
held the number of Warrant Shares issued upon such exercise of this
Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for such
Warrant, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for
the participation in such Distribution (provided, however, that, to the extent
that the Holder’s right to participate in any such
Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of
such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Beneficial Ownership
Limitation). For the term of this Warrant, the Company shall hold
such Distribution for the benefit of the Holder until the Holder
exercises this Warrant or any portion thereof.
6
(f) Fundamental Transaction. If, at
any time while this Warrant is outstanding, (i) the Company,
directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another
Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a
series of related transactions, (iii) the Company’s board of
directors gives its consent to a transaction whereby an individual
or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) acquires effective
control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 50%
of the voting securities of the Company (other than by means of
conversion or exercise of the Series C Preferred, that certain
Common Stock Purchase Warrant (for 2,166,527 shares), dated June
30, 2015, of the Company held by Holder or this Warrant),
provided, this clause (iii)
does not include an unsolicited takeover bid, (iv) the Company,
directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the
Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person or group of
Persons whereby such other Person or group acquires more than 50%
of the outstanding shares of Common Stock (not including any shares
of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(d) on the exercise of this Warrant), the
number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate
Consideration”) receivable as a result of such
Fundamental Transaction by the holder of the number of Warrant
Shares for which this Warrant is exercisable immediately prior to
such Fundamental Transaction (without regard to any limitation in
Section 2(d) on the exercise of this Warrant). For purposes of any
such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. Notwithstanding anything to
the contrary, in the event of a Fundamental Transaction, the
Company or any Successor Entity (as defined below) shall, at the
Holder’s option, exercisable at any time concurrently with,
or within thirty (30) calendar days after, the consummation of the
Fundamental Transaction, purchase this
Warrant from the Holder by paying to the Holder an amount of
cash equal to the Black Scholes Value of the remaining unexercised
portion of this Warrant on the date of the consummation of such
Fundamental Transaction. “Black Scholes
Value” means the value of this Warrant based on the
Black and Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg determined as of the
calendar day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date,
(B) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the HVT function on Bloomberg as of
the Trading Day immediately following the public announcement of
the applicable Fundamental Transaction, (C) the underlying price
per share used in such calculation shall be the sum of the price
per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Fundamental
Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations
of the Company under this Warrant and the other Transaction
Documents in accordance with the provisions of this Section 3(f)
pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the Warrant Shares acquirable and
receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Warrant and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Warrant and
the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company herein.
(g) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 3, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
7
(h) Notice to Holder.
(i) Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly mail to the Holder a
notice setting forth the Exercise Price after such adjustment and
any resulting adjustment to the number of Warrant Shares and
setting forth a brief statement of the facts requiring such
adjustment.
(ii) Notice
to Allow Exercise by Holder. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, (E) the
Company shall otherwise effect a Fundamental Transaction, or (F)
the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed
to the Holder at its last address as it shall appear upon the
Warrant Register (as defined below) of the Company, at least 20
calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such
notice or any defect therein or in the mailing thereof shall not
affect the validity of the corporate action required to be
specified in such notice. To the extent that any notice provided
hereunder constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the
Company shall simultaneously file such notice with the Commission
pursuant to a Current Report on Form 8-K. The Holder shall remain
entitled to exercise this Warrant during the period commencing on
the date of such notice to the effective date of the event
triggering such notice except as may otherwise be expressly set
forth herein.
Section
4. Transfer
of Warrant.
(a) Transferability. Subject to
compliance with any applicable securities laws and the conditions
set forth in Section 4(d) hereof and to the provisions of the
Purchase Agreement, this Warrant and all rights hereunder
(including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant
at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in
the form attached hereto duly executed by the Holder 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, as
applicable, 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. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this
Warrant to the Company unless the Holder has assigned this Warrant
in full, in which case, the Holder shall surrender this Warrant to
the Company within three (3) Trading Days of the date the Holder
delivers an assignment form to the Company assigning this Warrant
in full. This
Warrant, if properly assigned in accordance herewith, may be
exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.
(b) New Warrants. 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 Section 4(a) 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 this
Warrant or the Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges
shall be dated as of the Initial Issuance Date and identical with
this Warrant except as to the number of Warrant Shares issuable
pursuant thereto.
(c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof
from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the
contrary.
8
(d) Transfer
Restrictions. If, at the
time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of
this Warrant shall not be either (i) registered pursuant to an
effective registration
statement under the
Securities Act and under
applicable state securities or blue sky laws or (ii) exempt from
registration under the Securities Act, the Company may require, as
a condition of allowing such transfer, that the Holder or
transferee of this Warrant, as the case may be, comply with the
provisions of the Purchase Agreement.
(e) Representation by the Holder.
The Holder, by the acceptance hereof, represents and warrants that
it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling
such Warrant Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, except
pursuant to sales registered or exempted under the Securities
Act.
Section
5. Miscellaneous.
(a) No Rights as Stockholder Until
Exercise. This Warrant does not entitle the Holder to any
voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section
2(c)(i), except as expressly set forth in Section 3.
(b) 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, in the case of this Warrant, 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.
(c) 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 not be a Business Day, then, such action may be taken or such
right may be exercised on the next succeeding Business
Day.
(d) Authorized Shares. The Company
covenants that, during the period this 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 issuing the necessary 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 trading market upon which the Common Stock may
be listed. The Company covenants that all Warrant Shares which may
be issued upon the exercise of the purchase rights represented by
this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such
issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its Amended and Restated Certificate 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 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 as set forth in this
Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any
Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such
action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant and (iii) use 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.
9
Before
taking any action which would result in an adjustment in the number
of Warrant Shares 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.
(e) Jurisdiction. All questions
concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
(f) Restrictions. The Holder
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.
(g) Nonwaiver and Expenses. 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 the Holder’s rights, powers or
remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which
results in any material damages to the Holder, the Company shall
pay to the 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 the Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.
(h) Notices. Any notice, request or
other document required or permitted to be given or delivered to
the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.
(i) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the 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.
(j) Remedies. The 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 and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
(k) 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 and permitted assigns of the Company
and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder
from time to time of this Warrant and shall be enforceable by the
Holder.
(l) Amendment. Any provision of
this Warrant may be waived by the Holder in writing, which waiver
shall be binding on all of the Holder’s successors and
assigns. Any provision of this Warrant may be amended by a written
instrument executed by the Company and the Holder, which amendment
shall be binding on all of the Holder’s successors and
assigns.
(m) 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.
(n) 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.
********************
(Signature Page Follows)
10
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
|
|
DYNARESOURCE, INC. |
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Name: K.W.
(“K.D.”) Diepholz
|
|
|
|
|
Title:
Chairman &
CEO
|
|
Warrant Signature Page
11
EXHIBIT A
NOTICE
OF EXERCISE
TO:
DYNARESOURCE,
INC.
(1) The undersigned
hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Please issue said
Warrant Shares in the name of the undersigned or in such other name
as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number:
_______________________________
_______________________________
_______________________________
(3)
Accredited
Investor. The undersigned is an “accredited
investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity:
_________________________________________________
Name of
Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
________________________________________________________________________________________
12
EXHIBIT B
ASSIGNMENT
FORM
(To assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
|
Name:
|
_______________________________
|
|
|
(Please
Print)
|
|
Address:
|
_______________________________
|
|
|
(Please
Print)
|
|
Dated:
_______________ __, ______
|
|
|
Holder’s
Signature: _______________________________
|
|
|
Holder’s
Address: _______________________________
|
|
13
