Attached files
| file | filename |
|---|---|
| EX-10.1 - NOTE PURCHASE AGREEMENT - DYNARESOURCE INC | dynr_ex101.htm |
| EX-4.7 - AMENDED AND RESTATED REGISTRATION RIGHT AGREEMENT - DYNARESOURCE INC | dynr_ex47.htm |
| EX-4.6 - COMMON STOCK PURCHASE WARRANT - DYNARESOURCE INC | dynr_ex46.htm |
| EX-4.5 - AMENDMENT TO THE JUNE 30 2015 WARRANT - DYNARESOURCE INC | dynr_ex45.htm |
| EX-4.4 - COMMON STOCK PURCHASE WARRANT - DYNARESOURCE INC | dynr_ex44.htm |
| EX-4.3 - COMMON STOCK PURCHASE WARRANT - DYNARESOURCE INC | dynr_ex43.htm |
| EX-4.2 - CONVERTIBLE PROMISSORY NOTE - DYNARESOURCE INC | dynr_ex42.htm |
| EX-4.1 - CONVERTIBLE PROMISSORY NOTE - DYNARESOURCE INC | dynr_ex41.htm |
| EX-3.1 - CERTIFICATE OF INCREASE - DYNARESOURCE INC | dynr_ex31.htm |
| 8-K - CURRENT REPORT - DYNARESOURCE INC | dynr_8k.htm |
Exhibit 3.2
CERTIFICATE OF DESIGNATIONS OF THE POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
PREFERRED STOCK AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS
THEREOF
of
SERIES D SENIOR CONVERTIBLE PREFERRED STOCK
for
DYNARESOURCE, INC.
DYNARESOURCE, INC.,
a Delaware corporation (the
“Corporation”),
pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this
Certificate of Designations and does hereby state and certify that
pursuant to the authority expressly vested in the Board of
Directors of the Corporation (the “Board of
Directors”) by the
Amended and Restated Certificate of Incorporation of the
Corporation (the “Amended and
Restated Certificate of Incorporation”), the Board of Directors duly adopted the
following resolutions, which resolutions remain in full force and
effect as of the date hereof:
RESOLVED, that, pursuant to paragraph 3 of Article IV of the
Amended and Restated Certificate of Incorporation, the Board of
Directors hereby authorizes the issuance of, and fixes the
designation and preferences and relative, participating, optional
and other special rights, and qualifications, limitations and
restrictions, of a series of Preferred Stock consisting of
3,000,000 shares (the “Series D
Preferred Shares”), par
value $0.0001 per share, to be designated “Series D Senior Convertible Preferred
Stock”.
RESOLVED, that each of the Series D Preferred Shares shall
rank equally in all respects and shall be subject to the following
terms and provisions:
1. Certain
Defined Terms. For
purposes of this Certificate of Designations, the following terms
shall have the following meanings:
(a) “Bloomberg”
means Bloomberg Financial Markets.
(b) “Business
Day” means 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.
(c) “Change
in Control Transaction”
will be deemed to exist if (i) there occurs any consolidation or
merger of the Corporation with or into any other corporation or
other entity or person (whether or not the Corporation is the
surviving corporation), any other business combination, including
without limitation a reorganization, recapitalization, share
exchange, spin-off or scheme of arrangement, or any other
transaction or series of related transactions in which in excess of
50% of the Corporation’s voting power is transferred through
a merger, consolidation, tender offer or similar transaction, (ii)
any person (as defined in Section 13(d) of the Exchange Act),
together with its affiliates and associates (as such terms are
defined in Rule 405 under the Securities Act), beneficially owns or
is deemed to beneficially own (as described in Rule 13d-3 under the
Exchange Act without regard to the 60-day exercise period) in
excess of 50% of the Corporation’s voting power
(provided, however, that if any person is immediately prior
to the Initial Issuance Date a beneficial owner (as determined
pursuant to Section 13(d) of the Exchange Act) of 40% or more of
the Corporation’s Common Stock, it shall not be deemed to be
a Change of Control Transaction if such person increases its
beneficial ownership percentage by not more than ten (10)
percentage points), (iii) a sale, lease, transfer or exclusive
license or other disposition of all or substantially all of the
assets of the Corporation (including its Subsidiaries), determined
on a consolidated basis, (iv) the sale, lease, transfer, exclusive
license or other disposition or encumbrance of any material mining
concession of the Corporation or of any of the Corporation’s
Subsidiaries, or (v) the transfer of 10% of the Corporation’s
interests in any Subsidiary, either directly or indirectly,
including but not limited to direct transfers, issuances by a
Subsidiary to parties other than the Corporation, cancellation of
outstanding securities or otherwise.
(d) “Common
Shares” means fully paid,
validly issued and non-assessable shares of Common
Stock.
(e) “Common
Stock” means the common
stock, par value $0.01 per share, of the
Corporation.
(f) “Common
Stock Equivalent” means
any rights, warrants or options to purchase or other securities
convertible into or exchangeable or exercisable for, directly or
indirectly, any (1) shares of Common Stock or (2) securities
convertible into or exchangeable or exercisable for, directly or
indirectly, shares of Common Stock.
(g) “Deemed
Liquidation Event” means,
unless the Required Holders elect otherwise by written notice sent
to the Corporation at least three (3) days prior to the effective
date of such event, (i) a Change in Control Transaction, (ii) a
“going private” transaction under Rule 13e-3
promulgated pursuant to the Exchange Act, or (iii) a tender offer
by the Corporation under Rule 13e-4 promulgated pursuant to the
Exchange Act. The Holders shall be entitled to thirty (30)
days’ prior written notice before the Corporation effects any
of the transactions described in the foregoing subsections (i)
through (iii). In the event a Change in Control Transaction occurs
in which the Corporation is not a participant, the Corporation
shall provide the Holders notice of such Change in Control
Transaction as soon as possible after learning of the Change in
Control Transaction, and such Change in Control Transaction will be
a Deemed Liquidation Event unless the Required Holders elect
otherwise by written notice sent to the Corporation within fifteen
(15) days after the Corporation sends the Holders notice that such
Change in Control Transaction has occurred.
1
(h) “DynaMexico
Shares” means the Fixed
Capital “Series A” Shares or the Variable Capital
“Series B” Shares issued by DynaResource de Mexico S.A.
de C.V., a Subsidiary of the Corporation.
(i) “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.
(j) “Equity
Security” means (i) any
shares of capital stock of the Corporation, (ii) any rights,
options, warrants or similar securities to subscribe for, purchase
or otherwise acquire any shares of capital stock of the
Corporation, and (iii) debt or other evidences of indebtedness,
capital stock or other securities directly or indirectly
convertible into or exercisable or exchangeable for any shares of
capital stock of the Corporation.
(k) “Exchange
Act” means
the Securities
Exchange Act of 1934, as amended.
(l) “Excluded
Securities” means (i)
shares of Common Stock or Common Stock Equivalents issued in the
transactions contemplated by the Note, including pursuant to the
Certificate of Designations or the Warrants, other than Common
Stock Equivalents issued pursuant to the antidilution adjustment
provisions in Section 3(b) or Section 3(c) of the Warrants, and
(ii) any Equity Securities issued to a Holder pursuant to the
preemptive rights under Section 9
of this Certificate of
Designations.
(m) “Holder”
means each holder of the Series D Preferred
Shares.
(n) “Initial
Issuance Date” means the
date a Note is first issued by the Corporation pursuant to the
Purchase Agreement.
(o) “Junior
Securities” means the
Common Stock, the Series A Preferred Stock, par value $0.0001 per
share, the Series B Convertible Preferred Stock, par value $0.0001
per share and each other class or series of Equity Security of the
Corporation (other than the Pari Passu Securities), the terms of
which do not expressly provide that it ranks senior in preference
or priority to or on parity, without preference or priority, with
respect to the Series D Senior Convertible Preferred Stock as to
dividend rights or rights upon a Liquidation
Event.
(p) “Liquidation
Event” means any Deemed
Liquidation Event or any liquidation, dissolution or winding up of
the Corporation, either voluntary or
involuntary.
(q) “Maturity
Date” means the date that
is 5 years after the conversion in full of the Notes held by a
majority in aggregate principal amount of the Notes, which majority
shall include the Primary Investor for so long as the Primary
Investor holds any Notes.
(r) “Note”
or “Notes”
means the Note(s) issued by the Corporation pursuant to the
Purchase Agreement.
(s) “Pari
Passu Securities” means
the Series C Preferred Shares and each other security of the
Corporation which expressly provides that it ranks on parity,
without preference or priority, with respect to the Series D
Preferred Shares as to dividend rights or rights upon a Liquidation
Event.
(t) “Primary
Investor” means Golden
Post Rail, LLC, a Texas limited liability company, Matthew K. Rose
and his heirs, or any charitable organization or
foundation.
(u) “Purchase
Agreement” means the Note
Purchase Agreement, dated as of May 14, 2020, by and among the
Corporation and the initial purchaser of the Note(s) and the
Warrants thereunder.
(v) “Qualified
Stockholders” means any
Holder who is an “accredited investor” (within the
meaning of Rule 501(a) promulgated by the SEC).
(w) “Required
Holders” means the
Holders of at least a majority of the aggregate Series D Preferred Shares then
outstanding, which shall include the Primary Investor for so long
as the Primary Investor holds any Series D Preferred
Shares.
2
(x) “Restricted
Change in Control Transaction” means any Change in Control Transaction
(within the Corporation’s control to effect) in which the
cash consideration to be paid to the Holders upon the consummation
of such Change in Control Transaction is less than $2.00 per Series
D Preferred Share (as adjusted for any stock dividends, splits,
combinations and similar events) in immediately available funds,
(i) before any earnout payments and (ii) net of any
reserves for contingencies, such as an escrow, holdback contingency
reserves or indemnification obligation including, for the avoidance
of doubt, any Change in Control Transaction in which the cash
consideration to be paid to the Holders is $0.
(y) “SEC”
means the United States Securities and Exchange
Commission.
(z) “Securities
Act” means the Securities
Act of 1933, as amended.
(aa) “Series
C Preferred Shares” means
the Series C Senior Convertible Preferred Stock, par value $0.0001
per share, of the Corporation.
(bb) “Subsidiary”
shall have the meaning as set forth in the Purchase
Agreement.
(cc) “Tax”
means any tax, levy, impost, duty or other charge or withholding of
a similar nature (including any related penalty or
interest).
(dd) “Tax
Deduction” means a
deduction or withholding for or on account of Tax from a payment
under this Certificate of Designations.
(ee) “Trading
Day” means 9:30AM to
3:59PM on any day on which the shares of Common Stock are traded on
a Trading Market, or, if the shares of Common Stock are not so
traded, a Business Day.
(ff) “Trading
Market” means the NYSE
Amex Equities, the New York Stock Exchange or the NASDAQ Global
Select Market, the NASDAQ Global Market or the NASDAQ Capital
Market.
(gg) “Transfer
Agent” means Signature
Stock Transfer, Inc., a Texas corporation, or such other person
designated by the Corporation as the transfer agent for the shares
of Common Stock.
(hh) “Warrants”
shall have the meaning as set forth in the Purchase
Agreement.
2. Designation. There
is hereby created out of the authorized and unissued shares of
preferred stock of the Corporation a series of preferred stock
designated as the “Series D Senior Convertible Preferred
Stock” (the “Preferred
Stock”). The
number of shares constituting such series shall be
3,000,000.
3. Cumulative
Dividends.
(a) The
Holders of the Series D Preferred Shares, in preference to the
holders of Junior Securities, and on parity with any dividend on
any Pari Passu Securities, shall be entitled to receive dividends
payable in cash, but only out of funds that are legally available
therefore, at the per share rate of four percent (4%) per annum of
the Preferred Stock Original Purchase Price (as defined below) on
each outstanding Series D Preferred Share. Such dividends shall
accrue from day to day commencing on the issuance date of each such
share on the basis of a 365-day year. Dividends on the Series D
Preferred Shares will accrue whether or not the Corporation has
earnings or profits, whether or not there are funds legally
available for the payment of such dividends, and whether or not
such dividends are declared, and such dividends shall be cumulative
to the extent not actually paid. The Corporation shall take all
actions necessary or advisable under applicable laws to permit the
payment of dividends to the Holders of Series D Preferred
Shares.
3
(b) So
long as any Series D Preferred Shares are outstanding, the
Corporation (i) shall not pay, declare or set aside funds for
payment of any dividend (whether in cash or property), or make any
other distribution on any Junior Securities, or purchase, redeem or
otherwise acquire for value or set aside funds for the payment or
redemption of any Junior Securities (except by conversion into or
exchange for other Junior Securities), until full cumulative
dividends as set forth in Section 3(a)
above on the Series D Preferred
Shares shall have been paid or declared and set apart and (ii)
shall not pay, declare or set aside funds for payment of any
dividend, or make any other distribution on any Pari Passu
Security, or purchase, redeem or otherwise acquire for value or set
aside funds for the payment or redemption of any Pari Passu
Securities (except by conversion into or exchange for other Pari
Passu Securities or the redemption of the Series C Preferred Stock
following its Maturity Date), unless full cumulative dividends are
declared and paid ratably on the Series D Preferred
Shares.
(c) In
the event dividends or distributions are paid on any Junior
Securities, the Corporation shall pay an additional dividend or
distribution on all outstanding Series D Preferred Shares in a per
share amount equal (on an as-if-converted to Common Stock basis) to
the amount paid or set aside for each share of Junior Securities.
Payments under the preceding sentence shall be made concurrently
with the dividend or distribution to the holders of the Junior
Securities.
4. Liquidation
Preference.
(a) In
the event of any Liquidation Event, the Holders of the Series D
Preferred Shares shall be entitled to receive pari passu with the
Pari Passu Securities, on a pro rata basis, out of the assets of
the Corporation available for distribution to stockholders
(“Liquidation
Funds”), prior and in
preference to any distribution of any assets of the Corporation to
the holders of Junior Securities, an amount equal to the sum of (i)
the amount of $2.00 per share (the “Preferred
Stock Original Purchase Price”) plus (ii) all accrued but unpaid
dividends on each Series D Preferred Share, in each case as
adjusted for any stock dividends, splits, combinations and similar
events (the “Liquidation
Preference”). If upon any such Liquidation
Event, the Liquidation Funds shall be insufficient to pay the
Holders of the Series D Preferred Shares and the holders of the
Pari Passu Securities the full amount to which they shall be
entitled, in the case of the Series D Preferred Shares, under
this Section
4(a), the Holders of
the Series D Preferred Shares and the
holders of the Pari Passu Securities shall share ratably in any
distribution of the assets available for distribution in proportion
to the respective amounts which would otherwise be payable in
respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in
full. The Liquidation Preference to be paid to the Holders of the
Series D Preferred Shares under this Section 4(a)
on a pari passu basis with the Pari
Passu Securities shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the
distribution of any Liquidation Funds of the Corporation to the
holders of Junior Securities in connection with a Liquidation
Event. A Change in Control Transaction shall not,
ipso
facto, be deemed a Liquidation
Event.
(b) After
payment of the full amount of the Liquidation Preference, in the
case of a Liquidation Event, the remaining assets of the
Corporation available for distribution to its stockholders shall be
distributed among the Holders of the Series D Preferred Shares, the
Pari Passu Securities, the holders of Series A Preferred Stock, par
value $0.0001 per share, and the holders of Common Stock, pro rata
based on the number of shares held by each such Holder or holder,
as applicable, treating for this purpose all Series D Preferred
Shares as if they had been converted to Common Stock pursuant to
the terms of this Certificate of Designations immediately prior to
such Liquidation Event. The foregoing shall not limit any rights
which Holders may have with respect to any requirement that
the Corporation repurchase the Series D Preferred Shares
or for any right to monetary
damages.
5. Issuance
of Series D Preferred Shares. The Series D Preferred Shares shall be
issued by the Corporation pursuant to the
Note(s).
6. Optional
Conversion by the Holders. Each Holder shall have the right at
any time and from time to time, at the option of such Holder and
without the payment of additional consideration by the Holder, to
convert all or any portion of the Series D Preferred Shares held by
such Holder, for such number of Common Shares per each Series D
Preferred Share, free and clear of any liens, claims or
encumbrances, as is determined by dividing (i) the sum of (A) the
Preferred Stock Original Purchase Price plus (B) any accrued but
unpaid dividends on such Series D Preferred Share by (ii) the
Conversion Price (as defined below) in effect on the Conversion
Date (as defined below). Immediately following such
conversion, the persons entitled to receive the Common Shares upon
the conversion of Series D Preferred Shares shall be treated for
all purposes as having become the owners of such Common Shares,
subject to the rights provided herein to Holders. The
term “Conversion
Price” means $2.00 per
share, subject to adjustment as provided
herein.
(a) Delivery
of Conversion Notice. To convert Series D Preferred Shares into Common
Shares on any date (a “Conversion
Date”), the Holder shall
give written notice (a “Conversion
Notice”) to the
Corporation in the form of Exhibit A
hereto (which Conversion Notice will
be given by facsimile transmission, e-mail or other electronic
means no later than 11:59 p.m. New York City Time on such date, and
sent via overnight delivery no later than one (1) Trading Day after
such date) stating that such Holder elects to convert the same and
shall state therein the number of Series D Preferred Shares to be
converted and the name or names in which such Holder wishes the
certificate or certificates for Common Shares to be
issued. If required by Section
11, as soon as possible after
delivery of the Conversion Notice, such Holder shall surrender the
certificate or certificates representing the Series D Preferred
Shares being converted, duly endorsed, at the office of the
Corporation.
4
(b) Mechanics
of Conversion. The
Corporation shall, promptly upon receipt of a Conversion Notice
(but in any event not less than one (1) Trading Day after receipt
of such Conversion Notice), (i) send, via facsimile, e-mail or
other electronic means a confirmation of receipt of such Conversion
Notice to such Holder and the Transfer Agent, which confirmation
shall constitute an instruction to the Transfer Agent to process
such Conversion Notice in accordance with the terms herein and (ii)
on or before the third (3rd) Trading Day following the date of
receipt by the Corporation of such Conversion Notice (the
“Share
Delivery Date”), credit
such aggregate number of Common Shares to which the Holder shall be
entitled to such Holder’s or its designee’s balance
account with the Depository Trust Company
(“DTC”)
via its Deposit Withdrawal Agent Commission system. If
the number of Series D Preferred Shares represented by the
Preferred Stock certificate(s) delivered to the Corporation in
connection with a Conversion Notice, to the extent required
by Section 11
or to the extent otherwise requested
by the Holder, is greater than the number of Series D Preferred
Shares being converted, then the Corporation shall, as soon as
practicable and in no event later than three (3) Business Days
after receipt of such Preferred Stock certificate(s) and at its own
expense, issue and deliver to the Holder a new Preferred Stock
certificate representing the number of Series D Preferred Shares
not converted. The person or persons entitled to receive
the Common Shares issuable upon a conversion of Series D Preferred
Shares shall be treated for all purposes as the record holder or
holders of such Common Shares on the Conversion
Date.
The Corporation’s
obligation to issue Common Shares upon conversion of Series D
Preferred Shares shall, except as set forth below, be absolute, is
independent of any covenant of any Holder, and shall not be subject
to: (i) any offset or defense; or (ii) any claims
against the Holders of Series D Preferred Shares whether pursuant
to this Certificate of Designations, the Purchase Agreement, the
Note(s), the Warrants or otherwise, including, without limitation,
any claims arising out of any selling or short-selling activity by
Holders.
(c) Corporation’s
Failure to Timely Convert. If the Corporation fails to cause the
Transfer Agent by the Share Delivery Date to transmit to a Holder
of Series D Preferred Shares the number of Common Shares to which
such Holder is entitled upon such Holder’s conversion of
Series D Preferred Shares, then in addition to all other available
remedies which such Holder may pursue hereunder and under the Note
or the Purchase Agreement (including indemnification pursuant to
the terms thereof), the Corporation shall pay additional damages to
such Holder for each day after the Share Delivery Date that such
conversion is not timely effected in an amount equal to one percent
(1%) of the product of (i) the sum of the number of Common Shares
not issued to the Holder on or prior to the Share Delivery Date and
to which such Holder is entitled pursuant to the applicable
Conversion Notice and the terms of this Certificate of
Designations, and (ii) the Closing Sale Price (as defined below) of
the Common Stock on the Share Delivery Date, but in no event in
excess of eighteen percent (18.0%). In addition to the foregoing,
if on the Share Delivery Date, the Corporation shall fail to credit
such Holder’s balance account with DTC, then such Holder will
have the right to rescind the Conversion Notice. In addition to the
foregoing and any other rights available to a Holder of Series D
Preferred Shares, if the Corporation fails on or before the Share
Delivery Date to cause the Transfer Agent to transmit to a Holder
the number of Common Shares to which such Holder is entitled upon
such Holder’s conversion of Series D Preferred Shares, and if
after such date such Holder is required by its broker to purchase
(in an open market transaction or otherwise), or such
Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by such Holder which
such Holder anticipated receiving upon such exercise (a
“Buy-In”),
then the Corporation shall (A) pay in cash to such Holder the
amount, if any, by which (x) such 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 shares of Common Shares that the
Corporation was required to deliver to such 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 such Holder, either allow such Holder to rescind the
Conversion Notice or deliver to such Holder the number of Common
Shares that would have been issued had the Corporation timely
complied with its exercise and delivery obligations hereunder. For
example, if a Holder purchases shares of Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of Series D Preferred Shares with an
aggregate sale price giving rise to such purchase obligation of
$10,000, under clause (A) of the immediately preceding sentence,
the Corporation shall be required to pay such Holder $1,000. Such
Holder shall provide the Corporation written notice indicating the
amounts payable to such Holder in respect of the Buy-In and, upon
request of the Corporation, evidence of the amount of such loss.
Nothing herein shall limit any 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 Corporation’s
failure to timely deliver Common Shares upon conversion of Series D
Preferred Shares as required pursuant to the terms
hereof.
The term “Closing
Sale Price” means the
last closing trade price for the Common Shares on the electronic
bulletin board for the Common Shares as reported by Bloomberg, or,
if the Common Shares become listed on a Trading Market, on such
trading Market, of such security prior to 4:00 p.m., New York City
Time, as reported by Bloomberg, or, if the foregoing do not apply
or if no last trade price is reported for such security by
Bloomberg, the highest bid price as reported on the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.) at the close of trading. If the Closing
Sale Price cannot be calculated for the Common Shares on a
particular date on any of the foregoing bases, the Closing Sale
Price of the Common Shares on such date shall be the fair market
value as mutually determined by the Corporation and the
Holder. All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation
period.
5
(d) Adjustments
to the Conversion Price.
(i) Adjustments
for Stock Splits and Combinations. If the Corporation shall at any time
or from time to time after the Initial Issuance Date effect a stock
split of the outstanding Common Stock, the applicable Conversion
Price in effect immediately prior to the stock split shall be
proportionately decreased. If the Corporation shall at
any time or from time to time after the Initial Issuance Date,
combine the outstanding shares of Common Stock, the applicable
Conversion Price in effect immediately prior to the combination
shall be proportionately increased. Any adjustments
under this Section 6(d)(i)
shall be effective at the close of
business on the date the stock split or combination
occurs.
(ii) Adjustments
for Certain Dividends and Distributions. If the Corporation shall at any time
or from time to time on or after the Initial Issuance Date make or
issue or set a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution
payable in Common Shares then, and in each event, the applicable
Conversion Price in effect immediately prior to such event shall be
decreased as of the time of such issuance or, in the event such
record date shall have been fixed, as of the close of business on
such record date, by multiplying the applicable Conversion Price
then in effect by a fraction:
(A) the
numerator of which shall be the total number of Common Shares
issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date;
and
(B) the
denominator of which shall be the total number of Common Shares
issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the
number of Common Shares issuable in payment of such dividend or
distribution.
(iii) Adjustment
for Other Dividends and Distributions. If the Corporation shall at any time
or from time to time on or after the Initial Issuance Date make or
issue or set a record date for the determination of holders of
Common Stock entitled to receive a non-cash dividend or other
distribution payable in securities or property other than Common
Shares, then, and in each event, an appropriate revision to the
applicable Conversion Price shall be made and provision shall be
made (by adjustments of the Conversion Price or otherwise) so that
the Holders of Series D Preferred Shares shall receive upon
conversions thereof, in addition to the number of Common Shares
receivable thereon, the number of securities of the Corporation or
other issuer (as applicable) or other property that they would have
received had the Series D Preferred Shares been converted into
Common Shares on the date of such event (provided,
however,
that, to the extent the right of a Holder of Series D Preferred
Shares to participate in any such Distribution would result in such
Holder of Series D Preferred Shares exceeding the Beneficial
Ownership Limitation, then such Holder of Series D Preferred Shares
shall not be entitled to participate in such Distribution to such
extent (or in the beneficial ownership of any Common Shares as a
result of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of such
Holder of Series D Preferred Shares until such time, if ever, as
its right thereto would not result in such Holder of Series D
Preferred Shares exceeding the Beneficial Ownership
Limitation).
(iv) Adjustments for Issuance of
Additional Equity Securities of the Corporation. In the event the Corporation shall
issue or sell any Common Stock or Common Stock Equivalents
including, without limitation, (i) the issuance of Common Stock or
Common Stock Equivalents in settlement or resolution (by judgment
or otherwise) of any litigation or threatened litigation (other
than (A) as provided in Section 6(d)(i)
through (iii)
or (B) Excluded Securities), and (ii)
the issuance of Common Stock or Common Stock Equivalents to any
Subsidiary after the Initial Issuance Date, or if, after any
issuance of Common Stock Equivalents, the price per share for which
Additional Shares of Common Stock may be issued thereafter is
amended or adjusted such that more shares of Common Stock are
issuable under such Common Stock Equivalents, then the applicable
Conversion Price upon each such issuance or amendment shall be
adjusted to that price (rounded to the nearest cent) determined by
multiplying the Conversion Price according to the following
equation:
6
where:
A =
the aggregate number of shares of Common Stock outstanding prior to
the issuance (or immediately prior to such amendment or adjustment,
as applicable) on a fully-diluted basis;
B =
the number of new shares of Common Stock or Common Stock
Equivalents issued (or effectively issued pursuant to such
amendment or adjustment, as applicable), on a fully-diluted
basis;
C =
the aggregate number of shares of Common Stock into which all
outstanding Series D Preferred Shares are convertible prior to the
issuance; and
X =
the number by which to multiply the Conversion Price in effect
immediately prior to the issuance.
No adjustment shall be made under this
Section
6(d)(iv) upon the issuance of
any Additional Shares which are issued pursuant to the exercise,
conversion or exchange rights under any Common Stock Equivalents,
if any such adjustment shall previously have been made upon the
issuance of such Common Stock Equivalents (or upon the issuance of
any warrant or other rights therefore) pursuant to this
Section
6(d)(iv).
For purposes of the foregoing, in the case of the
sale or issuance of any Common Stock Equivalents or in the case
that any Common Stock Equivalents are amended and adjusted as
provided in this Section
6(d)(iv), the maximum number of
Additional Shares issuable upon conversion, exchange or exercise of
such Common Stock Equivalent shall be deemed to be outstanding at
the time of such sale or issuance or amendment or adjustment, as
the case may be, and no further adjustment shall be made to the
Conversion Price upon the actual issuance of Additional Shares
pursuant to the exercise, conversion or exchange of such Common
Stock Equivalents.
In
the event the Corporation shall issue or sell any shares of
preferred stock of the Corporation that are not convertible into
Common Stock, then an appropriate adjustment to the securities to
be received upon conversion of the Series D Preferred Shares (by
adjustments of the Conversion Price or otherwise) shall be made, as
the Holders and the Corporation shall mutually agree.
Notwithstanding
anything herein to the contrary, to the extent that a Holder of
Series D Preferred Shares’ right to participate in any such
issuance of any Common Stock or Common Stock Equivalents would
result in such Holder of Series D Preferred Shares exceeding the
Beneficial Ownership Limitation, then such Holder of Series D
Preferred Shares shall not be entitled to participate in such
issuance to such extent (or beneficial ownership of such shares of
Common Stock as a result of such issuance to such extent) and such
issuance to such extent shall be held in abeyance for such Holder
of Series D Preferred Shares until such time, if ever, as its right
thereto would not result in such Holder of Series D Preferred
Shares exceeding the Beneficial Ownership Limitation).
(v) Certain
Issues Excepted. There shall be no adjustment to the
Conversion Price pursuant to Section
6(d)(iv) with respect to the
sale or issuance of Excluded Securities.
(vi) Adjustments
for Issuance of Additional Equity Securities of
Subsidiary. In the
event (i) the Corporation’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 Corporation, in each case including,
without limitation, as a result of the settlement or resolution (by
judgment or otherwise) of any litigation or threatened litigation,
then the applicable Conversion Price upon each such decrease or
issuance shall be adjusted to that price (rounded to the nearest
cent) determined by multiplying the Conversion Price according to
the following equation:
7
where:
A =
the aggregate number of shares of Common Stock outstanding prior to
the change in ownership of the Mexican Subsidiary on a
fully-diluted basis;
B =
the aggregate number of shares of Common Stock into which all
outstanding shares of Series D Preferred Stock are convertible
prior to the change in ownership of the Mexican
Subsidiary;
C =
the number of shares in the Mexican Subsidiary held by the
Corporation following the change in ownership of the Mexican
Subsidiary;
D =
the aggregate number of shares in the Mexican Subsidiary
outstanding following the change in ownership of the Mexican
Subsidiary;
E =
the number of shares in the Mexican Subsidiary held by the
Corporation prior to the change in ownership of the Mexican
Subsidiary;
F =
the aggregate number of shares in the Mexican Subsidiary
outstanding prior to the change in ownership of the Mexican
Subsidiary; and
X = the number by which to multiply the Conversion
Price in effect immediately prior to the change in ownership of the
Mexican Subsidiary; provided, however, that if X is less than or equal to zero
(0), then X shall equal .001.
No adjustment shall be made under this
Section
6(d)(vi) upon the issuance of
any additional DynaMexico Shares which are issued pursuant to the
exercise, conversion or exchange rights under any DynaMexico Share
Equivalents, if any such adjustment shall previously have been made
upon the issuance of such DynaMexico Share Equivalents (or upon the
issuance of any warrant or other rights therefore) pursuant to
this Section
6(d)(vi).
For purposes of the foregoing, in the case of the
sale or issuance of any DynaMexico Share Equivalents or in the case
that any DynaMexico Share Equivalents are amended and adjusted as
provided in this Section
6(d)(vi), the maximum number of
additional DynaMexico Shares issuable upon conversion, exchange or
exercise of such DynaMexico Share Equivalents shall be deemed to be
outstanding at the time of such sale or issuance or amendment or
adjustment, as the case may be, and no further adjustment shall be
made to the Conversion Price upon the actual issuance of additional
DynaMexico Shares pursuant to the exercise, conversion or exchange
of such DynaMexico Share Equivalents.
Notwithstanding
anything herein to the contrary, to the extent that a Holder of
Series D Preferred Shares’ right to participate in any such
issuance of any DynaMexico Shares or DynaMexico Share Equivalents
would result in such Holder of Series D Preferred Shares exceeding
the Beneficial Ownership Limitation, then such Holder of Series D
Preferred Shares shall not be entitled to participate in such
issuance to such extent (or beneficial ownership of such DynaMexico
Shares as a result of such issuance to such extent) and such
issuance to such extent shall be held in abeyance for such Holder
of Series D Preferred Shares until such time, if ever, as its right
thereto would not result in such Holder of Series D Preferred
Shares exceeding the Beneficial Ownership Limitation).
(e) Notice
of Record Date. In
the event of any taking by the Corporation of a record date of the
holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or
other distribution, any security or right convertible into or
entitling the holder thereof to receive additional Common Shares,
or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property,
or to receive any other right, the Corporation shall deliver to
each Holder at least twenty (20) days prior to the date specified
therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution,
security or right and the amount and character of such dividend,
distribution, security or right.
(f) Reservation
of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and
keep available out of its authorized but unissued Common Stock,
solely for the purposes of effecting the conversion and/or
redemption of the Series D Preferred Shares, an amount of shares of
Common Stock equal to 200% of the number of shares issuable upon
conversion of the Series D Preferred Shares at the current
Conversion Price (the “Required
Reserve Amount”). If at any time while any of
the Series D Preferred Shares remain outstanding the Corporation
does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion and/or redemption of the Series D
Preferred Shares at least a number of shares of Common Stock equal
to the Required Reserve Amount (an “Authorized
Share Failure”), then the
Corporation shall promptly take all action necessary to increase
the Corporation’s authorized shares of Common Stock to an
amount sufficient to allow the Corporation to reserve the Required
Reserve Amount for the Series D Preferred Shares then
outstanding. Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later
than sixty (60) days (or the lesser of (i) ninety (90) days if the
proxy statement is reviewed by the staff of the SEC or (ii) ten
(10) days after the staff of the SEC indicates that it has no
further comments to such proxy statement) after the occurrence of
such Authorized Share Failure (the “Meeting
Outside Date”), the
Corporation shall hold a meeting of its stockholders for the
approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the
Corporation shall provide each stockholder with a proxy statement
and shall use its reasonable best efforts to solicit its
stockholders’ approval of such increase in authorized shares
of Common Stock and to cause its Board of Directors to recommend to
the stockholders that they approve such
proposal. Notwithstanding the foregoing, if at such time
of an Authorized Share Failure, the Corporation is able to obtain
the necessary consent of the holders of its capital stock to
approve the increase in the number of authorized shares of Common
Stock, the Corporation may satisfy this obligation by obtaining
such consent and submitting for filing with the SEC an Information
Statement on Schedule 14C.
8
(g) Fractional
Shares. No
fractional shares shall be issued upon the conversion of any Series
D Preferred Shares. All Common Shares (including
fractions thereof) issuable upon conversion of more than one Series
D Preferred Share by a Holder thereof and all Series D Preferred
Shares issuable upon the purchase thereof shall be aggregated for
purposes of determining whether the conversion and/or purchase
would result in the issuance of any fractional
share. If, after the aforementioned aggregation, the
conversion and/or purchase would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall, in lieu
of issuing any fractional share, either round up the number of
shares to the next highest whole number or, at the
Corporation’s option, pay the Holder otherwise entitled to
such fraction a sum in cash equal to the fair market value of such
fraction on the Conversion Date (as determined in good faith by the
Board of Directors of the Corporation).
(h) Reorganization,
Merger or Going Private. In case of any reorganization or any
reclassification of the capital stock of the Corporation or any
consolidation or merger of the Corporation with or into any other
corporation or corporations or a sale or transfer of all or
substantially all of the assets of the Corporation to any other
person or a “going private” transaction under Rule
13e-3 promulgated pursuant to the Exchange Act, then, as part of
such reorganization, consolidation, merger, or transfer if the
holders of shares of Common Stock receive any publicly traded
securities as part or all of the consideration for such
reorganization, reclassification, consolidation, merger or sale,
then it shall be a condition precedent of any such event or
transaction that provision shall be made such that each Series D
Preferred Share shall thereafter be convertible into such new
securities at a conversion price and pricing formula which places
the Holders of Series D Preferred Shares in an economically
equivalent position as they would have been if not for such
event. The Corporation shall give each Holder written
notice at least ten (10) Trading Days prior to the consummation of
any such reorganization, reclassification, consolidation, merger or
sale.
(i) Certificate
for Conversion Price Adjustment. The Corporation shall promptly furnish
or cause to be furnished to each Holder a certificate prepared by
the Corporation setting forth any adjustments or readjustments of
the Conversion Price pursuant to this Section
6.
(j) Conversion
Limitations. The Company shall
not effect any conversion of Series D Preferred Shares, and a
Holder of Series D Preferred Shares shall not have the right to
convert any portion of its Series D Preferred Shares, pursuant to
this Section
6, to the extent that after
giving effect to such conversion as set forth in this
Section
6, the Holder of Series D
Preferred Shares (together with its Affiliates, and any other
persons acting as a group together with such holder or any of its
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 Common Shares beneficially owned by the Holder of Series
D Preferred Shares and its Affiliates and Attribution Parties shall
include the number of Common Shares issuable upon conversion of any
Series D Preferred Shares, but shall exclude the number of Common
Shares which would be issuable upon 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
such Holder of Series D Preferred Shares or any of its Affiliates
or Attribution Parties. Except as set forth in the preceding
sentence, for purposes of this Section
6(j), 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 each Holder of Series D Preferred Shares
that the Company is not representing to such Holder of Series D
Preferred Shares that such calculation is in compliance with
Section 13(d) of the Exchange Act and such Holder of Series D
Preferred Shares is solely responsible for any schedules required
to be filed in accordance therewith. To the extent that the
limitation contained in this Section 6(j)
applies, the determination of whether
the Series D Preferred Shares are convertible (in relation to other
securities owned by the Holder of such Series D Preferred Shares
together with any Affiliates and Attribution Parties) and of which
portion of the Series D Preferred Shares is convertible shall be in
the sole discretion of the Holder of such Series D Preferred
Shares, and the submission of any Conversion Notice shall be deemed
to be such Holder’s determination of whether the Series D
Preferred Shares are convertible (in relation to other securities
owned by such Holder together with its Affiliates and Attribution
Parties) and of which portion of such Series D Preferred Shares is
convertible, 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
6(j), in determining the number
of outstanding Common Shares, a Holder of Series D Preferred Shares
may rely on the number of outstanding Common Shares as reflected in
(A) the Company’s most recent periodic or annual report filed
with the SEC, 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 transfer agent setting forth the number of Common
Shares outstanding. Upon the written or oral request of a Holder of
Series D Preferred Shares, the Company shall within one Business
Day confirm orally and in writing to such Holder of Series D
Preferred Shares the number of Common Shares then outstanding. In
any case, the number of outstanding Common Shares shall be
determined after giving effect to the conversion or exercise of
securities of the Company, including Series D Preferred Shares,
held by such Holder and/or its Affiliates or Attribution Parties
since the date as of which such number of outstanding Common Shares
was reported. The “Beneficial
Ownership Limitation”
shall be 9.99% of the number of Common Shares outstanding
immediately after giving effect to the conversion of Series D
Preferred Shares for Common Shares. Each Holder of Series D
Preferred Shares, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of
this Section
6(j); provided,
that the Beneficial Ownership Limitation in no event exceeds 19.99%
of the number of Common Shares outstanding immediately after giving
effect to the conversion of the Series D Preferred Shares held by
such Holder of Series D Preferred Shares and the provisions of
this Section 6(j)
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 6(j)
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 any Series D
Preferred Shares.
9
7. Mandatory
Repurchase. If any of the events set forth in
clauses (i) through (iii) below shall have occurred or are
continuing, each Holder shall have the unilateral option and right
to compel the Corporation to repurchase for cash any or all of such
Holder’s Series D Preferred Shares within three (3) days of a
written notice requiring such repurchase (provided that no such
written notice shall be required for clauses (ii) and (iii) below
and such demand for repurchase shall be deemed automatically made
upon the occurrence of any of the events set forth in such clauses
(ii) and (iii) below), at an amount per share equal to the greater
of: (i) the sum of (A) the Preferred Stock Original Purchase Price
plus (B) all accrued but unpaid dividends on such Series D
Preferred Share, in each case as adjusted for any stock dividends,
splits, combinations and similar events, or (ii) an amount equal to
the per share amount the Holders of Series D Preferred Shares would
have received upon a theoretical Liquidation Event occurring at the
time of the Holder’s exercise of the repurchase option
pursuant to this Section 7
had such Holders converted their
Series D Preferred Shares into Common Shares immediately preceding
such theoretical Liquidation Event (such greater amount, the
“Repurchase
Price”):
(i) it
is a date later than the Maturity Date;
(ii) the
entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Corporation or any
Subsidiary of a voluntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree or order adjudging the Corporation or
any Subsidiary as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Corporation or any Subsidiary
under any applicable federal or state law or (iii) appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Corporation or any Subsidiary or of
any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and
in effect for a period of sixty (60) consecutive
days; or
(iii) the
commencement by the Corporation or any Subsidiary of a voluntary
case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or of
any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Corporation or any Subsidiary in an
involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law
or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Corporation or any Subsidiary or of
any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Corporation or any
Subsidiary in furtherance of any such action.
8. Voting
Rights; Directors.
(a) Each
Holder of Series D Preferred Shares shall be entitled to the
number of votes equal to the number of Common Shares into which
such Series D Preferred Shares could be converted and shall have
voting rights and powers equal to the voting rights and powers of
the Common Stock (except as otherwise expressly provided herein or
as required by law, voting together with the Common Stock as a
single class) and shall be entitled to notice of any
stockholders’ meeting in accordance with the bylaws of the
Corporation. Fractional votes shall not, however, be permitted and
any fractional voting rights resulting from the above formula
(after aggregating all shares into which Series D Preferred
Shares held by each Holder could be converted) shall be rounded
down to the nearest whole number.
(b) The
Board of Directors shall consist of no more than seven (7) members.
If at any time the holders of Series C Preferred Shares do not have
the right to elect a director or there are no Series C Preferred
Shares outstanding, the Required Holders shall be entitled to elect
one (1) member of the Board of Directors at each meeting or
pursuant to each written consent of the Corporation’s
stockholders for the election of directors, and to remove from
office such director and to fill any vacancy caused by the
resignation, death or removal of such director. The remaining
directors shall be elected as provided in the Amended and Restated
Certificate of Incorporation as in effect on the Initial Issuance
Date.
(c) In
addition to any other rights provided by law, except where the vote
or written consent of the Holders of a greater number of shares is
required by law or by another provision of the Amended and Restated
Certificate of Incorporation, the affirmative vote at a meeting
duly called for such purpose or the written consent without a
meeting of the Required Holders, voting together as a single class,
shall be required before the Corporation may:
10
(i) amend
or repeal any provision of, or add any provision to, this
Certificate of Designations, the Amended and Restated Certificate
of Incorporation or bylaws, or file any articles of amendment,
certificate of designations, preferences, limitations and relative
rights of any series of preferred stock, if such action would
adversely alter or change the preferences, rights, privileges or
powers of, or restrictions provided for the benefit of the Series D
Preferred Shares, regardless of whether any such action shall be by
means of amendment to the Amended and Restated Certificate of
Incorporation or by merger, consolidation or
otherwise;
(ii) increase
or decrease (other than by conversion) the authorized number of
shares of Series D Preferred Shares (for the avoidance of doubt,
the Corporation may increase or decrease the number of authorized
shares of undesignated “blank check” preferred
stock);
(iii) create
or authorize (by reclassification or otherwise) any new class or
series of shares that has a preference over or is on a parity with
the Series D Preferred Shares with respect to dividends or the
distribution of assets on a Liquidation Event;
(iv) declare
or pay a dividend or other distribution with respect to any shares
of the Corporation’s capital stock, including, without
limitation, any Pari Passu Security and/or any Junior
Security;
(v) purchase,
repurchase or redeem any Junior Security;
(vi) whether
or not prohibited by the terms of the Series D Preferred Shares,
circumvent a right of the Series D Preferred
Shares;
(vii) effect
a Liquidation Event (other than a Change in Control
Transaction);
(viii) enter
into any contract or other arrangement to do any of the foregoing.
In addition, so long as the Primary Investor holds any Series D
Preferred Shares, except where the vote or written consent of the
Holders of a greater number of shares is required by law or by
another provision of the Amended and Restated Certificate of
Incorporation, the affirmative vote at a meeting duly called for
such purpose or the written consent without a meeting of the
Required Holders, voting together as a single class, shall be
required before the Corporation may effect a Restricted Change in
Control Transaction; or
(ix) issue
or authorize the issuance of any shares of Series D Preferred Stock
to any entity or person, except to the extent such shares of Series
D Preferred Stock are issued by the Company to any holder of the
Notes (as defined in the Purchase Agreement) upon conversion of
such Notes in accordance with their respective
terms.
9. Preemptive
Rights.
(a) Except
for the issuance of Excluded Securities or pursuant to the
conversion or exercise of any Equity Security outstanding on the
Initial Issuance Date, if, following the Initial Issuance Date, the
Corporation authorizes the issuance or sale of any Equity
Securities to any person or entity (including any stockholder of
the Corporation) (the “Offeree”),
the Corporation shall first offer to sell to the Qualified
Stockholders a portion of such Equity Securities equal to the
quotient determined by dividing (1) the number of Common Shares
held by such Qualified Stockholder at such time (which are not or
would not be subject to vesting or repurchase in favor of the
Corporation as of or prior to the consummation of such issuance or
sale) on a fully-diluted and as-if converted basis, by (2) the
total number of Common Shares then issued and outstanding
immediately prior to such issuance on a fully-diluted and as-if
converted basis. The Qualified Stockholders shall be entitled to
purchase such Equity Securities at the same price as such Equity
Securities are to be offered to the Offeree; provided that if the Offeree is required to also purchase
other Equity Securities, the Qualified Stockholders shall also be
required to purchase the same Equity Securities (at the same price)
that the Offeree is required to purchase. The Qualified
Stockholders electing to purchase their pro-rata share
(“Participating
Stockholders”) will take
all necessary or desirable actions in connection with the
consummation of the purchase transactions contemplated by
this Section 9
as requested by the Board of
Directors, including the execution of all agreements, documents and
instruments in connection therewith in the form presented by the
Corporation, so long as such agreements, documents and instruments
do not require such Participating Stockholders to make more
burdensome representations, warranties, covenants or indemnities
than those required of the Offeree in the agreements, documents or
instruments in connection with such transaction. If any Qualified
Stockholder elects not to purchase any such securities, or not to
purchase all of such Qualified Stockholder’s pro-rata
portion, each other Qualified Stockholder who has elected to
purchase all of such Qualified Stockholder’s full pro-rata
portion (a “Fully
Participating Stockholder”) shall be entitled to purchase an
additional number of shares of such Equity Securities. If more than
one Fully Participating Stockholder desires to purchase such Equity
Securities in excess of the portion allocated to such Fully
Participating Stockholder pursuant to the first sentence of
this Section
9(a), then each such Fully
Participating Stockholder shall be entitled to purchase up to all
of such available Equity Securities. If there is an
oversubscription in respect of such remaining Equity Securities,
the oversubscribed amount shall be fully allocated among the Fully
Participating Stockholders pro rata based on such Fully
Participating Stockholders’ relative proportionate ownership
of all Common Shares on a fully-diluted and as-if converted
basis; provided,
that, to the extent a Fully Participating Stockholder is entitled
to oversubscription rights in respect of such Fully Participating
Stockholder’s ownership of any shares of capital stock of the
Corporation (other than Series D Preferred Shares), the
oversubscription rights set forth in this Section 9(a)
shall be deemed to include the
oversubscription rights in respect of such other shares of capital
stock of the Corporation and, satisfaction of the oversubscription
rights set forth herein, shall be deemed satisfaction of the
oversubscription rights in respect of such other shares of capital
stock of the Corporation (it being understood, however, that for
purposes of determining the Fully Participating Stockholder’s
pro rata portion of the remaining Equity Securities, such other
shares of capital stock of the Corporation entitled to
oversubscription rights shall be included in the calculation of the
numerator and denominator).
11
(b) In
order to exercise its purchase rights hereunder, a Qualified
Stockholder must, within fifteen (15) days after receipt of written
notice from the Corporation describing the Equity Securities being
offered, the purchase price thereof, the payment terms and such
Qualified Stockholder’s percentage allotment, deliver a
written notice to the Corporation describing its election hereunder
(which election shall be absolute and
unconditional).
(c) During
the 90 days following the expiration of the offering period
described above, the Corporation shall be entitled to sell such
Equity Securities which the Qualified Stockholders have not elected
to purchase to the Offeree at no less than the purchase price
stated in the notice provided under Section 9(b)
hereunder. Any Equity Securities
proposed to be offered or sold by the Corporation to the Offeree
after such 90-day period, or at a price not complying with the
immediate preceding sentence, must be reoffered to the Qualified
Stockholders pursuant to the terms of this Section 9
prior to any sale to the
Offeree.
(d) Notwithstanding
the foregoing, if the Board of Directors (with the prior approval
of the Required Holders) determines that it should, in the best
interests of the Corporation, issue Equity Securities of the
Corporation which would otherwise be required to be offered to the
Qualified Stockholders under this Section 9
prior to their issuance, it may issue
such Equity Securities without first complying with this
Section
9; provided that within sixty (60) days after such issuance,
it offers each Qualified Stockholder the opportunity to purchase
the number of shares of such Equity Securities that such Qualified
Stockholder would be entitled to purchase pursuant to this
Section
9.
10. Rank. The
Series D Preferred Shares shall be of equal rank, without
preference or priority, with respect to the Pari Passu Securities
as to dividend rights or rights upon a Liquidation Event. All
shares of Junior Securities shall be of junior rank to all Series D
Preferred Shares with respect to the preferences as to dividends,
distributions and payments upon a Liquidation Event. The
rights of the shares of Junior Securities shall be subject to the
preferences and relative rights of the Series D Preferred
Shares. Without the prior express written consent of the
Required Holders, the Corporation shall not hereafter authorize or
issue additional or other capital stock that is of senior or
pari-passu rank to the Series D Preferred Shares in respect of the
preferences as to dividends and other distributions, amortization
and redemption payments and payments upon Liquidation
Event. The Corporation shall be permitted to issue
preferred stock that is junior in rank to the Series D Preferred
Shares in respect of the preferences as to dividends and other
distributions, amortization and redemption payments and payments
upon Liquidation Event, provided, that the maturity date (or any other date
requiring redemption, repayment or any other payment, including,
without limitation, dividends in respect of any such preferred
shares) of any such junior preferred shares is not on or before
ninety-one (91) days after the Maturity Date. In the
event of the merger or consolidation of the Corporation with or
into another corporation, the Series D Preferred Shares shall
maintain their relative powers, designations and preferences
provided for herein (except that the Series D Preferred Shares may
not be pari
passu with, or junior to, any
capital stock of the successor entity) and no merger shall have a
result inconsistent therewith.
11. Book-Entry. Notwithstanding
anything to the contrary set forth herein, upon conversion or
redemption of Series D Preferred Shares in accordance with the
terms hereof, the Holder thereof shall not be required to
physically surrender the certificate representing the Series D
Preferred Shares to the Corporation unless (A) the full or
remaining number of Series D Preferred Shares represented by the
certificate are being converted or redeemed or (B) such Holder has
provided the Corporation with prior written notice requesting
reissuance of Series D Preferred Shares upon physical surrender of
any Series D Preferred Shares. Each Holder and the
Corporation shall maintain records showing the number of Series D
Preferred Shares so converted or redeemed and the dates of such
conversions or redemptions. Notwithstanding the
foregoing, if Series D Preferred Shares represented by a
certificate are converted or redeemed as aforesaid, a Holder may
not transfer the certificate representing the Series D Preferred
Shares unless such Holder first physically surrenders the
certificate representing the Series D Preferred Shares to the
Corporation, whereupon the Corporation will forthwith issue and
deliver upon the order of such Holder a new certificate of like
tenor, registered as such Holder may request, representing in the
aggregate the remaining number of Series D Preferred Shares
represented by such certificate. A Holder and any
assignee, by acceptance of a certificate, acknowledges and agrees
that, by reason of the provisions of this paragraph, following
conversion or redemption of any Series D Preferred Shares, the
number of Series D Preferred Shares represented by such certificate
will be less than the number of Series D Preferred Shares stated on
the face thereof. Each certificate for Series D
Preferred Shares shall bear the following
legend:
ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE
TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS
RELATING TO THE SHARES OF SERIES D SENIOR CONVERTIBLE PREFERRED
STOCK REPRESENTED BY THIS CERTIFICATE. THE NUMBER OF
SHARES REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER
OF SHARES STATED ON THE FACE HEREOF PURSUANT TO THE CERTIFICATE OF
DESIGNATIONS RELATING TO THE SHARES REPRESENTED BY THIS
CERTIFICATE.
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12. Taxes.
(a) Any
and all payments made by the Corporation hereunder, including any
amounts received on a conversion or redemption of the Series D
Preferred Shares and any amounts on account of dividends or deemed
dividends, must be made by it without any Tax Deduction, unless a
Tax Deduction is required by law. If the Corporation is aware that
it must make a Tax Deduction (or that there is a change in the rate
or the basis of a Tax Deduction) in respect of any payment to any
Holder, it must notify such Holder
promptly.
(b) If
a Tax Deduction for Taxes other than Excluded Taxes (as defined
below) is required to be made by the Corporation with respect to
any payment to any Holder, the amount of the payment made by the
Corporation will be increased to an amount which (after making the
Tax Deduction, including any Tax Deduction applicable to additional
sums payable pursuant to this Section
12(b)) results in the receipt
by such Holder of an amount equal to the payment which would have
been due if no Tax Deduction had been required. If the
Corporation is required to make a Tax Deduction, it must make any
payment required in connection with that Tax Deduction within the
time allowed by law. As soon as practicable after making
a Tax Deduction or a payment required in connection with a Tax
Deduction, the Corporation must deliver to the Holder any official
receipt or form, if any, provided by or required by the taxing
authority to whom the Tax Deduction was
paid. “Excluded
Taxes” means (a) Taxes
imposed on or measured by the Holder’s net income (however
denominated), and franchise Taxes imposed on the Holder (in lieu of
net income Taxes), by the jurisdiction (or any political
subdivision thereof) under the laws of which such Holder is a
citizen or resident, under the laws of which such Holder is
organized, in which the Holder’s principal office is located,
or in which the Holder is otherwise doing business, (b) any branch
profits Taxes imposed by the United States of America or any
similar Tax imposed by any other jurisdiction in which the
Corporation is located, (c) in the case of a non-US Holder, any
withholding Tax that is imposed on amounts payable to such non-US
Holder at the time such non-US Holder becomes a Holder (or at such
time that such Holder changes its citizenship, residence, place of
organization, principal office, or location where doing business)
or is attributable to such non-US Holder’s failure or
inability to comply with any applicable documentation requirements
or to provide any documents or certifications that are reasonably
requested by the Corporation, and (d) in the case of any Holder,
any withholding Tax (including any backup withholding tax) that is
imposed on amounts payable to such Holder that is attributable to
such Holder’s failure or inability to comply with any
applicable documentation requirements or to provide any documents
or certifications that are reasonably requested by the
Corporation.
(c) In
addition, the Corporation agrees to pay in accordance with
applicable law any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies that
arise from any payment made hereunder or in connection with the
execution, delivery, registration or performance of, or otherwise
with respect to, the Series D Preferred Shares other than income
taxes (“Other
Taxes”). As
soon as practicable after making a payment of Other Taxes, the
Corporation must deliver to such Holder any official receipt or
form, if any, provided by or required by the taxing authority to
whom such Other Taxes were paid.
(d) The
obligations of the Corporation under this Section 12
shall survive the Maturity Date of the
Series D Preferred Shares and the payment for the Series D
Preferred Shares and all other amounts payable
hereunder.
13. Notices. The
Corporation shall distribute to the Holders of Series D Preferred
Shares copies of all notices, materials, annual and quarterly
reports, proxy statements, information statements and any other
documents distributed generally to the holders of shares of Common
Stock of the Corporation, at such times and by such method as such
documents are distributed to such holders of such Common
Stock.
14. Replacement
Certificates. The certificate(s) representing the
Series D Preferred Shares held by any Holder may be exchanged by
such Holder at any time and from time to time for certificates with
different denominations representing an equal aggregate number of
Series D Preferred Shares, as reasonably requested by such Holder,
upon surrendering the same. No service charge will be
made for such registration or transfer or
exchange.
15. Attorneys’
Fees.
In connection with enforcement by a
Holder of any obligation of the Corporation hereunder, the
prevailing party shall be entitled to recovery of reasonable
attorneys’ fees and expenses
incurred.
16. No
Reissuance. No Series D Preferred Shares acquired
by the Corporation by reason of redemption, purchase, conversion or
otherwise shall be reissued. Series D Preferred Shares
issued and reacquired by the Corporation, whether upon redemption,
conversion or otherwise, shall have the status of authorized and
unissued undesignated shares of “blank check” preferred
stock.
17. Severability
of Provisions. If any right, preference or limitation
of the Series D Preferred Shares set forth in this Certificate of
Designations (as this Certificate of Designations may be amended
from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule or law or public policy, all other
rights, preferences and limitations set forth in this Certificate
of Designations, which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall
nevertheless remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent
upon any such other right, preference or limitation unless so
expressed herein.
18. Limitations. Except
as may otherwise be required by law and as may be set forth in the
Purchase Agreement and/or the Note, the Series D Preferred Shares
shall not have any powers, preference or relative participating,
optional or other special rights other than those specifically set
forth in this Certificate of Designations (as may be amended from
time to time) or otherwise in the Amended and Restated Certificate
of Incorporation.
19. Payments. Any
payments required to be made to the Holders in cash hereunder,
shall be made by wire transfer of immediately available
funds.
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IN
WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be executed by a duly authorized officer of the
Corporation as of May 13, 2020.
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DynaResource, Inc. |
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By:
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Name: K.W.
(“K.D.”) Diepholz
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Title:
Chairman
& CEO
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Certificate of Designations Signature Page
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EXHIBIT A
(To be Executed by Holder
in order to Convert Series D Preferred Shares)
CONVERSION NOTICE
FOR
SERIES D SENIOR CONVERTIBLE PREFERRED STOCK
The undersigned, as a holder (“Holder”)
of shares of Series D Senior Convertible Preferred Stock
(“Series D
Preferred Shares”) of
DynaResource, Inc. (the “Corporation”),
hereby irrevocably elects to convert _____________ Series D
Preferred Shares for shares (“Common
Shares”) of common stock,
par value $0.01 per share, of the Corporation according to the
terms and conditions of the Certificate of Designations for the
Series D Preferred Shares as of the date written
below. The undersigned hereby requests the Common Shares
to be issued pursuant to this Conversion Notice in the name of, and
delivered via Deposit Withdrawal Agent Commission system to, the
undersigned or its designee as indicated below. No fee
will be charged to the Holder of Series D Preferred Shares for any
conversion. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the
Certificate of Designations.
Conversion Date: __________________________
Conversion
Information: NAME
OF HOLDER:
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By:
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Print Name:
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Print Title:
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Print Address of Holder:
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______________________________________
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______________________________________
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DWAC Instructions:
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_________________________________________________________________
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_________________________________________________________________
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If Common Shares are to be issued to a person other than Holder,
Holder’s signature must be guaranteed
below:
SIGNATURE GUARANTEED BY:
THE COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED IS SET
FORTH ON PAGE 2 OF THE CONVERSION NOTICE.
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Page 2 to Conversion Notice dated
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for:
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_______________________________
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(Conversion Date)
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(Name of Holder)
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COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED
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Number of Series D Preferred Shares converted:
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_______________
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Number of Series D Preferred Shares converted times the Preferred
Stock Original Purchase Price:
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$_____________
(Total dollar amount converted)
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Conversion Price in effect on the Conversion Date:
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$______________
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Total dollar amount converted divided by Conversion Price
=
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_______________
(Number of Common Shares to be issued)
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Please issue and deliver _____ certificate(s) for Common Shares in
the following amount(s):
Page 1 to Conversion Notice
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