EXHIBIT 10.1
Exhibit
10.1
SUBSCRIPTION
# _____
STAR
MOUNTAIN RESOURCES, INC.
Subscription
Agreement
The
undersigned “Subscriber”, on the terms and conditions herein set forth, hereby irrevocable submits this subscription
agreement (the “Subscription Agreement”) to STAR MOUNTAIN RESOURCES, INC., a Nevada corporation (the
“Company”), in connection with a private offering by the Company (the “Offering”) to raise
additional working capital of up to US$2,000,000[1] (the “Offering Amount”) through the sale to accredited
investors only of up to 4,000,000 units of the Company’s securities described below (the “Units”) at $0.50 per
Unit. Each Unit is comprised of the following:
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(a) |
One share of the Company’s Series C Preferred Stock as
provided for in the form of Designations, Rights and Preferences of Series C Preferred Stock attached hereto as Exhibit A
(the “Series C Preferred Stock”), |
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(b) |
One share of the Company’s common stock, |
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(c) |
One Series A common stock purchase warrant entitling the holder
to purchase an additional share of the Company’s common stock at an exercise price of $0.75 per share for a period of
two years from the issuance date thereof as provided for in the Form of Series A Warrant attached hereto as Exhibit B (the
“A Warrant”), and |
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(d) |
One Series B common stock purchase warrant entitling the holder
to purchase one share of the Company’s common stock at an exercise price of $1.50 per share for a period of three years
from the issuance date thereof as provided for in the Form of Series B Warrant attached hereto as Exhibit C (the “B
Warrant”). |
Furthermore,
Subscribers will be entitled to Piggy-Back Registration Rights as provided for in the Piggy-Back Registration Rights Agreement
attached hereto as Exhibit D.
1.
Subscription for the Purchase of Units.
THE
UNDERSIGNED hereby subscribes to purchase _____________ Units of the Company’s securities at $.50 per Unit for a total
subscription of $______________. In this regard, the Investor agrees to forward payment in the amount of $_________________.
Please
issue a check or wire transfer payable to:
LEGAL
AND COMPLIANCE, LLC IOTA TRUST ACCOUNT
Memo:
SMRS Series C Unit Offering
[1]
At the sole discretion of our Board of Directors we reserve the right to accept up to an additional $500,000 (1,000,000
Units) in the event this offering is over subscribed.
(a)
Deliver the check along with the signed Subscription Agreement to:
LEGAL
AND COMPLIANCE, LLC
330
Clematis Street, Suite 217
West
Palm Beach, FL 33401
(b)
Alternatively, please deliver the funds via wire transfer (as noted below) and mail the signed subscription agreement to the address
noted in 1 (a) above:
| Wells
Fargo Bank, N.A. |
420 Montgomery
San Francisco, CA 94104 |
| ABA# 121000248 |
| For Credit To:
Legal & Compliance, LLC IOTA Trust Account |
| Account Number
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Whereas,
in connection with its purchase the undersigned represents and warrants to the Company the following: The Company’s private
offering of common stock is being made to “accredited” investors within the meaning of Rule 506 of Regulation
D promulgated by the Securities Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”).
1.2
Offer to Purchase. Subscriber hereby irrevocably offers to purchase the Units and tenders herewith the total price noted above.
Subscriber recognizes and agrees that (i) this subscription is irrevocable and, if Subscriber is a natural person, shall survive
Subscriber’s death, disability or other incapacity, and (ii) the Company has complete discretion to accept or to reject
this Subscription Agreement in its entirety and shall have no liability for any rejection of this Subscription Agreement. This
Subscription Agreement shall be deemed to be accepted by the Company only when it is executed by the Company. However, in the
event the Company does not receive accepted subscriptions for the Offering Amount by October 31, 2015, the Company shall return
to the Subscriber, the Subscriber’s subscription funds, without interest.
1.3
Effect of Acceptance. Subscriber hereby acknowledges and agrees that on the Company’s acceptance of this Subscription
Agreement, it shall become a binding and fully enforceable agreement between the Company and the Subscriber. As a result, upon
acceptance by the Company of this Subscription Agreement and subject to the Company receiving accepted subscriptions for the Offering
Amount, Subscriber will become the record and beneficial holder of the Units (and the preferred stock, common stock and warrants
represented thereby) and the Company will be entitled to receive the purchase price of the Units as specified herein.
2.
Representation as to Investor Status.
2.1
Accredited Investor. In order for the Company to sell the common stock in conformance with state and federal securities laws,
the following information must be obtained regarding Subscriber’s investor status. Please initial each item applicable
to you as an investor in the Company.
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(a) A natural person whose net worth, either individually or jointly with such person’s spouse, at the time of Subscriber’s
purchase, exceeds $1,000,000;
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(b) A natural person who had an individual income in excess of $200,000, or joint income with that person’s spouse in excess
of $300,000, in each of the two most recent years and reasonably expects to reach the same income level in the current year;
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(c) A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity;
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(d) A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”);
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(e) An insurance company as defined in section 2(13) of the Exchange Act;
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(f) An investment company registered under the Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act;
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(g) A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958;
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(h) A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state, or
its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
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(i) An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed
plan, with investment decisions made solely by persons that are accredited investors;
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(j) A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
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(k) An organization described in Section 501(c)(3) of the Internal Revenue Code, or a corporation, business trust or partnership,
not formed for the specific purpose of acquiring Series B Notes and Warrants, with total assets in excess of $5,000,000;
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(l) A director or executive officer of the Company;
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(m) A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring Series B Notes and Warrants,
whose purchase is directed by a sophisticated person who has such knowledge and experience in financial and business matters that
such person is capable of evaluating the merits and risks of investing in the Company;
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(n) An entity in which all of the equity owners qualify under any of the above subparagraphs.
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(o) Subscriber does not qualify under any of the investor categories set forth in (a) through (l) above.
2.2
Net Worth. The term “net worth” means the excess of total assets over total liabilities (including personal and
real property, but excluding the estimated fair market value of a person’s primary home).
2.3
Income. In determining individual “income,” Subscriber should add to Subscriber’s individual taxable adjusted
gross income (exclusive of any spousal income) any amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depletion, contributions to an IRA or Keogh retirement plan, alimony
payments, and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income.
2.4
Type of Subscriber. Indicate the form of entity of Subscriber:
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Individual |
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Limited
Partnership |
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Corporation |
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General
Partnership |
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Revocable
Trust |
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Other
Type of Trust (indicate type): _____________________ |
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Other
(indicate form of organization): _____________________ |
(a)
If Subscriber is not an individual, indicate the approximate date Subscriber entity was formed: _____________________.
(b)
If Subscriber is not an individual, initial the line below which correctly describes the application of the following
statement to Subscriber’s situation: Subscriber (i) was not organized or reorganized for the specific purpose of acquiring
the shares of common stock of the Company and (ii) has made investments prior to the date hereof, and each beneficial owner thereof
has and will share in the investment in proportion to his or her ownership interest in Subscriber.
If
the “False” box is checked, each person participating in the entity will be required to fill out a Subscription Agreement.
2.5
Other Representations and Warranties of Subscriber. Subscriber hereby represents and warrants to the Company as follows:
(a)
The Units (and the shares of preferred stock, common stock and common stock purchase warrants represented thereby) are being acquired
for Subscriber’s own account for investment, with no intention by Subscriber to distribute or sell any portion thereof within
the meaning of the Securities Act, and will not be transferred by Subscriber in violation of the Securities Act or the then applicable
rules or regulations thereunder. No one other than Subscriber has any interest in or any right to acquire the Units. Subscriber
understands and acknowledges that the Company will have no obligation to recognize the ownership, beneficial or otherwise, of
the shares of common stock by anyone but Subscriber.
(b)
Subscriber’s financial condition is such that Subscriber is able to bear the risk of holding the Units that Subscriber may
acquire pursuant to this Agreement, for an indefinite period of time, and the risk of loss of Subscriber’s entire investment
in the Company.
(c)
Subscriber has received, has read and understood and is familiar with this Subscription Agreement, the Units and the common stock
and the common stock purchase warrants.
(d)
Subscriber has been furnished with all documents and materials relating to the business, finances and operations of the Company
and its subsidiaries and information that Subscriber requested and deemed material to making an informed investment decision regarding
its purchase of the Units. Subscriber has been afforded the opportunity to review such documents and materials and the information
contained therein. Subscriber has been afforded the opportunity to ask questions of the Company and its management. Subscriber
understands that such discussions, as well as any written information provided by the Company, were intended to describe the aspects
of the Company’s and its subsidiaries’ business and prospects which the Company believes to be material, but were
not necessarily a thorough or exhaustive description, and except as expressly set forth in this Subscription Agreement, the Company
makes no representation or warranty with respect to the completeness of such information and makes no representation or warranty
of any kind with respect to any information provided by any entity other than the Company. Some of such information may include
projections as to the future performance of the Company and its subsidiaries, which projections may not be realized, may be based
on assumptions which may not be correct and may be subject to numerous factors beyond the Company’s and its subsidiaries’
control. Additionally, Subscriber understands and represents that he is purchasing the Units notwithstanding the fact that the
Company and its subsidiaries, if any, may disclose in the future certain material information that the Subscriber has not received,
including the financial results of the Company and its subsidiaries for their current fiscal quarters. Neither such inquiries
nor any other due diligence investigations conducted by such Subscriber shall modify, amend or affect such Subscriber’s
right to rely on the Company’s representations and warranties, if any, contained in this Subscription Agreement. Subscriber
has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect
to its investment in the common stock.
(e)
No representations or warranties have been made to Subscriber by the Company, or any representative of the Company, or any securities
broker/dealer, other than as set forth in this Subscription Agreement.
(f)
Subscriber has investigated the acquisition of the Units to the extent Subscriber deemed necessary or desirable and the Company
has provided Subscriber with any reasonable assistance Subscriber has requested in connection therewith.
(g)
Subscriber, either personally, or together with his advisors (other than any securities broker/dealers who may receive compensation
from the sale of any of the Units), has such knowledge and experience in financial and business matters that Subscriber is capable
of evaluating the merits and risks of purchasing the Units and of making an informed investment decision with respect thereto.
(h)
Subscriber is aware that Subscriber’s rights to transfer the Units (or the common stock thereby represented) is restricted
by the Securities Act and applicable state securities laws, and Subscriber will not offer for sale, sell or otherwise transfer
the Units (or the underlying common stock and purchase warrants) without registration under the Securities Act and qualification
under the securities laws of all applicable states, unless such sale would be exempt therefrom.
(i)
Subscriber understands and agrees that the Units (or the underlying common stock or common stock purchase warrants) it acquires
have not been registered under the Securities Act or any state securities act in reliance on exemptions therefrom and that the
Company has no obligation to register any of the Units (and underlying common stock represented thereby) offered by the Company
as set forth in the Accredited Investor Memorandum of Terms dated September 29, 2015 (the “Memorandum”). Subscriber
further acknowledges that Subscriber is purchasing the Units after having been provided with the Memorandum.
(j)
The Subscriber has had an opportunity to ask questions of, and receive answers from, representatives of the Company concerning
the terms and conditions of this investment and all such questions have been answered to the full satisfaction of the undersigned.
Subscriber understands that no person other than the Company has been authorized to make any representation and if made, such
representation may not be relied on unless it is made in writing and signed by the Company. The Company has not, however, rendered
any investment advice to the undersigned with respect to the suitability
(k)
Subscriber understands that the certificates or other instruments representing the securities included in the Units (the “Securities”),
as well as the common stock issuable thereby shall bear a restrictive legend in substantially the following form (and a stop transfer
order may be placed against transfer of such stock certificates):
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO ANY EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND UNDER APPLICABLE
STATE LAW, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
(l)
Subscriber also acknowledges and agrees to the following:
(i)
An investment in the Units is highly speculative and involves a high degree of risk of loss of the entire investment in the Company;
and
(ii)
There is no assurance that a public market for the securities will be available and that, as a result, Subscriber may not be able
to liquidate Subscriber’s investment in the Securities should a need arise to do so.
(m)
Subscriber is not dependent for liquidity on any of the amounts Subscriber is investing in the Units.
(n)
Subscriber’s address set forth below is his or her correct residence address.
(o)
Subscriber has full power and authority to make the representations referred to herein, to purchase the Units and to execute and
deliver this Subscription Agreement.
(p)
Subscriber understands that the foregoing representations and warranties are to be relied upon by the Company as a basis for the
exemptions from registration and qualification of the sale of the Units under the federal and state securities laws and for other
purposes.
The
foregoing representations and warranties are true and accurate as of the date hereof and shall survive such date. If any of the
above representations and warranties shall cease to be true and accurate prior to the acceptance of this Subscription Agreement,
Subscriber shall give prompt notice of such fact to the Company by telegram, or facsimile or e-mail, specifying which representations
and warranties are not true and accurate and the reasons therefor.
3.
Indemnification. Subscriber acknowledges that Subscriber understands the meaning and legal consequences of the representations
and warranties made by Subscriber herein, and that the Company is relying on such representations and warranties in making the
determination to accept or reject this Subscription Agreement. Subscriber hereby agrees to indemnify and hold harmless the Company
and each employee and agent thereof from and against any and all losses, damages or liabilities due to or arising out of a breach
of any representation or warranty of Subscriber contained in this Subscription Agreement.
4.
Transferability. Subscriber agrees not to transfer or assign this Subscription Agreement, or any interest herein, and further
agrees that the assignment and transferability of the Units acquired pursuant hereto shall be made only in accordance with applicable
federal and state securities laws.
5.
Termination of Agreement; Return of Funds; Minimum Offering Amount. In the event that, for any reason, this Subscription Agreement
is rejected in its entirety by the Company, this Subscription Agreement shall be null and void and of no further force and effect,
and no party shall have any rights against any other party hereunder. In the event that the Company rejects this Subscription
Agreement, the Company shall promptly return or cause to be returned to Subscriber any money tendered hereunder without interest
or deduction.
Funds
from accepted subscriptions shall be held in an escrow account with Legal & Compliance, LLC, 330 Clematis Street, Suite 217,
West Palm Beach, FL 33401 until the Offering Amount has been received, at which time the Company then can access the subscription
proceeds.
6.
Notices. All notices or other communications given or made hereunder shall be in writing and shall be delivered or mailed
by registered or certified mail, return receipt requested, postage prepaid, or delivered by, facsimile or e-mail to Subscriber
at the address set forth below and to the Company at the address set forth on the first page of this Agreement, or at such other
place as the Company may designate by written notice to Subscriber.
7.
Amendments. Neither this Subscription Agreement nor any term hereof may be changed, waived, discharged or terminated except
in a writing signed by Subscriber and the Company.
8.
Governing Law. This Subscription Agreement and all amendments hereto shall be governed by and construed in accordance with
the laws of the State of Nevada.
9.
Headings. The headings in this Subscription Agreement are for convenience of reference, and shall not by themselves determine
the meaning of this Subscription Agreement or of any part hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
INDIVIDUALS
In
witness whereof, the parties hereto have executed this Agreement as of the dates set forth below.
Dated:
_____________, 2015.
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Signature(s):
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Name
(Please Print): |
________________________________ |
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Residence
Address: |
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________________________________ |
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Phone
Number: |
(______) _______-_________________ |
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Cellular
Number: |
(______) _______-_________________ |
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Social
Security Number: |
_________________ |
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Email
address: |
________________@_______________ |
ACCEPTANCE
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STAR
MOUNTAIN RESOURCES, INC. |
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a
Nevada corporation |
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| Date:
_____________, 2015. |
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By: |
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Joseph Marchal,
Chairman & CEO |
CORPORATIONS,
PARTNERSHIPS, TRUSTS OR OTHER ENTITIES
In
witness whereof, the parties hereto have executed this Agreement as of the dates set forth below.
Dated:
_____________, 2015.
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Name
of Purchaser (Please Print): |
________________________________ |
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By:
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________________________________ |
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Name
(Please Print): |
________________________________ |
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Title |
________________________________ |
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Address:
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Phone
Number: |
(______)
_______-___________ |
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Cellular
Number: |
(______)
_______-___________ |
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Taxpayer
ID Number: |
________________________________ |
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Email
address: |
________________@__________________________ |
ACCEPTANCE
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STAR
MOUNTAIN RESOURCES, INC. |
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a
Nevada corporation |
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| Date: _____________,
2015. |
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By:
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Joseph Marchal,
Chairman & CEO |
EXHIBIT
A
CERTIFICATE
OF DESIGNATIONS, RIGHTS AND PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES C PREFERRED STOCK
Section
1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.
“Arizona
Courts” shall have the meaning set forth in Section 7(d).
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the Company’s common stock, par value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
“Conversion
Date” shall have the meaning set forth in Section 6(a).
“Conversion
Rate” shall have the meaning set forth in Section 6(b).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series C Preferred
in accordance with the terms hereof.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Holder”
shall have the meaning given such term in Section 2.
“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Company other than those securities
which are explicitly senior or pari passu to the Series C Preferred in dividend rights or liquidation preference.
“Liquidation”
shall have the meaning set forth in Section 4.
“Notice
of Conversion” shall have the meaning set forth in Section 6(a).
“Original
Issue Date” means the date of the first issuance of any shares of the Series C Preferred regardless of the number of
transfers of any particular shares of Series C Preferred and regardless of the number of certificates which may be issued to evidence
such Series C Preferred.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Series
C Preferred” shall have the meaning set forth in Section 2.
“Securities”
means the Series C Preferred and the Underlying Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Senior
Securities” means the shares of capital stock designated as Series A Preferred Stock and up to $30,000,000 of principal
amount of debt that may be issued by the Company to finance its working capital requirements.
“Share
Delivery Date” shall have the meaning set forth in Section 4(c).
“Stated
Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.
“Trading
Day” means a day on which the New York Stock Exchange is open for business.
“Transfer
Agent” means a transfer agent to be appointed by the Company and any successor transfer agent of the Company.
“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Series C Preferred in accordance
with the terms of this Certificate of Designation.
Section
2. Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series C Preferred Stock
(the “Series C Preferred”) and the number of shares so designated shall be up to 5,000,000 (which shall not
be subject to increase without the written consent of all of the holders of the Series C Preferred (each, a “Holder”
and collectively, the “Holders”). Each share of Series C Preferred shall have a par value of $0.001 per share
and a stated value equal to $0.50 per share (the “Stated Value”).
Section
3. INTENTIONALLY DELETED.
Section
4. Voting Rights. Except as otherwise provided herein or as otherwise required by law, holders of Series C Preferred
shall be entitled to 10 votes per share on matters submitted to a vote of the stockholders of the Company. Also, as long as any
shares of Series C Preferred are outstanding, the Company shall not, without the affirmative vote of all of the Holders of the
then outstanding shares of the Series C Preferred, alter or change adversely the powers, preferences or rights given to the Series
C Preferred or alter or amend this Certificate of Designation.
Section
5. Liquidation. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a
“Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of
the Company an amount equal to the par value of the Series C Preferred and any other fees or liquidated damages then due and owing
thereon under this Certificate of Designation, for each share of Series C Preferred after any distribution or payment made to
Senior Securities and before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets
of the Company shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall
be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all
amounts payable thereon were paid in full.
Section
6. Conversion and Redemption.
a)
Conversions at Option of Holder. Each share of Series C Preferred shall be convertible, at any time after six (6) months
after the date of issuance, and from time to time from and thereafter at the option of the Holder thereof, into that number of
shares of Common Stock determined by multiplying the number of shares of Series C Preferred by the Conversion Rate. Holders shall
effect conversions by providing the Company with the form of conversion notice attached hereto as Annex A (a “Notice
of Conversion”). Each Notice of Conversion shall specify the number of shares of Series C Preferred to be converted,
the number of shares of Series C Preferred owned prior to the conversion at issue, the number of shares of Series C Preferred
owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior
to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Company (such date, the “Conversion
Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such
Notice of Conversion to the Company is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor
shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The
calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.
To effect conversions of shares of Series C Preferred, a Holder shall not be required to surrender the certificate(s) representing
the shares of Series C Preferred to the Company unless all of the shares of Series C Preferred represented thereby are so converted,
in which case such Holder shall deliver the certificate representing such shares of Series C Preferred promptly following the
Conversion Date at issue. Shares of Series C Preferred converted into Common Stock or redeemed in accordance with the terms hereof
shall be canceled and shall not be reissued.
b)
Conversion Rate. The conversion rate for the Series C Preferred shall equal to one-half (½ ) share of common stock
per one (1) share of Series C Preferred Stock, subject to adjustment herein (the “Conversion Rate”).
c)
Mechanics of Conversion
i.
Delivery of Conversion Shares Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the converting Holder the number of Conversion
Shares being acquired upon the conversion of the Series C Preferred which, on or after the earlier of (i) the twelve month anniversary
of the Original Issue Date or (ii) the Effective Date, shall be free of restrictive legends and trading restrictions. If the Common
Stock is listed or quoted for public trading, the Company shall deliver the Conversion Shares required to be delivered by the
Company under this Section 6 electronically through the Depository Trust Company or another established clearing corporation performing
similar functions.
ii.
Failure to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered
to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice
to the Company at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the
Company shall promptly return to the Holder any original Series C Preferred certificate delivered to the Company and the Holder
shall promptly return to the Company the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.
iii.
Obligation Absolute. The Company’s obligation to issue and deliver the Conversion Shares upon conversion of Series
C Preferred in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder
to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by such Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by such
Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company
to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action that the Company may have against such Holder. In the event a
Holder shall elect to convert any or all of the Series C Preferred, the Company may not refuse conversion based on any claim that
such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any
other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of
the Series C Preferred of such Holder shall have been sought and obtained, and the Company posts a surety bond for the benefit
of such Holder in the amount of 150% of the par value of the Series C Preferred which is subject to the injunction, which bond
shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall
be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion
Shares and, if applicable, cash, upon a properly noticed conversion.
iv.
Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series C Preferred,
each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the
Holder (and the other holders of the Series C Preferred), not less than such aggregate number of shares of the Common Stock as
shall be issuable (taking into account the adjustments and restrictions of Section 6) upon the conversion of the then outstanding
shares of Series C Preferred. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue,
be duly authorized, validly issued, fully paid and nonassessable.
v.
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of
the Series C Preferred. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion,
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 Conversion Rate or round up to the next whole share.
vi.
Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Series C Preferred shall be made without
charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such
Conversion Shares, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of
such shares of Series C Preferred and the Company shall not be required to issue or deliver such Conversion Shares unless or until
the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation
performing similar functions) required for same-day electronic delivery of the Conversion Shares.
d)
Call for Redemption by Company. Commencing at any time after the Original Issue Date, the Company shall have the right,
upon 10 days’ notice to the Holder (the “Redemption Notice”), to redeem all of the then outstanding Series C
Preferred at a price equal to the Stated Value (the “Redemption Price”), on the date set forth in the Redemption Notice,
but in no event earlier than 30 days following the date of the receipt by the Holder of the Redemption Notice (the “Redemption
Date”). The Holder may convert this Series C Preferred into Common Stock at the Conversion Rate at any time prior to the
Redemption Date. Any portion of this Series C Preferred not exercised by 5:30 p.m. (Pacific time) on the Redemption Date shall
no longer be exercisable and shall be returned to the Company (and, if not so returned, shall automatically be deemed canceled),
and the Company, upon its receipt of the unexercised portion of this Series C Preferred, shall issue therefore in full and complete
satisfaction of its obligations under such remaining portion of this Series C Preferred to the Holder an amount equal to the number
of shares of Common Stock then issuable hereunder multiplied by the Redemption Price. The Redemption Price shall be mailed to
such Holder at its address of record, and the Series C Preferred shall be canceled.
Section
6. Certain Adjustments.
a)
Stock Dividends and Stock Splits. If the Company, at any time while this Series C Preferred is outstanding: (i) pays a
stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock
or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon conversion of this Series C Preferred), (ii) subdivides outstanding shares of Common Stock into a larger number of
shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company,
then the Conversion Rate shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 6(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)
Calculations. All calculations under this Section 6 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 6, 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 any treasury shares of the Company) issued
and outstanding.
c)
Notice to the Holders.
i.
Adjustment to Conversion Rate. Whenever the Conversion Rate is adjusted pursuant to any provision of this Section 6, the
Company shall promptly deliver to each Holder a notice setting forth the Conversion Rate after such adjustment and setting forth
a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Conversion 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 of 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 or (E) 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 filed
at each office or agency maintained for the purpose of conversion of this Series C Preferred, and shall cause to be delivered
to each Holder at its last address as it shall appear upon the stock books of the Company, at least twenty (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 deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice.
d)
Piggyback Registration Rights. The Holder shall have the registration rights as set forth in Exhibit A.
Section
7. Miscellaneous.
a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Company, at the address set forth above Attention: Donna Moore, or such other address
as the Company may specify for such purposes by notice to the Holders delivered in accordance with this Section 7. Any and all
notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally,
by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or
address of such Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of
the Company, at the principal place of business of such Holder. Any notice or other communication or deliveries hereunder shall
be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next
Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be given.
b)
Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or
impair the obligation of the Company, which is absolute and unconditional, to pay liquidated damages, as applicable, on the shares
of Series C Preferred at the time, place, and rate, and in the coin or currency, herein prescribed.
c)
Lost or Mutilated Series C Preferred Certificate. If a Holder’s Series C Preferred certificate shall be mutilated,
lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a
mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the
shares of Series C Preferred so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or
destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Company.
d)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate
of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without
regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation,
enforcement and defense of the transactions contemplated by any Holder (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting
in Maricopa County, Arizona (the “Arizona Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Arizona Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the enforcement of any of the rights of the Holders), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such Arizona Courts, or such Arizona Courts are improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Certificate of Designation and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Certificate
of Designation or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions
of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party
for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such
action or proceeding.
e)
Waiver. Any waiver by the Company or a Holder of a breach of any provision of this Certificate of Designation shall not
operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this
Certificate of Designation or a waiver by any other Holders. The failure of the Company or a Holder to insist upon strict adherence
to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party
(or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate
of Designation on any other occasion. Any waiver by the Company or a Holder must be in writing.
f)
Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of
this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it
shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount
deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum rate of interest permitted under applicable law.
g)
Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day.
h)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation
and shall not be deemed to limit or affect any of the provisions hereof.
i)
Status of Converted or Redeemed Series C Preferred. If any shares of Series C Preferred shall be converted, redeemed or
reacquired by the Company, such shares shall resume the status of authorized but unissued shares of preferred stock and shall
no longer be designated as Series C Preferred.
*********************
ANNEX
A
NOTICE
OF CONVERSION
(To
be Executed by the Registered Holder in order to Convert Shares of Series C Preferred Stock)
The
undersigned hereby elects to convert the number of shares of Series C Convertible Preferred Stock indicated below into shares
of common stock, par value $0.001 per share (the “Common Stock”), of Star Mountain Resources, Inc., a Nevada
corporation (the “Company”), according to the conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and opinions as may be required by the Company. No fee
will be charged to the Holders for any conversion, except for any such transfer taxes.
Conversion
calculations:
Date
to Effect Conversion: _____________________________________________
|
Number
of shares of Series C Preferred owned prior to Conversion: _______________
|
Number
of shares of Series C Preferred to be Converted: ________________________
|
Number
of shares of Common Stock to be Issued: ___________________________
|
Applicable
Conversion Rate:____________________________________________
|
Number
of shares of Series C Preferred subsequent to Conversion: ________________
|
Address
for Delivery: ______________________
|
| |
[HOLDER] |
| |
|
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
EXHIBIT
A
REGISTRATION
RIGHTS
The
shares of the STAR MOUNTAIN RESOURCES, INC., a Nevada corporation’s Common Stock issued upon conversion of the Series C
Preferred will be deemed “Registrable Securities” subject to the provisions of this Exhibit 3. All capitalized terms
used but not defined in this Exhibit 3 shall have the meanings ascribed to such terms in the Certificate of Designations for Series
C Preferred Stock to which this Exhibit is attached.
1.
Piggy-Back Registration.
1.1
Piggy-Back Rights. If at any time on or after the Original Issue Date the Company proposes to file any Registration Statement
under the Securities Act of 1933, as amended (the “1933 Act”) (a “Registration Statement”) with respect
to any offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into,
equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company
and by shareholders of the Company), other than a Registration Statement (i) filed in connection with any employee stock option
or other benefit plan, (ii) for a dividend reinvestment plan or (iii) in connection with a merger or acquisition, then the Company
shall (x) give written notice of such proposed filing to the holders of Registrable Securities appearing on the books and records
of the Company as such a holder as soon as practicable but in no event less than ten (10) days before the anticipated filing date
of the Registration Statement, which notice shall describe the amount and type of securities to be included in such Registration
Statement, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any,
of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of
such number of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice
(a “Piggy-Back Registration”). The Company shall cause such Registrable Securities to be included in such registration
and shall cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities
requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company
and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution
thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that
involves an underwriter or underwriters shall enter into an underwriting agreement in customary form with the underwriter or underwriters
selected for such Piggy-Back Registration.
1.2
Withdrawal. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable
Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness
of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making
a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness
of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders
of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.5 below.
1.3
The Company shall notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result
of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing. At the request of such holder, the Company shall also prepare, file and furnish to
such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. The holders of Registrable Securities shall not offer or sell any Registrable
Securities covered by the Registration Statement after receipt of such notification until the receipt of such supplement or amendment.
1.4
The Company may request a holder of Registrable Securities to furnish the Company such information with respect to such holder
and such holder’s proposed distribution of the Registrable Securities pursuant to the Registration Statement as the Company
may from time to time reasonably request in writing or as shall be required by law or by the SEC in connection therewith, and
such holders shall furnish the Company with such information.
1.5
All fees and expenses incident to the performance of or compliance with this Exhibit A by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in
the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the SEC, (B) with respect to filings required to be made with any trading market on which the Common Stock is then listed
for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or
exemptions of the Registrable Securities) and (D) with respect to any filing that may be required to be made by any broker through
which a holder of Registrable Securities intends to make sales of Registrable Securities with the FINRA, (ii) printing expenses,
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) 1933 Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other persons or entities retained by the
Company in connection with the consummation of the transactions contemplated by this Exhibit B. In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar
commissions of any holder of Registrable Securities.
1.6
The Company and its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities,
the officers, directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent
role of a person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual
or entity who controls the Buyer or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other
individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title
or any other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to
(1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any related prospectus or
any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating
to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein
(in the case of any such prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act or any state securities law, or any rule
or regulation thereunder, in connection with the performance of its obligations under this Exhibit A, except to the extent, but
only to the extent, that (i) such untrue statements or omissions are based upon information regarding the Buyer or such holder
of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer and each
holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Exhibit A of which the Company is aware.
1.7
If the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion
as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements
or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Company
and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue
or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, the Company or the Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by
a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in Section 1.6 was available to such party in accordance with its terms. It is agreed that
it would not be just and equitable if contribution pursuant to this Section 1.7 were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding
sentence. Notwithstanding the provisions of this Section 1.7, any holder of Registrable Securities shall not be required to contribute,
in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such party from the sale of
all of their Registrable Securities pursuant to such Registration Statement or related prospectus exceeds the amount of any damages
that such party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.
EXHIBIT
B
FORM
OF SERIES A COMMON STOCK PURCHASE WARRANT
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
STAR
MOUNTAIN RESOURCES, INC.
SERIES
A WARRANT TO PURCHASE COMMON STOCK
Warrant
No.: [●]
Number of
Shares of Common Stock: [●]
Date of
Issuance: _____________________ (“Issuance Date”)
FOR
VALUE RECEIVED, STAR MOUNTAIN RESOURCES, INC., a Nevada corporation (the “Company”), promises to issue in the name
of, and sell and deliver to ____________________ (the “Holder”) a certificate or certificates for an aggregate of
______________ shares (the “Warrant Shares”) of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), upon exercise of this Warrant (the “Warrant”) payment by the Holder of $0.75
per Warrant Share (the “Exercise Price”), with the Exercise Price being subject to adjustment in the circumstances
set forth below.
1. Exercise
of Warrant; Call for Redemption by Company
A. Exercise
Period. The Holder may exercise this Warrant, in whole or in part (but not as to fractional shares), at any time and from
time to time commencing on the Issuance Date and ending, subject to an earlier call for redemption by the Company as hereinafter
set forth, at 5:30 p.m., Pacific Time, two (2) years thereafter (the “Exercise Period”).
B. Exercise
Procedure.
i. This
Warrant will be deemed to have been exercised at such time as the Company has received all of the following items (the “Exercise
Date”):
a. a
completed Exercise Agreement, in the form attached hereto as Exhibit 1, executed by the Holder (the “Purchaser”);
and
b. a
certified check or other manner of payment acceptable to the Company in an amount equal to the sum of the product of the Exercise
Price multiplied by the number of shares of Common Stock being purchased upon such exercise.
ii. Certificates
for the shares of Common Stock purchased upon exercise of this Warrant will be delivered by the Company to the Purchaser within
twenty (20) business days after the Exercise Date. Unless this Warrant has expired or all of the purchase rights represented hereby
have been exercised, the Company will prepare a new Warrant representing the rights formerly represented by this Warrant that
have not expired or been exercised. The Company will, within such twenty (20) day period, deliver such new Warrant to the Holder
at the address set forth in this Warrant.
iii. The
shares of Common Stock issuable upon the exercise of this Warrant will be deemed to have been transferred to the Purchaser on
the Exercise Date, and the Purchaser will be deemed for all purposes to have become the record holder of such Common Stock on
the Exercise Date.
iv. The
issuance of certificates for shares of Common Stock upon the exercise of this Warrant will be made without charge to the Purchaser
for any issuance tax in respect thereof or any other cost incurred by the Company in connection with such exercise and related
transfer of the shares; provided, however, that the Company shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any certificate or instrument in a name other than that of the Holder
of this Warrant, and that the Company shall not be required to issue or deliver any such certificate or instrument unless and
until the person or persons requiring the issue thereof shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
v. Unless
the underlying shares of Common Stock are registered, sales of the securities may only be made pursuant to Rule 144 under the
Securities Act of 1933 (the “Act”) at such time as the Company as well as the Holder is able to effect sales of the
Warrant (including the shares of Common Stock underlying the Warrant pursuant to Rule 144 or other applicable exemption).
The
Holder shall have the right to exercise all or apportion of this Warrant as follows:
a. The
completion of any required registration or other qualification of such shares under any federal or state law o under the rulings
or regulations of the Securities and Exchange Commission or any other government regulatory body which is necessary;
b. The
obtaining of any approval or other clearance from any federal or state government agency which is necessary;
c. The
obtaining from the registered owner of the Warrant, as required in the sole judgment of the Company, a representation in writing
that the owner is acquiring such Common Shares for the owner’s own account for investment and not with a view to, or for
sale in connection with, the distribution of any part thereof, if the Warrants and the related shares have not been registered
under the Act; and
d. The
placing on the certificate, as required in the sole judgment of the Company, of an appropriate legend and the issuance of stop
transfer instructions in connection with this Warrant and the underlying shares of Common Stock to the following effect:
“The
securities represented by this certificate have not been registered under the securities act of 1933 or the laws of any state
and have been issued pursuant to an exemption from registration pertaining to such securities and pursuant to a representation
by the security holder named hereon that said securities have been acquired fro purposes of investment and may not be offered,
sold, transferred, pledged, or hypothecated in the absence of registration. Furthermore, No offer, sale, transfer, pledge, hypothecation
is to take place without the prior written approval of counsel or the issuer being affixed to this certificate. The transfer agent
has been instructed to execute transfer of this certificate only in accordance with the above instructions.”
C. Fractional
Shares. The Company shall not be required to issue fractions of shares of Common Stock on the exercise of this Warrant. The
Company shall not be obligated to issue any fractional share interests or fractional Warrant interests upon the exercise of this
Warrant, nor shall it be obligated to issue scrip or pay cash in lieu of fractional interests, provided, however, that if a holder
exercises all the Warrants held of record by such holder, the Company shall at its option (i) eliminate the fractional interests
by rounding any fraction up to the nearest whole number of shares or (ii) within 30 days after the Exercise Date, deliver to the
Purchaser a check payable to the Purchaser, in lieu of such fractional share, in an amount equal to the value of such fractional
share as determined by the closing price of the Company’s Common Stock as reported on the principal exchange on which the
Company’s Common Stock is then traded, as of the close of business on the Exercise Date.
2. Effect
of Reorganization, Reclassification, Consolidation, Merger or Sale
A. Recapitalization
or Reclassification of Common Stock. In case the Company shall at any time prior to the Exercise of this Warrant, or the expiration
of the Exercise Period, whichever first occurs, effect a recapitalization or reclassification of such character that its Common
Stock shall be changed into or become exchangeable for a larger or smaller number of shares, then, upon the effective date thereof,
the number of shares of Common Stock that the Holder of this Warrant shall be entitled to purchase upon exercise hereof shall
be increased or decreased, as the case may be, in direct proportion to the increase or decrease in such number of shares of Common
Stock by reason of such recapitalization or reclassification, and the Exercise Price of such recapitalized or reclassified Common
Stock shall, in the case of an increase in the number of shares, be proportionately decreased and, in the case of a decrease in
the number of shares, be proportionately increased.
B. Consolidation,
Merger or Sale. In case the Company shall at any time prior to the exercise of this Warrant, or the expiration of the Exercise
Period, whichever first occurs, consolidate or merge with any other corporation (unless the Company shall be the surviving entity)
or transfer all or substantially all of its assets to any other corporation preparatory to a dissolution, then the Company shall,
as a condition precedent to such transaction, cause effective provision to be made so that the Holder of this Warrant, upon the
exercise thereof after the effective date of such transaction, shall be entitled to receive the kind and amount of shares, evidences
of indebtedness, and/or other property receivable on such transaction by a holder of the number of shares of Common Stock as to
which the Warrant was exercisable immediately prior to such transaction (without giving effect to any restriction upon such exercise);
and, in any such case, appropriate provision shall be made with respect to the rights and interests of the Holder hereof to the
effect that the provisions of this Warrant shall thereafter be applicable (as nearly as may be practicable) with respect to any
shares, evidences of indebtedness, or other securities or assets thereafter deliverable upon exercise of this Warrant.
C. Notice
of Adjustment. Whenever the number of shares of Common Stock purchasable upon exercise of this Warrant shall be adjusted as
provided herein, the Company shall file with its corporate records a certificate of its Chief Financial Officer setting forth
the computation and the adjusted number of shares of Common Stock purchasable hereunder resulting from such adjustments, and a
copy of such certificate shall be mailed to the Holder. Any such certificate or letter shall be conclusive evidence as to the
correctness of the adjustment or adjustments referred to therein and shall be available for inspection by the holders of the Warrants
on any day during normal business hours.
3. Reservation
of Common Stock. The Company will at all time reserve and keep available such number of shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant. Upon exercise of this Warrant pursuant to its terms, the Holder will
acquire fully paid and non-assessable ownership rights of the Common Stock, free and clear of any liens, claims or encumbrances
except as otherwise provided herein.
4. No
Shareholder Rights or Obligations. This Warrant will not entitle the Holder hereof to any voting rights or other rights as
a shareholder of the Company. Until the shares of Common Stock issuable upon the exercise of this Warrant are recorded as issued
on the books and records of the Company’s transfer agent, the Holder shall not be entitled to any voting rights or other
rights as a shareholder; provided, however, the Company uses its best efforts to ensure that, upon receipt of the Exercise Agreement
and payment of the Exercise Price, the appropriate documentation necessary to effectuate the exercise of the Warrant and the issuance
of the Common Stock is accomplished as expeditiously as possible. No provision of this Warrant, in the absence of affirmative
action by the Holder to purchase Common Stock, and no enumeration in this Warrant of the rights or privileges of the Holder, will
give rise to any obligation of such Holder for the Exercise Price or as a stockholder of the Company.
5. Transferability.
Subject to the terms hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed Assignment in the form of Exhibit 2 hereto at the principal offices of the Company. This Warrant
and the underlying shares of Common Stock may not be offered, sold or transferred except in compliance with the Act, and any applicable
state securities laws, and then only against receipt of an agreement of the person to whom such offer or sale or transfer is made
to comply with the provisions of this Warrant with respect to any resale or other disposition of such securities; provided that
no such agreement shall be required from any person purchasing this Warrant or the underlying shares of Common Stock pursuant
to a registration statement effective under the Act. The Holder of this Warrant agrees that, prior to the disposition of any security
purchased on the exercise hereof other than pursuant to a registration statement then effective under the Act, or any similar
statute then in effect, the Holder shall give written notice to the Company, expressing his intention as to such disposition.
Upon receiving such notice, the Company shall present a copy thereof to its securities counsel. If, in the sole opinion of such
counsel, which such opinion shall not be unreasonably withheld, the proposed disposition does not require registration of such
security under the Act, or any similar statute then in effect, the Company shall, as promptly as practicable, notify the Holder
of such opinion, whereupon the Holder shall be entitled to dispose of such security in accordance with the terms of the notice
delivered by the Holder to the Company.
6. Piggyback
Registration Rights. The Holder shall have the registration rights as set forth in Exhibit 3.
7. Miscellaneous
A. Notices.
Any notices, requests or consents hereunder shall be deemed given, and any instruments delivered, two days after they have been
mailed by first class mail, postage prepaid, or upon receipt if delivered personally or by facsimile transmission, as follows:
| If
to the Company: |
|
STAR
MOUNTAIN RESOURCES, INC. |
| |
|
605 W. Knox Road,
Suite 202 |
| |
|
Tempe, Arizona
85284 |
| |
|
|
| If
to the Holder: |
|
|
| |
|
|
| |
|
|
| |
|
|
except
that any of the foregoing may from time to time by written notice to the other designate another address which shall thereupon
become its effective address for the purposes of this paragraph.
B. Entire
Agreement. This Warrant, including the exhibits and documents referred to herein which are a part hereof, contain the entire
understanding of the parties hereto with respect to the subject matter and may be amended only by a written instrument executed
by the parties hereto or their successors or assigns. Any paragraph headings contained in this Warrant are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Warrant.
C. Governing
Law. This Warrant is governed by, interpreted under and construed in all respects in accordance with the substantive laws
of the State of Nevada, without regard to the conflicts of law provision thereof, and irrespective of the place of domicile or
resident of the party. In the event of a controversy arising out of the interpretation, construction, performance or breach of
this Warrant, the parties hereby agree and consent to the jurisdiction and venue of the Courts of the State of Nevada, or the
United States District Court for Nevada; and further agree and consent that personal service of process in any such action or
preceding outside the State of Nevada shall be tantamount to service in person in Nevada.
IN
WITNESS WHEREOF, this Warrant has been duly executed and the corporate seal affixed hereto, all as of the day and year first above
written.
| |
Star
Mountain Resources, Inc. |
| |
|
|
| |
By: |
|
| |
|
|
| |
Name: |
|
| |
|
|
| |
Title: |
|
EXHIBIT
1
Exercise
Agreement
| To: |
Dated: ______________ |
The
undersigned record Holder, pursuant to the provisions set forth in the within Warrant, hereby subscribed for and purchases _____________________________
shares of Common Stock covered by such Warrant and hereby makes full cash payment of $_____________________ for such shares
at the Exercise Price provided by such Warrant.
| |
|
| |
(Signature) |
| |
|
| |
|
| |
(Print or type
name) |
| |
|
| |
|
| |
(Address) |
| |
|
| |
|
| |
|
NOTICE:
The signature of this Exercise Agreement must correspond with the name as written upon the face of the within Warrant, or upon
the Assignment thereof, if applicable, in every particular, without alteration, enlargement or any change whatsoever.
EXHIBIT
2
Assignment
FOR
VALUE RECEIVED, ________________________________, the undersigned Holder hereby sell, assigns, and transfer all of the rights
of the undersigned under the within Warrant with respect to the number of shares of Common Stock issuable upon the exercise of
such Warrant set forth below, unto the Assignee identified below, and does hereby irrevocable constitute and appoint ___________________________
to effect such transfer of rights on the books of the Company, with full power of substitution:
| |
|
|
|
Number
of Shares |
| Name
of Assignee |
|
Address
of Assignee |
|
of
Common Stock |
| |
|
|
|
|
| |
|
|
|
|
| Dated:
___________ |
|
|
| |
|
(Signature of
Holder) |
| |
|
|
| |
|
|
| |
|
(Print or type
name) |
NOTICE:
The signature of this Exercise Agreement must correspond with the name as written upon the face of the within Warrant, or upon
the Assignment thereof, if applicable, in every particular, without alteration, enlargement or any change whatsoever.
Consent
of Assignee
I
HEREBY CONSENT to abide by the terms and conditions of the within Warrant.
Dated:
____________
| |
|
| |
(Signature of
Assignee) |
| |
|
| |
|
| |
(Print or type
name) |
EXHIBIT
3
REGISTRATION
RIGHTS
The
shares of the STAR MOUNTAIN RESOURCES, INC., a Nevada corporation’s Common Stock purchased upon exercise of the Warrants
will be deemed “Registrable Securities” subject to the provisions of this Exhibit 3. All capitalized terms used but
not defined in this Exhibit 3 shall have the meanings ascribed to such terms in the Callable Warrant to Purchase Common Stock
to which this Exhibit is attached.
1. Piggy-Back
Registration.
1.1 Piggy-Back
Rights. If at any time on or after the Issuance Date the Company proposes to file any Registration Statement under the Securities
Act of 1933, as amended (the “1933 Act”) (a “Registration Statement”) with respect to any offering of
equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities,
by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders
of the Company), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan,
(ii) for a dividend reinvestment plan or (iii) in connection with a merger or acquisition, then the Company shall (x) give written
notice of such proposed filing to the holders of Registrable Securities appearing on the books and records of the Company as such
a holder as soon as practicable but in no event less than ten (10) days before the anticipated filing date of the Registration
Statement, which notice shall describe the amount and type of securities to be included in such Registration Statement, the intended
method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y)
offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of Registrable
Securities as such holders may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”).
The Company shall cause such Registrable Securities to be included in such registration and shall cause the managing underwriter
or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back
Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition
of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back Registration that involves an underwriter or underwriters shall
enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggy-Back Registration.
1.2 Withdrawal.
Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities
in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness
of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making
a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness
of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders
of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.5 below.
1.3 The
Company shall notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result
of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing. At the request of such holder, the Company shall also prepare, file and furnish to
such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. The holders of Registrable Securities shall not offer or sell any Registrable
Securities covered by the Registration Statement after receipt of such notification until the receipt of such supplement or amendment.
1.4
The Company may request a holder of Registrable Securities to furnish the Company such information with respect to such holder
and such holder’s proposed distribution of the Registrable Securities pursuant to the Registration Statement as the Company
may from time to time reasonably request in writing or as shall be required by law or by the SEC in connection therewith, and
such holders shall furnish the Company with such information.
1.5 All
fees and expenses incident to the performance of or compliance with this Exhibit A by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in
the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the SEC, (B) with respect to filings required to be made with any trading market on which the Common Stock is then listed
for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or
exemptions of the Registrable Securities) and (D) with respect to any filing that may be required to be made by any broker through
which a holder of Registrable Securities intends to make sales of Registrable Securities with the FINRA, (ii) printing expenses,
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) 1933 Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other persons or entities retained by the
Company in connection with the consummation of the transactions contemplated by this Exhibit B. In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar
commissions of any holder of Registrable Securities.
1.6 The
Company and its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities, the
officers, directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent
role of a person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual
or entity who controls the Buyer or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other
individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title
or any other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating
to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any related prospectus
or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating
to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein
(in the case of any such prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act or any state securities law, or any rule
or regulation thereunder, in connection with the performance of its obligations under this Exhibit A, except to the extent, but
only to the extent, that (i) such untrue statements or omissions are based upon information regarding the Buyer or such holder
of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer and each
holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Exhibit A of which the Company is aware.
1.7 If
the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion
as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements
or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Company
and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue
or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, the Company or the Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by
a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in Section 1.6 was available to such party in accordance with its terms. It is agreed that
it would not be just and equitable if contribution pursuant to this Section 1.7 were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding
sentence. Notwithstanding the provisions of this Section 1.7, any holder of Registrable Securities shall not be required to contribute,
in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such party from the sale of
all of their Registrable Securities pursuant to such Registration Statement or related prospectus exceeds the amount of any damages
that such party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.
[End
of Exhibit 3]
EXHIBIT
C
FORM
OF SERIES B COMMON STOCK PURCHASE WARRANT
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
STAR
MOUNTAIN RESOURCES, INC.
SERIES
B WARRANT TO PURCHASE COMMON STOCK
Warrant
No.: [●]
Number of
Shares of Common Stock: [●]
Date of
Issuance: _____________________ (“Issuance Date”)
FOR
VALUE RECEIVED, STAR MOUNTAIN RESOURCES, INC., a Nevada corporation (the “Company”), promises to issue in the name
of, and sell and deliver to ____________________ (the “Holder”) a certificate or certificates for an aggregate of
______________ shares (the “Warrant Shares”) of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), upon exercise of this Warrant (the “Warrant”) payment by the Holder of $1.50
per Warrant Share (the “Exercise Price”), with the Exercise Price being subject to adjustment in the circumstances
set forth below.
8. Exercise
of Warrant; Call for Redemption by Company
A. Exercise
Period. The Holder may exercise this Warrant, in whole or in part (but not as to fractional shares), at any time and from
time to time commencing on the Issuance Date and ending, subject to an earlier call for redemption by the Company as hereinafter
set forth, at 5:30 p.m., Pacific Time, three (3) years thereafter (the “Exercise Period”).
B. Exercise
Procedure.
i. This
Warrant will be deemed to have been exercised at such time as the Company has received all of the following items (the “Exercise
Date”):
a. a
completed Exercise Agreement, in the form attached hereto as Exhibit 1, executed by the Holder (the “Purchaser”);
and
b. a
certified check or other manner of payment acceptable to the Company in an amount equal to the sum of the product of the Exercise
Price multiplied by the number of shares of Common Stock being purchased upon such exercise.
ii. Certificates
for the shares of Common Stock purchased upon exercise of this Warrant will be delivered by the Company to the Purchaser within
twenty (20) business days after the Exercise Date. Unless this Warrant has expired or all of the purchase rights represented hereby
have been exercised, the Company will prepare a new Warrant representing the rights formerly represented by this Warrant that
have not expired or been exercised. The Company will, within such twenty (20) day period, deliver such new Warrant to the Holder
at the address set forth in this Warrant.
iii. The
shares of Common Stock issuable upon the exercise of this Warrant will be deemed to have been transferred to the Purchaser on
the Exercise Date, and the Purchaser will be deemed for all purposes to have become the record holder of such Common Stock on
the Exercise Date.
iv. The
issuance of certificates for shares of Common Stock upon the exercise of this Warrant will be made without charge to the Purchaser
for any issuance tax in respect thereof or any other cost incurred by the Company in connection with such exercise and related
transfer of the shares; provided, however, that the Company shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any certificate or instrument in a name other than that of the Holder
of this Warrant, and that the Company shall not be required to issue or deliver any such certificate or instrument unless and
until the person or persons requiring the issue thereof shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
v. Unless
the underlying shares of Common Stock are registered, sales of the securities may only be made pursuant to Rule 144 under the
Securities Act of 1933 (the “Act”) at such time as the Company as well as the Holder is able to effect sales of the
Warrant (including the shares of Common Stock underlying the Warrant pursuant to Rule 144 or other applicable exemption).
The
Holder shall have the right to exercise all or apportion of this Warrant as follows:
a. The
completion of any required registration or other qualification of such shares under any federal or state law o under the rulings
or regulations of the Securities and Exchange Commission or any other government regulatory body which is necessary;
b. The
obtaining of any approval or other clearance from any federal or state government agency which is necessary;
c. The
obtaining from the registered owner of the Warrant, as required in the sole judgment of the Company, a representation in writing
that the owner is acquiring such Common Shares for the owner’s own account for investment and not with a view to, or for
sale in connection with, the distribution of any part thereof, if the Warrants and the related shares have not been registered
under the Act; and
d. The
placing on the certificate, as required in the sole judgment of the Company, of an appropriate legend and the issuance of stop
transfer instructions in connection with this Warrant and the underlying shares of Common Stock to the following effect:
“The
securities represented by this certificate have not been registered under the securities act of 1933 or the laws of any state
and have been issued pursuant to an exemption from registration pertaining to such securities and pursuant to a representation
by the security holder named hereon that said securities have been acquired fro purposes of investment and may not be offered,
sold, transferred, pledged, or hypothecated in the absence of registration. Furthermore, No offer, sale, transfer, pledge, hypothecation
is to take place without the prior written approval of counsel or the issuer being affixed to this certificate. The transfer agent
has been instructed to execute transfer of this certificate only in accordance with the above instructions.”
C. Fractional
Shares. The Company shall not be required to issue fractions of shares of Common Stock on the exercise of this Warrant. The
Company shall not be obligated to issue any fractional share interests or fractional Warrant interests upon the exercise of this
Warrant, nor shall it be obligated to issue scrip or pay cash in lieu of fractional interests, provided, however, that if a holder
exercises all the Warrants held of record by such holder, the Company shall at its option (i) eliminate the fractional interests
by rounding any fraction up to the nearest whole number of shares or (ii) within 30 days after the Exercise Date, deliver to the
Purchaser a check payable to the Purchaser, in lieu of such fractional share, in an amount equal to the value of such fractional
share as determined by the closing price of the Company’s Common Stock as reported on the principal exchange on which the
Company’s Common Stock is then traded, as of the close of business on the Exercise Date.
9. Effect
of Reorganization, Reclassification, Consolidation, Merger or Sale
A. Recapitalization
or Reclassification of Common Stock. In case the Company shall at any time prior to the Exercise of this Warrant, or the expiration
of the Exercise Period, whichever first occurs, effect a recapitalization or reclassification of such character that its Common
Stock shall be changed into or become exchangeable for a larger or smaller number of shares, then, upon the effective date thereof,
the number of shares of Common Stock that the Holder of this Warrant shall be entitled to purchase upon exercise hereof shall
be increased or decreased, as the case may be, in direct proportion to the increase or decrease in such number of shares of Common
Stock by reason of such recapitalization or reclassification, and the Exercise Price of such recapitalized or reclassified Common
Stock shall, in the case of an increase in the number of shares, be proportionately decreased and, in the case of a decrease in
the number of shares, be proportionately increased.
B. Consolidation,
Merger or Sale. In case the Company shall at any time prior to the exercise of this Warrant, or the expiration of the Exercise
Period, whichever first occurs, consolidate or merge with any other corporation (unless the Company shall be the surviving entity)
or transfer all or substantially all of its assets to any other corporation preparatory to a dissolution, then the Company shall,
as a condition precedent to such transaction, cause effective provision to be made so that the Holder of this Warrant, upon the
exercise thereof after the effective date of such transaction, shall be entitled to receive the kind and amount of shares, evidences
of indebtedness, and/or other property receivable on such transaction by a holder of the number of shares of Common Stock as to
which the Warrant was exercisable immediately prior to such transaction (without giving effect to any restriction upon such exercise);
and, in any such case, appropriate provision shall be made with respect to the rights and interests of the Holder hereof to the
effect that the provisions of this Warrant shall thereafter be applicable (as nearly as may be practicable) with respect to any
shares, evidences of indebtedness, or other securities or assets thereafter deliverable upon exercise of this Warrant.
C. Notice
of Adjustment. Whenever the number of shares of Common Stock purchasable upon exercise of this Warrant shall be adjusted as
provided herein, the Company shall file with its corporate records a certificate of its Chief Financial Officer setting forth
the computation and the adjusted number of shares of Common Stock purchasable hereunder resulting from such adjustments, and a
copy of such certificate shall be mailed to the Holder. Any such certificate or letter shall be conclusive evidence as to the
correctness of the adjustment or adjustments referred to therein and shall be available for inspection by the holders of the Warrants
on any day during normal business hours.
10. Reservation
of Common Stock. The Company will at all time reserve and keep available such number of shares of Common Stock as will be
sufficient to permit the exercise in full of this Warrant. Upon exercise of this Warrant pursuant to its terms, the Holder will
acquire fully paid and non-assessable ownership rights of the Common Stock, free and clear of any liens, claims or encumbrances
except as otherwise provided herein.
11. No
Shareholder Rights or Obligations. This Warrant will not entitle the Holder hereof to any voting rights or other rights as
a shareholder of the Company. Until the shares of Common Stock issuable upon the exercise of this Warrant are recorded as issued
on the books and records of the Company’s transfer agent, the Holder shall not be entitled to any voting rights or other
rights as a shareholder; provided, however, the Company uses its best efforts to ensure that, upon receipt of the Exercise Agreement
and payment of the Exercise Price, the appropriate documentation necessary to effectuate the exercise of the Warrant and the issuance
of the Common Stock is accomplished as expeditiously as possible. No provision of this Warrant, in the absence of affirmative
action by the Holder to purchase Common Stock, and no enumeration in this Warrant of the rights or privileges of the Holder, will
give rise to any obligation of such Holder for the Exercise Price or as a stockholder of the Company.
12. Transferability.
Subject to the terms hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed Assignment in the form of Exhibit 2 hereto at the principal offices of the Company. This Warrant
and the underlying shares of Common Stock may not be offered, sold or transferred except in compliance with the Act, and any applicable
state securities laws, and then only against receipt of an agreement of the person to whom such offer or sale or transfer is made
to comply with the provisions of this Warrant with respect to any resale or other disposition of such securities; provided that
no such agreement shall be required from any person purchasing this Warrant or the underlying shares of Common Stock pursuant
to a registration statement effective under the Act. The Holder of this Warrant agrees that, prior to the disposition of any security
purchased on the exercise hereof other than pursuant to a registration statement then effective under the Act, or any similar
statute then in effect, the Holder shall give written notice to the Company, expressing his intention as to such disposition.
Upon receiving such notice, the Company shall present a copy thereof to its securities counsel. If, in the sole opinion of such
counsel, which such opinion shall not be unreasonably withheld, the proposed disposition does not require registration of such
security under the Act, or any similar statute then in effect, the Company shall, as promptly as practicable, notify the Holder
of such opinion, whereupon the Holder shall be entitled to dispose of such security in accordance with the terms of the notice
delivered by the Holder to the Company.
13. Piggyback
Registration Rights. The Holder shall have the registration rights as set forth in Exhibit 3.
14. Miscellaneous
A. Notices.
Any notices, requests or consents hereunder shall be deemed given, and any instruments delivered, two days after they have been
mailed by first class mail, postage prepaid, or upon receipt if delivered personally or by facsimile transmission, as follows:
| If
to the Company: |
|
STAR
MOUNTAIN RESOURCES, INC. |
| |
|
605 W. Knox Road,
Suite 202 |
| |
|
Tempe, Arizona
85284 |
| |
|
|
| If
to the Holder: |
|
|
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| |
|
|
| |
|
|
except
that any of the foregoing may from time to time by written notice to the other designate another address which shall thereupon
become its effective address for the purposes of this paragraph.
B. Entire
Agreement. This Warrant, including the exhibits and documents referred to herein which are a part hereof, contain the entire
understanding of the parties hereto with respect to the subject matter and may be amended only by a written instrument executed
by the parties hereto or their successors or assigns. Any paragraph headings contained in this Warrant are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Warrant.
C. Governing
Law. This Warrant is governed by, interpreted under and construed in all respects in accordance with the substantive laws
of the State of Nevada, without regard to the conflicts of law provision thereof, and irrespective of the place of domicile or
resident of the party. In the event of a controversy arising out of the interpretation, construction, performance or breach of
this Warrant, the parties hereby agree and consent to the jurisdiction and venue of the Courts of the State of Nevada, or the
United States District Court for Nevada; and further agree and consent that personal service of process in any such action or
preceding outside the State of Nevada shall be tantamount to service in person in Nevada.
IN
WITNESS WHEREOF, this Warrant has been duly executed and the corporate seal affixed hereto, all as of the day and year first above
written.
| |
Star
Mountain Resources, Inc. |
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By: |
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Name: |
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Title: |
|
EXHIBIT
1
Exercise
Agreement
The
undersigned record Holder, pursuant to the provisions set forth in the within Warrant, hereby subscribed for and purchases_______________________________
shares of Common Stock covered by such Warrant and hereby makes full cash payment of $__________________ for such
shares at the Exercise Price provided by such Warrant.
| |
|
| |
(Signature) |
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|
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|
| |
(Print or type
name) |
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| |
(Address) |
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|
NOTICE:
The signature of this Exercise Agreement must correspond with the name as written upon the face of the within Warrant, or upon
the Assignment thereof, if applicable, in every particular, without alteration, enlargement or any change whatsoever.
EXHIBIT
2
Assignment
FOR
VALUE RECEIVED, _______________________________, the undersigned Holder hereby sell, assigns, and transfer all of the rights of
the undersigned under the within Warrant with respect to the number of shares of Common Stock issuable upon the exercise of such
Warrant set forth below, unto the Assignee identified below, and does hereby irrevocable constitute and appoint _________________________________to
effect such transfer of rights on the books of the Company, with full power of substitution:
| |
|
|
|
Number
of Shares |
| Name
of Assignee |
|
Address
of Assignee |
|
of
Common Stock |
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|
|
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|
| Dated:
____________ |
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|
(Signature of
Holder) |
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| |
|
(Print or type
name) |
NOTICE:
The signature of this Exercise Agreement must correspond with the name as written upon the face of the within Warrant, or upon
the Assignment thereof, if applicable, in every particular, without alteration, enlargement or any change whatsoever.
Consent
of Assignee
I
HEREBY CONSENT to abide by the terms and conditions of the within Warrant.
Dated:
____________
| |
|
| |
(Signature of
Assignee) |
| |
|
| |
|
| |
(Print or type
name) |
EXHIBIT
3
REGISTRATION
RIGHTS
The
shares of the STAR MOUNTAIN RESOURCES, INC., a Nevada corporation’s Common Stock purchased upon exercise of the Warrants
will be deemed “Registrable Securities” subject to the provisions of this Exhibit 3. All capitalized terms used but
not defined in this Exhibit 3 shall have the meanings ascribed to such terms in the Callable Warrant to Purchase Common Stock
to which this Exhibit is attached.
1. Piggy-Back
Registration.
1.1 Piggy-Back
Rights. If at any time on or after the Issuance Date the Company proposes to file any Registration Statement under the Securities
Act of 1933, as amended (the “1933 Act”) (a “Registration Statement”) with respect to any offering of
equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities,
by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders
of the Company), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan,
(ii) for a dividend reinvestment plan or (iii) in connection with a merger or acquisition, then the Company shall (x) give written
notice of such proposed filing to the holders of Registrable Securities appearing on the books and records of the Company as such
a holder as soon as practicable but in no event less than ten (10) days before the anticipated filing date of the Registration
Statement, which notice shall describe the amount and type of securities to be included in such Registration Statement, the intended
method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y)
offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of Registrable
Securities as such holders may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”).
The Company shall cause such Registrable Securities to be included in such registration and shall cause the managing underwriter
or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back
Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition
of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back Registration that involves an underwriter or underwriters shall
enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggy-Back Registration.
1.2 Withdrawal.
Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities
in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness
of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making
a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness
of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders
of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.5 below.
1.3 The
Company shall notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result
of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing. At the request of such holder, the Company shall also prepare, file and furnish to
such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. The holders of Registrable Securities shall not offer or sell any Registrable
Securities covered by the Registration Statement after receipt of such notification until the receipt of such supplement or amendment.
1.4
The Company may request a holder of Registrable Securities to furnish the Company such information with respect to such holder
and such holder’s proposed distribution of the Registrable Securities pursuant to the Registration Statement as the Company
may from time to time reasonably request in writing or as shall be required by law or by the SEC in connection therewith, and
such holders shall furnish the Company with such information.
1.5 All
fees and expenses incident to the performance of or compliance with this Exhibit A by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in
the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the SEC, (B) with respect to filings required to be made with any trading market on which the Common Stock is then listed
for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or
exemptions of the Registrable Securities) and (D) with respect to any filing that may be required to be made by any broker through
which a holder of Registrable Securities intends to make sales of Registrable Securities with the FINRA, (ii) printing expenses,
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) 1933 Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other persons or entities retained by the
Company in connection with the consummation of the transactions contemplated by this Exhibit B. In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar
commissions of any holder of Registrable Securities.
1.6 The
Company and its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities, the
officers, directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent
role of a person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual
or entity who controls the Buyer or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other
individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title
or any other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating
to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any related prospectus
or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating
to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein
(in the case of any such prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act or any state securities law, or any rule
or regulation thereunder, in connection with the performance of its obligations under this Exhibit A, except to the extent, but
only to the extent, that (i) such untrue statements or omissions are based upon information regarding the Buyer or such holder
of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer and each
holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Exhibit A of which the Company is aware.
1.7 If
the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion
as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements
or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Company
and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue
or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, the Company or the Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by
a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in Section 1.6 was available to such party in accordance with its terms. It is agreed that
it would not be just and equitable if contribution pursuant to this Section 1.7 were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding
sentence. Notwithstanding the provisions of this Section 1.7, any holder of Registrable Securities shall not be required to contribute,
in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such party from the sale of
all of their Registrable Securities pursuant to such Registration Statement or related prospectus exceeds the amount of any damages
that such party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.
[End
of Exhibit 3]
