EXHIBIT 10.2

 

REDHAWK HOLDINGS CORP. 

WARRANT AGREEMENT

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS. NO SALE OR DISPOSITION OF THIS
WARRANT OR THE SECURITIES ISSUABLE UPON ITS CONVERSION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR
HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION AND ANY APPLICABLE STATE SECURITIES DIVISIONS.

 

REDHAWK HOLDINGS CORP. 

WARRANT AGREEMENT

 

Issuance Date: June 20, 2019

 

The following is a statement of the rights of the holder of this Warrant and the
conditions to which this Warrant is subject, and to which the Holder hereof, by
the acceptance of this Warrant, agrees:

 

For value received Beechwood Properties, L.L.C., and its permitted assigns
(“Holder”), is entitled to subscribe for and purchase, subject to terms and
conditions set forth herein, 113,508,450 shares of the Common Stock, (each a
“Warrant Share”), of RedHawk Holdings Corp., a Nevada corporation, at the
Warrant Price. As used herein, “Warrant Price” means $0.005 per Warrant Share.

 

1.               Method of Exercise; Payment.

 

(a)             In consideration of services performed by Holder as a member of
the Board and as an officer, the Company and Holder agree that this Warrant
shall vest immediately upon the Company having sufficient shares of common stock
authorized by the Company’s Articles of Incorporation, as amended from time to
time, to accommodate such exercise. The Company covenants to take all
commercially reasonable steps to authorize sufficient common stock to
accommodate such exercise.

 

(b)             The purchase right represented by this Warrant may only be
exercised by Holder, in whole or in part, prior to the Expiration Date (as
defined herein) by the surrender of this Warrant and the execution and delivery
of a Notice of Exercise in the form attached hereto as Exhibit A (“Notice of
Exercise”) at the principal office of the Company, and by the payment to the
Company in cash of an amount equal to the then applicable Warrant Price
multiplied by the number of Warrant Shares being purchased. Upon any valid
exercise of the rights represented by this Warrant, certificates for the Warrant
Shares so purchased shall be delivered to Holder as soon as practicable or in
the case of uncertificated Warrant Shares, the Company’s stock ledger shall be
updated to reflect the issuance of such Warrant Shares as soon as practicable.
Such exercise shall be deemed to have been made immediately prior to the close
of business on the date of surrender of this Warrant and the delivery of the
validly executed notice of exercise.

 

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(c)              Notwithstanding Section 1(a) to the contrary, the Holder may
elect to exercise all or a portion of its rights to acquire Warrant Shares
without the payment of any additional consideration by surrendering this Warrant
to the Company (together with the Notice of Exercise) (i.e., a cashless
exercise) (“Warrant Conversion”). If the Holder elects to pay the Warrant Price
through a Warrant Conversion, the Company shall deliver to the Holder (without
payment by the Holder of any cash or other consideration) that number of shares
of Common Stock under the following formula:

 

X = (Y * (A – B)) / A

 

Where,

 

X = the total number of Warrant Shares to be issued pursuant to this Section
‎1(b).

 

Y = the total number of Warrant Shares the Holder elects to exercise.

 

A = the Fair Market Value of one Warrant Share at the time the election is made
pursuant to this Section 1(b).

 

B = the Warrant Price.

 

For purposes of this Warrant, “Fair Market Value” means, as of the date of
computation, the value determined in good faith by the Company’s board of
directors (“Board”). The Board may employ other outside experts and independent
consultants at the expense of the Company to assist in the valuation process and
shall be fully justified in relying on the statements, findings or opinions of
any such experts selected with reasonable care. In connection with the
determination of Fair Market Value, the Board and any such outside experts and
independent consultants shall permit the Holder to present written, oral and
such other information deemed relevant by the Holder as to the determination of
Fair Market Value, and the Board and all such experts and consultants shall
consider such evidence in good faith.

 

2.               Adjustment of Warrant Price and Number of Warrant Shares. If,
as a result of any distribution (whether in the form of cash, common stock,
other securities, or other property), stock split, reverse stock split,
recapitalization, reorganization, merger, consolidation, split-up, split-off,
spin-off, combination, repurchase, or exchange of common stock or other
securities of the Company, issuance of warrants or other rights to purchase
common stock or other securities of the Company at a de minimis price, or any
other similar corporate transaction, change, or event, an adjustment is
necessary in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under this Warrant, then the
Company shall, in such manner as is equitable, adjust any or all of: (i) the
number and class or type of Warrant Shares, and (ii) the Warrant Price.
Notwithstanding with foregoing, this Warrant shall not be adjusted solely to
prevent ownership dilution or economic dilution resulting from the sale by the
Company of equity securities, options, or warrants to purchase equity
securities, or securities convertible into equity securities, for a cash
investment in an arms-length transaction negotiated by the Company in good
faith. Holder shall take the same risks as holders of equity securities of the
Company that the value of Company’s equity securities might fall.

 

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3.               Notice of Adjustments. Whenever the number of Warrant Shares or
Warrant Price shall be adjusted pursuant to Section 2 hereof, the Company shall
issue to Holder a certificate signed by its chief executive or financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and a summary of the adjusted terms.

 

4.               Shares Fully Paid; Reservation of Warrant Shares. The Warrant
Shares will, upon issuance, be fully paid and nonassessable, and free from all
taxes, liens, and charges (other than restrictions on future transfers under
applicable federal and state securities laws) with respect to the issue thereof.
The Company shall reserve and set aside a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant.

 

5.               Fractional Shares. No fractional Warrant Shares will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor on the basis of the Warrant Price
then in effect.

 

6.               Purchase and Transferability of Warrant Shares. With respect to
any offer, sale, or other disposition of this Warrant or the Warrant Shares,
Holder by acceptance hereof agrees to be bound by the restrictions set forth in
this Warrant, specifically:

 

(a)             Notwithstanding any provision hereof to the contrary, no
exercise of the Warrant into any equity securities of the Company will be made
unless the Company determines (acting in a commercially reasonable manner) that
such exercise can be made under exemptions from registration or qualification of
such exercise under applicable securities laws without the creation of any
offering memorandum prescribed by such laws unless at the time of such exercise
the Company already has completed such a memorandum and such exercise would be
exempt from registration and qualification by, among other things, delivery of
such memorandum to Holder.

 

(b)             Holder represents and agrees that this Warrant and the Warrant
Shares issuable upon exercise of this Warrant are and will be purchased only for
investment, for Holder’s own account, and without any present intention to sell
or distribute this Warrant or the Warrant Shares. Holder further acknowledges
that the Warrant Shares will not be issued unless the issuance and delivery of
the Warrant Shares shall comply with all relevant provisions of law, and other
applicable federal and state securities laws and regulations.

 

(c)              Holder acknowledges and agrees that this Warrant and the
Warrant Shares have not been and will not be registered under the Act and,
accordingly, will not be transferable except as permitted under the various
exemptions contained in the Act, or upon satisfaction of the registration and
prospectus delivery requirements of the Act, and subject to Section 8 below.
Holder further acknowledges and agrees that only the Company may file a
registration statement with the Securities and Exchange Commission (“SEC”) and
the Company is under no obligation to do so with respect to the Warrant Shares,
nor does it have any obligation to file any other disclosure statement with the
SEC with respect thereto.

 

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7.               Representations of Holder. The Holder represents and warrants
that it is acquiring the Warrant and the Warrant Shares solely for its account
for investment and not with a view to or for sale or distribution of said
Warrant or Warrant Shares or any part thereof. The Holder also represents that
the entire legal and beneficial interests of the Warrant and Warrant Shares the
Holder is acquiring is being acquired for, and will be held for, its account
only. The Holder understands that the Warrant and the Warrant Shares have not
been registered under the Act, on the basis that no distribution or public
offering of the securities of the Company is to be effected. The Holder realizes
that the basis for the exemption may not be present if, notwithstanding its
representations, the Holder has a present intention of acquiring the securities
for a fixed or determinable period in the future, selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise
distributing the securities. The Holder has no such present intention. The
Holder recognizes that the Warrant and the Warrant Shares must be held
indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available. The Holder recognizes that the
Company has no obligation to register the Warrant or the Warrant Shares of the
Company, or to comply with any exemption from such registration. The Holder is
aware that neither the Warrant nor the Warrant Shares may be sold pursuant to
Rule 144 adopted under the Act unless certain conditions are met, including,
among other things, the existence of a public market for the Warrant Shares, the
availability of certain current public information about the Company and the
resale following the required holding period under Rule 144. Holder is aware
that the conditions for resale set forth in Rule 144 have not been satisfied and
that the Company presently has no plans to satisfy these conditions in the
foreseeable future. The Holder understands and agrees that all certificates
evidencing the Warrant Shares to be issued to the Holder, if any, may bear the
following legend: “The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the “Act”) or state securities
laws, and cannot be offered, sold or otherwise transferred in the absence of
registration or the availability of an exemption from registration under the
Act, regulations promulgated thereunder, and applicable state securities laws.”

 

8.               Assignment of Warrant. The Holder may not transfer this Warrant
or Warrant Shares to a third party without the prior written consent of the
Company, not to be unreasonably withheld, conditioned or delayed.
Notwithstanding the first sentence of this Section 8, the Holder shall have the
right to transfer and assign this Warrant (a “Permitted Transfer”) without any
consent of the Company to a Permitted Transferee (as defined below), provided,
however, that such Permitted Transfer must be effected in accordance with any
applicable securities laws, and if requested by the Company, Holder shall
deliver an opinion of counsel acceptable to the Company to that effect. Each new
Warrant issued upon any transfer of this Warrant shall bear a legend as to the
applicable restrictions on transferability to ensure compliance with the Act,
unless in the opinion of counsel for the Company such legend is not required to
ensure compliance with the Act. The Company may issue stop transfer instructions
to its transfer agent, if any, in connection with such restrictions. Subject to
the foregoing, transfers of this Warrant or Warrant Shares shall be registered
upon registration books maintained for such purpose by or on behalf of the
Company. Prior to presentation of this Warrant or Warrant Shares for
registration of transfer, the Company shall treat the registered holder hereof
as the owner and holder of this Warrant for all purposes whatsoever. The term
“Warrant” as used in this Section 8 includes any Warrants issued in substitution
for or replacement of this Warrant or into which this Warrant may be divided or
exchanged. “Permitted Transferee” means, as to any Holder, any of the following:
(i) if a natural person, his/her ancestors, descendants, siblings, or spouse,
any executor or administrator of his/her estate, any custodian, trustee
(including a trustee of a voting trust), executor, or other fiduciary primarily
for the account of such Holder or his/her ancestors, descendants, siblings, or
spouse, whether step, in-law or adopted, and, in the case of any such trust or
fiduciary, to the Holder who transferred this Warrant to such trust or
fiduciary, but only with respect to transfers made for bona fide estate planning
purposes, either during his/her lifetime or on death by will or intestacy; (ii)
with respect to any Holder which is an entity, (A) the then existing members,
shareholders or other investors in the Holder in connection with the dissolution
or winding-up of the Holder or otherwise, or (B) any person in connection with
any consolidation or reorganization of the Holder directly or indirectly with or
into one or more other investment vehicles; or (iii) any affiliate of the Holder
(other than any investment portfolio company of the Holder that is an affiliate)
which controls, is controlled by or is under common control with the Holder.
This provision shall in no way affect the restrictions on transfer and other
terms and conditions contained in Section 6 of this Warrant.

 

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9.               Rights as a Stockholder. This Warrant shall not (a) entitle
Holder to be deemed a stockholder of the Company for any purpose; (b) confer
upon the Holder of this Warrant, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof; (c) entitle Holder to
give or withhold consent to any company action (whether upon any
recapitalization, issuance of shares, reclassification of shares, consolidation,
merger, conveyance, or otherwise); or (d) entitle Holder to receive notice of
meetings or to receive distributions or subscription rights until the Warrant
shall have been exercised and the certificates representing the Warrant Shares
purchasable upon the exercise hereof shall have been issued, or in the case of
uncertificated Warrant Shares, the Company’s stock ledger updated, as provided
herein.

 

10.            Reorganization Event.

 

(a)             For purposes of this Warrant, a “Reorganization Event” shall
mean (i) any transaction in which all or substantially all of the Company’s
assets are acquired, or any transaction in which more than 50% of the Company’s
outstanding equity interests acquired, directly or indirectly, by any person
other than those persons who are the stockholders of the Company as of the
“Issuance Date” of this Warrant; (ii) the dissolution or liquidation of the
Company; or (iii) a merger or consolidation which is not within the scope of the
transactions described in clause (i) above and in which the Company is not the
surviving entity. Notwithstanding the foregoing, “Reorganization Event” shall
not include a merger, consolidation, or conversion in which the surviving entity
is owned and controlled by substantially the same persons, in substantially the
same proportions, as the Company prior to such transaction.

 

(b)             The Company shall provide the Holder with written notice of a
Reorganization Event. Such notice shall be given not later than 20 days prior to
the stockholders’ meeting called to approve such transaction (if any) or 20 days
prior to the closing of such transaction, whichever is earlier. The Company
shall also notify the Holder in writing of the final approval of such
transaction. The first of such notices shall describe the material terms and
conditions of the contemplated transaction.

 

(c)              Notwithstanding anything herein to the contrary, the Holder’s
right to exercise this Warrant in whole or in part shall automatically be fully
exercisable immediately prior to the occurrence of a Reorganization Event, and
shall automatically terminate immediately prior to the consummation of a
Reorganization Event. To exercise Holder’s Warrant rights immediately prior to
the consummation of a Reorganization Event, the Holder must, not later than ten
days prior to the closing of such transaction, surrender the Warrant to the
Company, deliver a validly executed notice of exercise to the Company in the
form attached hereto as Exhibit A, and deliver the required payment to the
Company. The exercise of this Warrant shall be conditioned upon the closing of
such transaction, in which event the Holder shall not be deemed to have
exercised such Warrant until immediately prior to the closing of such
transaction. If the transaction does not occur for any reason, the Company shall
promptly return to the Holder this Warrant and the amount of payment received
from the Holder for the exercise of his, her, or its rights hereunder.

 

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11.            Term and Termination; Automatic Warrant Conversion.

 

(a)             Subject to Section 10(c), the term of this Warrant shall be for
ten years, commencing on the Issuance Date and ending on the ten-year
anniversary of the Issuance Date, (the “Expiration Date”).

 

12.            Miscellaneous.

 

(a)             Any provision of this Warrant may be amended, waived or modified
upon the written consent of the Company and Holder.

 

(b)             This Warrant shall be governed by the internal laws of the State
of Nevada, without regard to principles of conflicts of laws.

 

(c)              Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be modified to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Warrant.

 

(d)             This Warrant may be executed in two or more counterparts,
including by electronic signature or scanned copy, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.

 

(e)              All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified, (b) when sent by confirmed electronic mail or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) three days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
and to Holder at such addresses as the Company or Holder may designate by
written notice to the other.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Warrant as of the date first
written above.

 

HOLDER:   COMPANY:       BEECHWOOD PROPERTIES, L.L.C.   REDHAWK HOLDINGS CORP.  
   

/s/ G. Darcy Klug

  By: /s/ Robert H. Rhyne, Jr.  G. Darcy Klug, Manager   Name & Title: Robert H.
Rhyne, Jr., Director       

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EXHIBIT A

 

NOTICE OF EXERCISE

 

TO:          REDHAWK HOLDINGS CORP.

 

The undersigned hereby elects to purchase __________ shares of Common Stock of
RedHawk Holdings Corp. pursuant to the terms of the foregoing Warrant. In
connection with such exercise, the undersigned (check one):

 

☐ tenders herewith payment of the Warrant Price in full by wire transfer of
immediately available funds to the Company’s account; or

 

☐ pursuant to the terms of the Warrant Conversion contained in Section 1(b) of
the Warrant.

 

Please issue a certificate or certificates representing said securities in the
name of the undersigned or in such other name as is specified below:

        (Name)                       (Address)  

  

The undersigned represents that the aforesaid Warrant Shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares. In support
thereof, the undersigned agrees to execute an investment representation
statement in a form reasonably requested by the Company as a condition to the
exercise herein noticed.

 

          (Signature)           Date: