TWO RIVERS WATER & FARMING COMPANY 8-K


 


EXHIBIT 10.2


 


THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED. 


 


TWO RIVERS WATER & FARMING COMPANY


 


WARRANT TO PURCHASE SHARES OF COMMON STOCK 


 


1.                 
Issuance. In consideration of good and valuable consideration as set forth in the Purchase Agreement (defined below),
including without limitation the Purchase Price (as defined in the Purchase Agreement), the receipt and sufficiency of which are
hereby acknowledged by Two Rivers Water & Farming Company, a Colorado corporation
(the “Company”), Black Mountain Equities, Inc., its successors
and/or registered assigns (the “Holder”), is hereby granted the right to purchase at any time on or after the
Issue Date (as defined below) until the date which is the last calendar day of the month in which the fifth anniversary of the
Issue Date occurs (the “Expiration Date”), 440,000 fully paid and nonassessable shares (the “Warrant
Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), as
such number of Warrant Shares may be adjusted from time to time pursuant to the terms and conditions of this Warrant to Purchase
Shares of Common Stock (this “Warrant”). This Warrant is being issued pursuant to the terms of that certain
Securities Purchase Agreement dated April 26, 2017, to which the Company and the Holder are parties (as the same may be amended
from time to time, the “Purchase Agreement”).


 


Unless otherwise indicated
herein, capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.


 


This Warrant was originally
issued to the Holder on April 26, 2017 (the “Issue Date”).


 


2.             Exercise of Warrant.


 


2.1.          General.


 


(a)               
This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Issue Date and ending
on the Expiration Date. Such exercise shall be effectuated by submitting to the Company (either by delivery to the Company or by
email or facsimile transmission) a completed and duly executed Notice of Exercise substantially in the form attached to this Warrant
as Exhibit A (the “Notice of Exercise”). The date such Notice of Exercise is either faxed, emailed or
delivered to the Company shall be the “Exercise Date,” provided that, if such exercise represents the full exercise
of the outstanding balance of the Warrant, the Holder shall tender this Warrant to the Company within five (5) Trading Days thereafter,
but only if the Warrant Shares to be delivered pursuant to the Notice of Exercise have been delivered to the Holder as of such
date. The Notice of Exercise shall be executed by the Holder and shall indicate (i) the number of Warrant Shares (as defined below)
to be issued pursuant to such exercise, and (ii) if applicable (as provided below), whether the exercise is a cashless exercise.


 






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For purposes of this
Warrant, the term “Trading Day” means any day during which the principal market on which the Common Stock is
traded (the “Principal Market”) shall be open for business.


 


(b)              
 To the extent this Warrant is not previously exercised, and if
the Market Price of one (1) Share is greater than the Exercise Price, the Holder may elect to receive Warrant Shares, in lieu of
a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining
unexercised) by surrender of this Warrant and a Notice of Exercise, in which event the Company shall issue to Holder a number of
Shares computed using the following formula:


 


X = Y (A-B)


 


A 


 


 Where X = the number of
Warrant Shares to be issued to Holder. 


 


		Y =	the number of Warrant Shares purchasable under this Warrant
at the date of such calculation or, if only a portion of this Warrant is being exercised, the portion of this Warrant being canceled.






 


A =       the
Market Price (at the date of such calculation). 


 


B =       Exercise
Price (as adjusted to the date of such calculation).


 


For the purposes of
this Warrant, the following terms shall have the following meanings:


 


“Affiliate”
shall mean an affiliate as such term is defined in Rule 144 under the Securities Act of 1933, as amended (or a successor rule).


 


“Aggregate
Exercise Price Payable” shall mean the product of multiplying the number of Warrant Shares exercisable by the Exercise
Price.


 


“Closing Price”
shall mean the last sale price of the Common Stock on the Principal Market on the relevant Trading Day(s), as reported by Bloomberg
LP (or if that service is not then reporting the relevant information regarding the Common Stock, a comparable reporting service
of national reputation selected by the Holder and reasonably acceptable to the Company) for the relevant date.


 


“Common Stock
Equivalents” shall mean any stock or securities (convertible into or exercisable or exchangeable) for shares of Common
Stock, not including the Company’s employee stock incentive plan.


 


“Exercise
Price” shall mean seventy cents ($0.70) per share of Common Stock, subject to adjustments herein.


 






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“Market Price”
shall mean the Volume Weighted Average Price for the Common Stock on the Trading Day that is (i) five Trading Days prior to the
Exercise Date or (ii) the Issue Date, whichever is greater.


 


“Note”
shall mean that certain Promissory Note issued by the Company to the Holder pursuant to the Purchase Agreement, as the same may
be amended from time to time, and including any promissory note(s) that replace or are exchanged for such referenced promissory
note.


 


(c)               
If the Notice of Exercise form elects a “cash” exercise (or if the cashless exercise referred to in the immediately
preceding subsection (b) is not available in accordance with the terms hereof), the Exercise Price per share of Common Stock for
the Warrant Shares shall be payable, at the election of the Holder, in cash or by certified or official bank check or by wire transfer
in accordance with instructions provided by the Company at the request of the Holder.


 


(d)              
Upon the appropriate payment to the Company, if any, of the Exercise Price for the Warrant Shares, together with the surrender
of this Warrant (if required), the Company shall promptly, but in no case later than the date that is five (5) Trading Days following
the date the Exercise Price is paid to the Company (or with respect to a “cashless exercise,” the date that is three
(3) Trading Days following the Exercise Date) (the “Delivery Date”), provided that all [conditions (“DWAC
Eligible Conditions”) to the Company’s eligibility for the Depositary Trust Company’s Deposit/Withdrawal
at Custodian (“DWAC”) system] are then satisfied, deliver or cause the Company’s Transfer Agent to deliver
the applicable Warrant Shares electronically via the DWAC system to the account designated by the Holder on the Notice of Exercise.
If all DWAC Eligible Conditions are not then satisfied, the Company shall instead issue and deliver or cause to be issued and delivered
(via reputable overnight courier) to the address as specified in the Notice of Exercise, a certificate, registered in the name
of the Holder or its designee, for the number of Warrant Shares to which the Holder shall be entitled. For the avoidance of doubt,
the Company has not met its obligation to deliver Warrant Shares by the Delivery Date unless the Transfer Agent has posted the
shares for DWAC pickup and the Holder or its broker, as applicable, has been notified of this availability, or if the DWAC Eligible
Conditions are not then satisfied, has actually received the certificate representing the applicable Warrant Shares no later than
the close of business on the relevant Delivery Date pursuant to the terms set forth above.


 


(e)               
If Warrant Shares are delivered later than as required under subsection (d) immediately above, the Company agrees to pay,
in addition to all other remedies available to the Holder in the Purchase Agreement or the Note, a late charge equal to the greater
of (i) $1,000.00 and (ii) 2% of the product of (1) the sum of the number of shares of Common Stock not issued to the Holder
on a timely basis and to which the Holder is entitled multiplied by (2) the Closing Price of the Common Stock on the Trading
Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder
without violating this Warrant, per Trading Day until such Warrant Shares are delivered. The Company shall pay any late charges
incurred under this subsection in immediately available funds upon demand; provided, however, that, at the option of the
Holder (without notice to the Company), such amount owed may be added to the principal amount of the Note. Furthermore, in addition
to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery
of the Warrant Shares as required under subsection (d) immediately above, the Holder may revoke all or part of the relevant Warrant
exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to
their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the late charge
described above shall be payable through the date notice of revocation or rescission is given to the Company.


 






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(f)               
The Holder shall be deemed to be the holder of the Warrant Shares issuable to it in accordance with the provisions of this
Section 2.1 on the Exercise Date.


 


2.2.           
Ownership Limitation. If at any time upon exercise of the Warrant, the Holder advises the Company (or the Company
otherwise has actual knowledge) that the Holder would, together with other shares of Common Stock held by it or its Affiliates,
own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of shares exceeding 4.99%
of the number of shares of Common Stock outstanding on such date (the “Maximum Percentage”), the Company shall
not be obligated and shall not issue to the Holder shares of Common Stock which would exceed the Maximum Percentage, but only until
such time as the Maximum Percentage would no longer be exceeded by any such receipt of shares of Common Stock by the Holder. Upon
delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until
the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess
of 4.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until
the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only
to the Holder and its Affiliates. The provisions of this paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2.2 to the extent necessary to correct this paragraph (or any portion
of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section
2.2 or to make changes or supplements necessary or desirable to properly give effect to such limitation.  The limitation
contained in this paragraph may not be waived and shall apply to a successor holder of the Note and Warrant.


 


3.             Mutilation or Loss of Warrant. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification,
and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver to the Holder
a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.


 


4.             Rights of the Holder. The Holder shall not, by virtue of this Warrant alone, be entitled to any rights of a stockholder
in the Company, either at law or in equity, and the rights of the Holder with respect to or arising under this Warrant are limited
to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.


 


5.             Certain Adjustments.


 


5.1.           
Capital Adjustments. If the Company shall at any time prior to the expiration of this Warrant subdivide the Common
Stock, by split-up or stock split, or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock as
a dividend, the number of Warrant Shares issuable upon the exercise of this Warrant shall forthwith be automatically increased
proportionately in the case of a subdivision, split or stock dividend, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the Exercise Price, Market Price (in the event of a cashless exercise), and other
applicable amounts, but the aggregate purchase price payable for the total number of Warrant Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 5.1 shall become effective automatically at the close
of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the
event that no record date is fixed, upon the making of such dividend.


 






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5.2.           
Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant
is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue
(or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents
entitling any person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such
lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price
per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price
on such date of the Dilutive Issuance), then the Exercise Price shall be reduced (and only reduced) to equal the Base Share Price
and the number of Warrant Shares issuable hereunder shall be increased such that the Aggregate Exercise Price Payable hereunder,
after taking into account the decrease in the Exercise Price, shall be equal to the Aggregate Exercise Price Payable prior to such
adjustment..  Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  
The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this Section 5.2, indicating therein the applicable issuance price, or applicable reset price, exchange
price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”).  For purposes
of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5.2, upon the occurrence
of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares
based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
No adjustment will be made for shares issued to Water Redevelopment Co.


 


 Initial:________


 


6.             Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable
on the exercise of this Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including
a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or
sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately
prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder and any Warrant Agent (as defined below) appointed pursuant to Section 8 hereof.
Nothing in this Section 6 shall be deemed to limit any other provision contained herein.


 


7.             Transfer to Comply with the Securities Act. This Warrant, and the Warrant Shares, have not been registered under
the 1933 Act. This Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant may only
be sold, transferred, pledged or hypothecated (other than to an Affiliate) if (a) there exists an effective registration statement
under the 1933 Act relating to such security or (b) the Company has received an opinion of counsel reasonably satisfactory to the
Company that registration is not required under the 1933 Act. Until such time as registration has occurred under the 1933 Act,
each certificate for this Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall
contain a legend, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained
in this Section 7. Any such transfer shall be accompanied by a transferor assignment substantially in the form attached to this
Warrant as Exhibit B (the “Transferor Assignment”), executed by the transferor and the transferee and
submitted to the Company. Upon receipt of the duly executed Transferor Assignment, the Company shall register the transferee thereon
as the new Holder on the books and records of the Company and such transferee shall be deemed a “registered holder”
or “registered assign” for all purposes hereunder, and shall have all the rights of the Holder.


 






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8.             Warrant Agent. The Company may, by written notice to the Holder, appoint an agent (a “Warrant Agent”)
for the purpose of issuing shares of Common Stock on the exercise of this Warrant pursuant hereto, exchanging this Warrant pursuant
hereto, and replacing this Warrant pursuant hereto, or any of the foregoing, and thereafter any such issuance, exchange or replacement,
as the case may be, shall be made at such office by such Warrant Agent.


 


9.             Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company
may treat the Holder as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.


 


10.           Notices. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled
“Notices” in the Purchase Agreement, the terms of which are incorporated herein by reference.


 


11.           Supplements and Amendments; Whole Agreement. This Warrant may be amended or supplemented only by an instrument
in writing signed by the parties hereto. This Warrant, together with the Purchase Agreement and the Note, taken together, contain
the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations,
warranties, agreements or understandings with respect to the subject matter hereof and thereof other than as expressly contained
herein and therein.


 


12.           Governing Law. This Warrant shall be governed by and interpreted in accordance with the laws of the State of Nevada,
without giving effect to the principles thereof regarding the conflict of laws. The Company and, by accepting this Warrant, the
Holder, each irrevocably (a) consent to and expressly submit to the exclusive personal jurisdiction of any state or federal court
sitting in San Diego County, Nevada in connection with any dispute or proceeding arising out of or relating to this Warrant, (b)
agree that all claims in respect of any such dispute or proceeding may only be heard and determined in any such court, (c) expressly
submit to the venue of any such court for the purposes hereof, and (d) waive any claim of improper venue and any claim or objection
that such courts are an inconvenient forum or any other claim or objection to the bringing of any such proceeding in such jurisdictions
or to any claim that such venue of the suit, action or proceeding is improper. The Company and, by accepting this Warrant, the
Holder, each hereby irrevocably consent to the service of process of any of the aforementioned courts in any such proceeding by
the mailing of copies thereof by reputable overnight courier (e.g., FedEx) or certified mail, postage prepaid, to such party’s
address as provided for herein, such service to become effective ten (10) calendar days after such mailing. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 


13.           Remedies. The remedies at law of the Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and, without
limiting any other remedies available to the Holder in the Purchase Agreement or the Note, law or equity, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein
or by an injunction against a violation of any of the terms hereof or otherwise.


 






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14.           Counterparts. This Warrant may be executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
Signature delivered via facsimile or email shall be considered original signatures for purposes hereof.


 


15.           Descriptive Headings. Descriptive headings of the sections of this Warrant are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions hereof.


 


16.           Attorney’s Fees. In the event of any litigation or dispute arising from this Warrant, the parties agree that
the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to
an additional award of the full amount of the attorneys’ fees and expenses paid by said prevailing party in connection
with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving
rise to the fees and expenses.  Nothing herein shall restrict or impair a court’s power to award fees and expenses for
frivolous or bad faith pleading.


 


17.           Severability. Whenever possible, each provision of this Warrant shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such
provision shall be modified to achieve the objective of the parties to the fullest extent permitted and such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this Warrant or the validity or enforceability of this Warrant
in any other jurisdiction.


 


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IN WITNESS WHEREOF, the Company has caused
this Warrant to be duly executed by an officer thereunto duly authorized. 


 


Dated: April 26, 2017 


 


	 	THE COMPANY:
	 	 	 
	 	Two Rivers Water & Farming Company.
	 	 	 
	 	By:	 
	 	Name: 	Wayne Harding
	 	Title:	Chief Executive Officer






 


[Signature page to Warrant]