Amendment No. 1
FINANCIAL STATEMENTS
A copy of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2015, including financial statements, accompanies this proxy statement.
The Annual Report is not to be regarded as proxy soliciting material or as a communication by means of which any solicitation is
to be made. A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC, is available
(excluding exhibits) without cost to stockholders upon written request made to Investor Relations, DGSE Companies, Inc., 15850
Dallas Parkway, Suite 140, Dallas, Texas 75248 or online at our website http://dgsecompanies.com/contact.
By Order of the Board of Directors,
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/s/ Nicholas A. Rios
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Nicholas A. Rios
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Secretary
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[
·
], 2016
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APPENDIX A
[RGL ADVISORS, LLC LETTERHEAD]
June 16, 2016
Special Committee of the Board of Directors
DGSE Companies, Inc.
15850 Dallas Parkway
Dallas, TX 75248
Members of the Special Committee:
We understand that DGSE Companies, Inc., a
Nevada corporation (the “Company”), proposes to enter into a stock purchase agreement with Elemetal, LLC, a Delaware
limited liability company (“Elemetal”), and NTR Metals, LLC, a Texas limited liability company (“NTR”)
(the “Stock Purchase Agreement”). Pursuant to the Stock Purchase Agreement, among other things, the Company will issue
shares of its common stock, par value $0.01 per share (“Common Stock”), to each of Elemetal and NTR at a per share
purchase price of $0.41, in satisfaction of indebtedness owing by the Company to each of Elemetal and NTR. Elemetal is exchanging
$3,500,000 of indebtedness, and NTR is exchanging the amount of indebtedness owing by the Company at the closing of the Transaction
(as defined below) under that certain loan agreement between the Company and NTR dated July 19, 2012 and an associated $7,500,000
revolving credit note executed in favor of NTR. In addition, the Company will grant to Elemetal a two-year warrant to purchase
1,000,000 shares of Common Stock at a per share exercise price of $0.65. Drafts of the Stock Purchase Agreement and Warrant, together
with the draft of a Registration Rights Agreement, were made available to us on June 13, 2016 (collectively referred to as the
“Agreement”), which set forth the terms of the foregoing transaction (the “Transaction”). The terms used
and not defined herein shall have the meanings ascribed thereto in the Agreement.
RGL Advisors was retained as the financial
advisor to the Special Committee of the Company’s Board of Directors (the “Special Committee”). You have requested
our opinion as to the fairness, from a financial point of view, as of the date hereof, to the common stockholders of the Company
(other than the investors in the Transaction) of the financial terms of the Transaction.
In the course of performing our review and
analysis for rendering this opinion, we have, among other things: (i) reviewed the draft Agreement dated June 13, 2016; (ii) reviewed
and analyzed certain audited and unaudited financial and other data, (iii) conducted discussions with members of the senior management
of the Company with respect to the business, operations, prospects and financial condition and outlook of the Company; (iv) visited
certain facilities and the business offices of the Company; (v) compared certain financial information for the Company with similar
information for certain other companies, the securities of which are publicly traded; (vi) reviewed the financial terms, to
the extent publicly available, of selected precedent transactions, and (viii) conducted such other financial studies, analyses
and investigations and considered such other information as we deemed appropriate.
In rendering our opinion, we have relied upon
and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished
or otherwise made available to us, discussed with us or reviewed by us, or that was publicly available, and we do not assume any
responsibility for or with respect to such data, material, or other information. We have not been requested to, and have not performed
an independent evaluation, physical inspection or appraisal of any of the assets or liabilities (contingent or otherwise) of the
Company, and we have not been furnished with any such valuations or appraisals. We have undertaken no independent analysis of any
potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company
is or may be a party or is or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent
liabilities to which the Company is or may be a party or is or may be subject. In relying on the financial analyses and forecasts
provided to us, we have assumed that they have been reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of the Company as to the future financial performance of the Company, and we assume no responsibility
for and express no view as to such analyses and forecasts or the assumptions on which they are based. We have further relied on
the assurances of management of the Company that they are unaware of any facts that would make such business prospects and financial
outlook incomplete or misleading.
We have also assumed that the Agreement will
conform in all material respects to the latest available drafts reviewed by us; that the Transaction will be consummated in a timely
manner and in accordance with the terms set forth in the Agreement without waiver, modification, or amendment of any material term,
condition or agreement; and that all governmental, regulatory, and other consents and approvals necessary for the consummation
of the Transaction will be obtained without any material adverse effect on the Company or on the contemplated benefits of the Transaction.
We have relied upon and assumed, without independent
verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash
flows or prospects of the Company since the dates of the most recent financial statements and other information, financial or otherwise,
provided to us, in each case that would be material to our analysis for this opinion.
Our opinion is necessarily based on financial,
economic, market and other conditions as in effect on, and information available to us as of, the date hereof. We have not undertaken
to update, reaffirm, revise or withdraw this opinion or otherwise comment upon any events occurring or coming to our attention
after the date hereof and do not have any obligation to update, revise or reaffirm this opinion.
Our opinion addresses solely the fairness of
the financial terms of the Transaction and does not address any other terms or agreement relating to the Transaction or any other
matters pertaining to the Company. We were not authorized, and did not, (i) solicit other potential parties with respect to the
Transaction or any alternatives to the Transaction or any related transaction with the Company; (ii) negotiate the terms of the
Transaction or any related transaction; or (iii) advise the Special Committee or any other party or entity with respect to alternatives
to the Transaction or any related transaction.
We are acting as financial advisor to the Special
Committee in connection with the Transaction and will receive a fee from the Company for our services. A portion of our fee was
paid at the commencement of our engagement, and the remainder was payable shortly following the time that we notified the Special
Committee that we were in a position to render this opinion. No portion of our fee is contingent upon consummation of the Transaction.
In addition, the Company has agreed to reimburse our expenses and indemnify us for certain liabilities that may arise out of our
engagement. During the last two years, RGL Advisors, LLC has not provided investment banking or any other services to the Company,
Elemetal or NTR for which it received compensation.
This opinion is furnished to the Special
Committee in connection with its consideration of the Transaction. This opinion should not be construed as creating any fiduciary
duty on our part to any party. This opinion is not intended to be, and does not constitute, a recommendation to the Special Committee,
the Company’s Board of Directors, any security holder or any other person or entity as to how to act or vote with respect
to any matter relating to the Transaction. This opinion is not to be used, circulated, quoted or otherwise referred to (either
in its entirety or through excerpts or summaries) for any other purposes, unless you have received our prior written approval.
This opinion does not constitute legal, regulatory,
accounting, insurance, tax or other similar professional advice, and does not address or express an opinion regarding: (i) the
underlying business decision of the Special Committee, the Company’s Board of Directors or the Company’s security holders
to proceed with or effect the Transaction; (ii) the fairness of any portion or aspect of the Transaction not expressly addressed
in this opinion; (iii) the fairness of any portion or aspect of the Transaction to the creditors or other constituencies of the
Company other than those set forth in the opinion; (iv) the relative merits of the Transaction as compared to any alternative business
strategies that might exist for the Company or the effect of any other transaction in which the Company might engage; (v) the tax
or legal consequences of the Transaction to either the Company or its security holders; (vi) how any security holder should act
or vote, as the case may be, with respect to the Transaction; (vii) the solvency, creditworthiness or fair value of the Company
or any other participant in the Transaction under any applicable laws relating to bankruptcy, insolvency or similar matters; or
(viii) the fairness of the amount or nature of the compensation to any of the Company’s officers, directors, or employees
relative to the compensation to the other security holders of the Company. This opinion has been approved by the Valuation and
Opinions Committee of RGL, Inc., the parent company of RGL Advisors, LLC.
Based on our experience as investment bankers
and valuation experts, and subject to the foregoing, including the various assumptions and limitations set forth herein, it is
our opinion that, as of the date hereof, the financial terms of the Transaction pursuant to the Agreement are fair, from a financial
point of view, to the common stockholders of the Company (other than the investors in the Transaction).
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RGL Advisors, LLC
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APPENDIX B
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement
(this “
Agreement
”) is entered into as of the 20
th
day of June, 2016, by and between DGSE Companies,
Inc., a corporation organized and existing under the laws of the State of Nevada (the “
Company
”), Elemetal,
LLC, a limited liability company organized and existing under the laws of the State of Delaware (“
Elemetal
”),
and NTR Metals, LLC, a limited liability company organized and existing under the laws of the State of Texas (“
NTR
”,
and together with Elemetal, the “
Purchasers
”).
WHEREAS, the Company desires
to sell to the Purchasers, and the Purchasers desire to purchase from the Company, shares of the Company’s common stock,
par value $.01 per share (the “
Common Stock
”), on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Company desires
to issue to Elemetal, and Elemetal desires to receive from the Company, a warrant to purchase additional shares of Common Stock,
on the terms and subject to the conditions set forth in this Agreement and the Warrant (as defined herein).
NOW, THEREFORE, in consideration
of the premises and the representations, warranties, covenants and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties
hereby agree as follows:
Article 1
Purchase and Sale
1.1
Purchase
and Sale Transaction
.
(a)
Subject
to the terms and conditions of this Agreement, the Company hereby agrees to issue and sell to Elemetal, and Elemetal hereby agrees
to purchase from the Company: (i) an aggregate of 8,536,585 shares of Common Stock (the “
Elemetal Shares
”)
at a purchase price of U.S.$0.41 per share, which Elemetal Shares shall be sold and issued to, and purchased by, Elemetal at the
Closing; and (ii) a warrant (the “
Warrant
”), substantially in the form attached hereto as
Exhibit A
,
to purchase an additional 1,000,000 shares of Common Stock (the “
Warrant Shares
”) at an exercise price of U.S.
$0.65 per Warrant Share. The purchase price for the Elemetal Shares and the Warrant shall be payable by the cancellation and forgiveness
of $3,500,000 of the total debt owed by the Company to Elemetal (the “
Elemetal Indebtedness
”) as a result of
bullion-related transactions (the “
Elemetal Consideration
”).
(b)
Subject
to the terms and conditions of this Agreement, the Company hereby agrees to issue and sell to NTR, and NTR hereby agrees to purchase
from the Company such number of whole shares of Common Stock (the “
NTR Shares
”) equal to the NTR Indebtedness
(as defined below) divided by the purchase price of U.S. $0.41 per share, which NTR Shares shall be sold and issued to, and purchased
by, NTR at the Closing. The purchase price for the NTR Shares shall be payable by the cancellation and forgiveness of the debt
owed by the Company to NTR as of the Closing (the “
NTR Indebtedness
”) as a result of that certain Loan Agreement
between the Company and NTR dated July 19, 2012 and an associated $7,500,000 Revolving Credit Note of the same date executed by
the Company in favor of NTR (the “
NTR Consideration
”, and together with the Elemetal Consideration, the “
Aggregate
Consideration
”). No fractional shares shall be issued.
(c)
The
parties hereto agree that (i) upon the issuance and delivery by the Company of the Elemetal Shares and the Warrant, the Elemetal
Indebtedness shall be fully satisfied, and (ii) upon the issuance and delivery by the Company of the NTR Shares, the NTR Indebtedness
shall be fully satisfied.
(d)
The
purchase and sale transactions contemplated in
Section 1.1(a)
and
Section 1.1(b)
, the satisfaction of the Elemetal
Indebtedness and the NTR Indebtedness contemplated in
Section 1.1(c)
, together with all other transactions contemplated
by this Agreement, are sometimes hereinafter referred to, collectively, as the “
Transactions
.” The Elemetal
Shares and the NTR Shares are sometimes hereinafter referred to, collectively, as the “
Securities
” and, individually,
as a “
Security
.”
1.2
Closing
.
(a)
The
consummation of the sale and issuance to, and purchase by, the Purchasers of the Securities and of the delivery to Elemetal of
the Warrant (the “
Closing
”) shall take place at such time as shall be fixed by mutual agreement of the Company
and the Purchasers as promptly as practicable after the satisfaction or waiver of all of the conditions precedent set forth under
Article 5
. At the Closing, (i) Elemetal shall deliver to the Company evidence of the Elemetal Consideration in form and
substance acceptable to the Company, (ii) the Company shall deliver to Elemetal (A) a stock certificate (or evidence of book-entry
issuance) representing the Elemetal Shares and (B) the Warrant, (iii) NTR shall deliver to the Company evidence of the NTR Consideration
in form and substance acceptable to the Company and (iv) the Company shall deliver to NTR a stock certificate (or evidence of book-entry
issuance) representing the NTR Shares.
(b)
The
Closing shall be held at the offices of the Company, at 15850 Dallas Parkway, Suite 140, Dallas, Texas, 75248.
Article 2
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers
as follows:
2.1
Organization;
Good Standing; Qualification and Power
. The Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, has all requisite power and authority to own, lease and operate its assets and to carry
on its business as presently being conducted, and is qualified to do business and is in good standing in every jurisdiction in
which the failure so to qualify or be in good standing could reasonably be expected to have a Material Adverse Effect (as defined
below) on the Company
2.2
Authorization
.
The Company has all requisite power and authority to execute and deliver this Agreement, the Securities, the Warrant and the Warrant
Shares and any and all instruments necessary or appropriate in order to effectuate fully the terms thereof and all related transactions
and to perform its obligations thereunder. The execution and delivery by the Company of this Agreement have been duly authorized
by all requisite corporate action of the Company. Except for the Required Shareholder Approval and the authorizations, consents,
waivers and approvals to be obtained at or prior to the Closing, the performance by the Company of its obligations hereunder and
the issuance, sale and delivery of the Securities, the Warrant and the Warrant Shares have been duly authorized by all requisite
corporate action of the Company.
2.3
No
Conflict
. Neither the execution and delivery by the Company of this Agreement, the performance by the Company of its obligations
hereunder nor the issuance, sale and delivery of the Securities and the Warrant will result in any violation of, be in conflict
with, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel or constitute a default
under or result in the imposition of any lien under, with or without the passage of time or the giving of notice: (a) any provision
of the Company’s Articles of Incorporation, as amended, restated or modified (the “
Articles of Incorporation
”)
or Bylaws, as amended, restated or modified (the “
Bylaws
”); (b) any provision of any judgment, decree or order
to which the Company is a party or by which it is bound; (c) any material contract or agreement to which the Company is a party
or by which it is bound; or (d) assuming receipt of the Required Shareholder Approval (as defined herein), any statute, rule or
governmental regulation applicable to the Company or its assets; except, in the case of each of the foregoing, where such violation,
conflict, termination, lien, cancellation, modification or default would not have a Material Adverse Effect (as hereinafter defined)
and except, in the case of each of the foregoing, provisions, contracts, agreements, statutes, rules or governmental regulations
as to which authorizations, consents, amendments, waivers and approvals will have been obtained or effected at or prior to the
Closing. Other than state blue sky securities filings, the filing of a Form D with the Securities and Exchange Commission (the
“
SEC
”), any securities filings with foreign governments or agencies or any consents that have been obtained,
the Company has not been or is not required to give any notice to, make any filing with, or obtain any authorization, consent or
approval of any governmental entity for the execution and delivery of this Agreement, the Securities or the Warrant. As used herein,
the term “
Material Adverse Effect
” shall mean any effect, change, event, state of fact, development, circumstance
or condition (including changes in laws, rules or regulations applicable to the Company and its business) which, when considered
individually or in the aggregate with all other effects, changes, events, state of facts, developments, circumstances and conditions,
has materially and adversely affected, or could reasonably be expected to materially and adversely affect, the results of operations,
financial condition, assets, liabilities, or business of the Company and its subsidiaries taken as a whole;
provided, however
,
that a “Material Adverse Effect” shall not be deemed to include (i) any changes resulting from general economic or
political conditions, (ii) circumstances that affect the precious metals industry and/or the retail jewelry industry generally
or (iii) force majeure events, acts of terrorism or acts of war.
2.4
Valid
Issuance of Securities and the Warrant Shares
.
(a)
When
issued, sold and delivered in accordance with this Agreement to the Purchasers upon the Purchasers’ delivery of the Aggregate
Consideration to the Company therefor as provided hereby, the Securities and the Warrant will have been duly authorized, validly
issued, fully paid and nonassessable with no personal liability attaching to the ownership thereof and will be free and clear of
all liens, charges and encumbrances of any nature whatsoever except for restrictions on transfer under this Agreement and under
applicable federal and state securities laws.
(b)
Upon
the Purchasers’ delivery of the exercise price for the Warrant Shares (as set forth in the Warrant), the Warrant Shares will
have been duly authorized and will be validly issued, and the Warrant Shares will be fully paid and nonassessable with no personal
liability attaching to the ownership thereof and will be free and clear of all liens, charges and encumbrances of any nature whatsoever
except for restrictions on transfer under this Agreement and under applicable federal and state securities laws
2.5
Validity
.
This Agreement has been duly executed and delivered by the Company.
2.6
Compliance
with Laws; Organizational Documents.
The Company (a) has complied in all material respects with, and is in material compliance
with, all laws applicable to it and its business, and (b) has all permits necessary for the conduct of its business as presently
conducted, other than such permits that, if not obtained, could not reasonably be expected to have a Material Adverse Effect on
the Company. Such permits are in full force and effect, the Company has not received notice of any material violations with respect
to any thereof, and no material proceeding is pending or threatened to revoke or limit any thereof.
2.7
Capitalization
of the Company
.
(a) Immediately prior to
the Closing, (i) the authorized capital stock of the Company consisted of the classes and amounts set forth on
Schedule A
hereto, and (ii) the issued and outstanding capital stock of the Company (separated by class and series) was as set forth on
Schedule
B
hereto.
(b) Except as set forth
in the Company’s filings with the SEC or as set forth on
Schedule C
hereto, there are no (i) outstanding warrants,
options, rights, agreements, convertible securities or other commitments or instruments pursuant to which the Company is or may
become obligated to issue or sell any shares of its capital stock or other securities or (ii) preemptive or similar rights to purchase
or otherwise acquire shares of the capital stock or other securities of the Company pursuant to any provision of law, the Company’s
Articles of Incorporation or Bylaws or any contract to which the Company, or to the Company’s Knowledge, any stockholder
(other than Purchasers or their Affiliates) thereof, is a party. As used herein, the Company’s “Knowledge” means
the actual knowledge of Matthew Peakes or Nabil Lopez.
2.8
Intellectual
Property
. There is no pending or, to the Company’s Knowledge, threatened claim or litigation against the Company
asserting that the Company infringes upon or otherwise violates any intellectual property right of any person. No Proceedings in
which the Company alleges that any person is infringing upon, or otherwise violating, any intellectual property right owned by
the Company are pending, and none have been served by, instituted or asserted by the Company, nor, to the Company’s Knowledge,
are any proceedings threatened alleging any such violation or infringement.
2.9
Material
Agreements
. (a) There is no material breach or default by the Company or, to the Company’s Knowledge, any other party
under any contract to which the Company or any of its subsidiaries is a party that is material to the Company’s business,
operations, assets, financial condition or operating results (each, a “
Material Agreement
”) and (b) each Material
Agreement is in full force and effect, constitutes the valid and binding obligation of the Company, and, to its Knowledge, the
respective other parties thereto (assuming due execution by the parties other than the Company or its subsidiaries, as applicable),
and is enforceable in accordance with its terms, except as enforceability thereof may be limited by applicable bankruptcy, reorganization,
insolvency or other laws affecting creditors’ rights generally or by general principles of equity.
2.10
Brokers
and Finders
. On behalf of the Company, there is no agent, broker, investment banker, consultant, Person or firm that has acted
on behalf, or under the authority of, the Company or, to the Company’s Knowledge, any of its stockholders (other than Purchasers
or their Affiliates), or will be entitled to any fee or commission directly or indirectly from the Company or, to the Company’s
Knowledge, any of its stockholders (other than Purchasers or their Affiliates), in connection with the Transactions.
2.11
Financial
Statements
. The Company has filed with the SEC its audited balance sheet as of December 31, 2015 (the “
Statement Date
”),
and the audited statements of income and cash flows for the year ending on the Statement Date (together, the “
Audited
Financial Statements
”), and its unaudited balance sheet as of March 31, 2016, and the unaudited statements of income
and cash flows for the quarter ended March 31, 2016 (together, the “
Unaudited Financial Statements
”). The
Audited Financial Statements and the Unaudited Financial Statements, together with the notes thereto, have been prepared in accordance
with generally accepted accounting principles in the United States, consistently applied throughout the periods indicated, subject
in the case of the Unaudited Financial Statements, to normal year-end adjustments, and present fairly in all material respects
the financial condition and position and results of operation of the Company as of the Statement Date or March 31, 2016, as applicable,
and for the periods indicated.
2.12
No
Consent or Approval Required
. Other than the Required Shareholder Approval, no consent, approval or authorization of, or declaration
to or filing with, any person is required by the Company for the valid authorization, execution and delivery by the Company of
this Agreement, the Securities or the Warrant or for the consummation of the Transactions, other than (a) those consents, approvals,
authorizations, declarations or filings that have been obtained or made, as the case may be, and (b) filings pursuant to federal
or state securities and any other applicable laws (all of which filings have been made by the Company, other than those which are
required to be made after the Closing, and which will be duly made in accordance with time periods under applicable laws) in connection
with the sale of the Securities and the Warrants.
2.13
Changes
.
Except as set forth in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 or in Current Reports
on Form 8-K filed since March 31, 2016, or as set forth on
Schedule D
hereto, since March 31, 2016, there has not been:
(a) Any
change in or effect on the assets, liabilities, financial condition, prospects or operations of the Company from that reflected
in the Unaudited Financial Statements, other than changes in the ordinary course of business, none of which individually or in
the aggregate has had or could reasonably be expected to have a Material Adverse Effect on the Company;
(b) Any
waiver by the Company of a material right of the Company or a material debt owed to the Company;
(c) Any
sale, assignment, license or transfer of ownership of any intellectual property rights, other than in the ordinary course of business;
(d) Any
change in any Material Agreement that has had or could reasonably be expected to have a Material Adverse Effect on the Company;
or
(e) Any
other event or condition of any character that, either individually or cumulatively, has had or could reasonably be expected to
have a Material Adverse Effect on the Company.
2.14
Absence
of Undisclosed Liabilities
. The Company has no material Liabilities, except (a) to the extent reflected or reserved against
on the balance sheet disclosed in the Unaudited Financial Statements and (b) liabilities arising in the ordinary course of business
consistent with past practice since March 31, 2016. There are no material loss contingencies (as such term is used in Statement
of Financial Accounting Standards No. 5, or any successor thereto, issued by the Financial Accounting Standards Board) of or affecting
the Company that are required to be disclosed or for which adequate provision was required to be made on the balance sheet included
in the Unaudited Financial Statements that have not been disclosed or for which adequate provision has not been made on the balance
sheet included in the Unaudited Financial Statements or in the notes thereto.
2.15
Insurance
.
The Company maintains adequate insurance covering the risks of the Company, if any, of such types and in such amounts and with
such deductibles as are customary for other companies of a similar size engaged in similar lines of business. All insurance held
by the Company is in full force and effect and is issued by insurers of recognized responsibility.
2.16
Title
to Assets, Properties and Rights
. The Company has good and marketable title (or a valid leasehold interest or license) to all
of the assets (whether real, personal or mixed) reflected as being owned (or leased or licensed) by the Company on the balance
sheet included in the Unaudited Financial Statements (except for those assets subsequently disposed of in the ordinary course of
business), free and clear of all liens, except for (a) liens for current taxes, assessments and other governmental charges not
yet due and payable and for which adequate reserves have been established on the books of the Company; (b) easements, covenants,
conditions and restrictions (whether or not of record) as to which no material violation or encroachment exists or, if such violation
or encroachment exists, as to which the cure of such violation or encroachment would not materially interfere with the conduct
of the Company’s business as presently conducted; (c) any zoning or other governmentally established restrictions or encumbrances;
(d) worker’s or unemployment compensation liens arising in the ordinary course of business; (e) mechanic’s, materialman’s,
supplier’s, vendor’s or similar liens arising in the ordinary course of business securing amounts that are not delinquent;
(f) those liens that do not, individually or cumulatively, have or could reasonably be expected to have a Material Adverse Effect
on the Company; and (g) liens set forth on
Schedule E
hereto.
2.17
Taxes
.
The Company has timely filed all material tax returns that are required to be filed, and has paid all Taxes as shown on such returns
and on all assessments received by it to the extent that such taxes have become due, except to the extent the Company is contesting
any such assessment in good faith. All such returns were true and correct in all material respects. Except as described in the
Company’s filings with the SEC, the Company has not received notice of any material tax deficiency proposed or assessed against
it, and has not executed any waiver of any statute of limitations on the assessment or collection of any tax that has not yet expired.
Except as described in the Company’s filings with the SEC, none of the Company’s tax returns is currently being audited
by governmental authorities, and no taxing authority has notified the Company, orally or in writing, that such taxing authority
will or may audit any such return.
2.18
Litigation
and Other Proceedings
. There are no proceedings pending or, to the Company’s Knowledge, threatened against the Company,
whether at law or in equity, whether civil or criminal in nature, that could reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect on the Company.
2.19
Proxy
Statements
. The Proxy Statements (as defined below) will not, on the dates first mailed to stockholders and at the time of
the Company Stockholder Meeting (as defined below), contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they are made, not misleading;
provided
, that no representation is made as to information in the Proxy Statements that is
provided or supplied by Purchasers or their Affiliates or representatives. The Proxy Statements will comply as to form in all material
respects with the applicable provisions of the Securities Act of 1933 (the “
Securities Act
”) and the Securities
Exchange Act of 1934.
2.20
Board
Recommendation; Required Vote
. The Board of Directors of the Company, at a meeting duly called and held, by unanimous vote
of all of the members of the Board of Directors of the Company has (i) in all respects approved the Transactions and the Amendment
(as defined below); (ii) resolved to recommend that the stockholders of the Company approve the Transactions and the Amendment;
and (iii) directed that the approval of the Transactions and Amendment be submitted to stockholders of the Company for consideration
in accordance with this Agreement, which resolutions as of the date of this Agreement, have not been subsequently rescinded, modified
or withdrawn in any way (collectively, the “
Board Recommendation
”). The Required Shareholder Approval is the
only vote of the holders of capital stock of the Company necessary to approve the Transactions and the Amendment.
Article 3
Representations
and Warranties of the Purchasers
The Purchasers severally and not jointly represent
and warrant to the Company as follows:
3.1
Authorization
.
The execution and delivery by each Purchaser of this Agreement and the performance by each Purchaser of its obligations hereunder
have been duly authorized by all requisite limited liability company action of each Purchaser.
3.2
No
Conflict
. Neither the execution and delivery by either Purchaser of this Agreement nor the performance by either Purchaser
of its obligations hereunder will result in any violation of, be in conflict with, or constitute a default under, with or without
the passage of time or the giving of notice: (a) any provision of either Purchaser’s governing documents; (b) any provision
of any judgment, decree or order to which either Purchaser is a party or by which it is bound; (c) any material contract or agreement
to which either Purchaser is a party or by which it is bound; or (d) any statute, rule or governmental regulation applicable to
either Purchaser; except, in the case of each of the foregoing, provisions, contracts, agreements, statutes, rules or governmental
regulations as to which authorizations, consents, amendments, waivers and approvals will have been obtained or effected at or prior
to the Closing.
3.3
Validity
.
This Agreement has been duly executed and delivered by each Purchaser and, assuming due and valid authorization, execution and
delivery hereof by the Company, constitutes the legal, valid and binding obligation of each Purchaser, enforceable against each
Purchaser in accordance with its terms except: (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally; and (b) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies.
3.4
Investment
Representations
.
(a) Each
Purchaser: (i) is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, and was not organized for the specific purpose of acquiring the Securities, the Warrant or the Warrant Shares; or (ii) is
not a “U.S. Person” within the meaning of Rule 902 of Regulation S promulgated under the Securities Act.
(b) Each
Purchaser has sufficient investment knowledge and experience so as to be able to evaluate the risks and merits of its investment
in the Company, and each Purchaser is able financially to bear the risks of its investment.
(c) It
is the present intention that the Securities being purchased by each Purchaser are being acquired (and, to the extent the Warrant
is exercised, the Warrant Shares will be acquired) for such Purchaser’s own account for the purpose of investment and not
with a present view to or for sale in connection with any distribution thereof.
(d) Each
Purchaser understands that: (i) none of the Securities, the Warrant or the Warrant Shares have been registered under the Securities
Act by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act pursuant to Section
4(a)(2) thereof or Rule 506 or 903 promulgated under the Securities Act; (ii) the Securities must be held indefinitely (or, in
the case of the Warrant, until the exercise in full or expiration or termination thereof) unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from such registration; (iii) the Warrant and each stock certificate representing
the Elemetal Shares, the NTR Shares, and, to the extent the Warrant is exercised, any stock certificate representing the Warrant
Shares acquired upon such exercise will bear a legend, among others, to the effect of clauses (i) and (ii) above; and (iv) the
Company will make a notation on its transfer books to the effect of clauses (i) and (ii) above.
(e) Each
Purchaser acknowledges that the Company has made available to such Purchaser all documents and information that such Purchaser
has requested relating to the Company, the Securities, the Warrant Shares, this Agreement and the Transactions.
3.5
Legends
.
Each Purchaser understands that the representatives of the Company will make notations in the appropriate records of the Company
of the restrictions on the transferability of the Securities and the Warrant Shares and may stamp or affix to any document or instrument
representing the Securities or Warrant Shares an appropriate legend stating, in effect, that the resale of the Securities or Warrant
Shares has not been registered under the Securities Act and that transfers thereof must be made in accordance with an available
exemption from registration under the Securities Act or in a transaction registered under the Securities Act.
3.6
Litigation
.
There are no actions, suits or proceedings of any nature pending or, to the knowledge of either Purchaser, threatened against or
by either Purchaser, any Affiliate of either Purchaser, any of its properties or any of their managers, officers or directors (in
their capacities as such) that challenge or seek to prevent, enjoin or otherwise delay the Transactions. To the knowledge of each
Purchaser, no event has occurred or circumstances exist that may give rise to or serve as a basis for any such action, suit or
proceeding. As used herein, “
Affiliate
” means, as to either Purchaser, any other person that, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control with such Purchaser, whether by contract,
voting power, or otherwise. The word “
control
” means the right to direct, whether by means of the holding of
shares or the possession of voting power, via contract or otherwise, the affairs of such person, firm, or company. Without limiting
the foregoing, a person is deemed to be an Affiliate of either Purchaser if such Purchaser owns, directly or indirectly, 50% or
of the voting securities of the specified person.
3.7
Disclosure
of Certain Information
. Each Purchaser understands and acknowledges that the Company may be required to disclose to the SEC
this Agreement and information relating to this Agreement, and hereby agrees that the Company, in its discretion, may disclose
this Agreement and such information to the SEC at such time and in such manner as the Company deems reasonable or necessary.
3.8
Brokers
and Finders
. On behalf of either Purchaser or its Affiliates (other than the Company and its subsidiaries), there is no agent,
broker, investment banker, consultant, Person or firm that has acted on behalf, or under the authority of, either Purchaser or
its Affiliates or, to such Purchaser’s knowledge, any of its stockholders, or will be entitled to any fee or commission directly
or indirectly from either Purchaser or its Affiliates or, to such Purchaser’s knowledge, any of its stockholders in connection
with the Transactions.
3.9
No
Rights as Stockholder
. Each Purchaser acknowledges that, except as otherwise provided herein, its purchase obligations under
this Agreement will not entitle such Purchaser to any of the rights, including, without limitation, voting rights, information
rights and rights to receive dividends or distributions, of a stockholder of the Company until the Closing.
Article 4
Covenants and
Agreements
4.1
Cooperation;
Commercially Reasonable Efforts
. The Company and the Purchasers shall cooperate with each other and use their respective commercially
reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable
under this Agreement and applicable laws, rules and regulations to consummate and make effective the Transactions and the Amendment
as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary applications,
notices, proxy statements, filings and other documents and to obtain as promptly as practicable all approvals of the Company’s
stockholders described in
Section 5.1(a)
and
Section 5.1(b)
and all approvals, permits, consents and authorizations
necessary or advisable to be obtained from the any third party and/or any governmental entity in order to consummate the Transactions
and to effect the Amendment.
4.2
Proxy
Statement; Company Stockholder Meeting
.
(a) As
promptly as practicable after the date of this Agreement, the Company shall prepare and file with the SEC a Notice of Meeting and
Preliminary Proxy Statement relating to a meeting of the Company’s stockholders (the “Company Stockholder Meeting”)
to be held for the purpose of voting on the Transactions and other matters as may be deemed necessary or advisable by the Company,
including, without limitation, an amendment of the Company’s Articles of Incorporation to increase the number of authorized
shares of Common Stock (the “Amendment”). As promptly as practicable after filing such Notice of Meeting and Preliminary
Proxy Statement, but in any event subject to the rules and regulations of the SEC, the Company shall prepare and file with the
SEC, and mail to its stockholders of record as of the close of business on the record date established by the Company for the Company
Stockholder Meeting (the “Record Stockholders”), a Notice of Meeting and Definitive Proxy Statement relating to the
Company Stockholder Meeting. The Notice of Meeting and Preliminary Proxy Statement and Notice of Meeting and Definitive Proxy Statement
are sometimes hereinafter referred to as the “Proxy Statements.” A reasonable time prior to the mailing thereof, the
Purchasers shall have the opportunity to review the Proxy Statements and the Company shall review and consider all reasonable revisions
proposed by the Purchasers to the extent reasonably satisfactory to the Purchasers.
(b) The
Purchasers shall furnish all information concerning the Purchasers as the Company may reasonably request in connection with the
preparation of the Proxy Statements, including, without limitation, any information in response to comments received from the SEC,
if applicable.
(c) The
Company Stockholder Meeting shall be called for a date which, after taking into consideration the provisions of the Articles of
Incorporation and Bylaws, the Nevada Corporations Code, the rules and regulations of the SEC and the NYSE MKT and the recommendations
of any proxy solicitor engaged by the Company with respect to the Company Stockholder Meeting and the Transactions, is as prompt
as practicable after the Notice of Meeting and Definitive Proxy Statement is filed with the SEC and mailed to the Record Stockholders.
(d) The
Company shall use its commercially reasonable efforts to secure all required authorizations, consents, waivers, amendments and
approvals with respect to the Transactions and the Amendment, including, without limitation, the stockholder approvals described
in Section 5.1(a) and contemplated by the Proxy Statements, including postponing or adjourning the Company Stockholder Meeting
(i) for the absence of a quorum, (ii) to allow reasonable additional time for any supplemental or amended disclosure necessary
under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by the stockholders prior
to the Company Stockholder Meeting or (iv) to allow additional solicitation of votes in order to obtain the Required Shareholder
Approval.
(e) At
the Company Stockholder Meeting, the Purchasers shall vote all of the shares of the Common Stock which they currently beneficially
own, whether directly or indirectly, in favor of the Amendment.
4.3
Additional
Listing Application
. As promptly as practicable after the date of this Agreement, but in any event after taking into consideration
the rules and regulations of the NYSE MKT with respect to the timing of, and supporting documents required to accompany, the Additional
Listing Application (as hereinafter defined), the Company shall submit to the NYSE MKT an additional listing application relating
to the Securities and the Warrant Shares (the “
Additional Listing Application
”) and shall use its commercially
reasonable efforts to secure the NYSE MKT’s approval of the Additional Listing Application.
4.4
Reservation
of Common Stock
. No later than the effective date of the Amendment, the Company will reserve and the Company shall continue
to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue the Warrant Shares pursuant to any exercise of the Warrants.
4.5
Board
Recommendation
. The Board of Directors of the Company shall not withdraw or modify, or propose to or resolve to withdraw or
modify the Board Recommendation, unless a failure to do so would be materially inconsistent with the Board’s fiduciary duties
as determined after consultation with outside legal counsel.
Article 5
Conditions Precedent
5.1
Conditions
Precedent of the Company
. The obligation of the Company to consummate the Transactions shall be subject to the satisfaction
prior to or at the Closing of the following conditions, which may only be waived in writing, in whole or in part, by the Company:
(a) the
Transactions shall have received (i) all requisite approvals of the stockholders of the Company required pursuant to Nevada law,
the Company’s Articles of Incorporation and Bylaws and the rules and regulations of the NYSE MKT (the “Required Shareholder
Approval”) and (ii) approval of a majority of the shares of Common Stock of the Company present in person or represented
by proxy at a meeting of the stockholders of the Company called for such purpose that are not owned, beneficially or of record,
by Elemetal, NTR, or any of their Affiliates (the “Majority of the Minority Requirement”);
(b) the
Amendment shall have received all requisite approvals of the stockholders of the Company;
(c) the
representations and warranties of the Purchasers set forth in this Agreement shall have been true and correct in all material respects
as of the date of this Agreement and shall be true and correct in all material respects as of the date of the Closing as if made
on and as of such date;
(d) the
Purchasers shall have performed in all material respects all obligations and complied in all material respects with all covenants
required by this Agreement to be performed or complied with by them at or prior to the Closing (other than a failure to so perform
or comply which is attributable to actions or inactions by or on behalf of the Company); and
(e) the
Purchasers shall have made the deliveries required by
Section 1.2(a)
hereto.
5.2
Conditions
Precedent of the Purchasers
. The respective obligations of the Purchasers to consummate the Transactions shall be subject to
the satisfaction prior to or at the Closing of the following conditions, which may only be waived in writing, in whole or in part,
by the Purchasers:
(a) the
Transactions shall have received (i) the Required Shareholder Approval and (ii) the Majority of the Minority Requirement;
(b) the
Amendment shall have received all requisite approvals of the stockholders of the Company;
(c) the
representations and warranties of the Company set forth in this Agreement shall have been true and correct in all material respects
as of the date of this Agreement and shall be true and correct in all material respects as of the date of the Closing as if made
on and as of such date;
(d) the
Company shall have performed in all material respects all obligations and complied in all material respects with all covenants
required by this Agreement to be performed or complied with by it at or prior to the Closing (other than a failure to so perform
or comply which is attributable to actions or inactions by or on behalf of the Purchasers);
(e) the
Company shall have made the deliveries required by
Section 1.2(a)
hereto;
(f) the
Company shall have delivered to the Purchasers a certificate of good standing in respect of the Company issued by the Secretary
of State of the State of Nevada dated as of a date within five calendar days of the Closing; and
(g) the
Company shall have executed and delivered the Registration Rights Agreement in the form attached as
Exhibit B
.
5.3
Conditions
Precedent of the All of the Parties
. The respective obligations of each party to consummate the Transactions shall be subject
to the satisfaction prior to or at the Closing of the following conditions, which may only be waived in writing, in whole or in
part, by mutual agreement of the parties:
(a) the
Additional Listing Application shall have been approved by the NYSE MKT; and
(b) no
order or decree of any court or governmental body having competent jurisdiction over the Transactions contemplated by this Agreement
shall prohibit the Transactions.
Article 6
Adjustments
6.1
Reclassification
.
If the Company, at any time prior to the Closing, by reclassification of securities or otherwise, shall change any of the securities
of the same class (the “
Comparable Securities
”) as the Securities or the Warrant Shares not yet sold, issued
and delivered to, and purchased by, the Purchaser under this Agreement (the “
Pending Securities
”) into the same
or a different number of securities of any other class or classes, then the Pending Securities shall automatically be adjusted
to be comprised of such number and kind of securities as would have been issuable as a result of such change with respect to the
Comparable Securities immediately prior to such reclassification or other change, and the purchase price for such Pending Securities
shall be proportionately adjusted, if applicable.
6.2
Subdivision
or Combination of Shares
. If the Company, at any time prior to the Closing, shall split or subdivide the Comparable Securities
into a greater number of securities of the same class, then the number of Pending Securities shall be proportionately increased
and the purchase price to be paid for such Pending Securities shall be proportionately decreased. If the Company, at any time prior
to the Closing, shall reverse split or combine the Comparable Securities into a lesser number of securities of the same class,
then the number of Pending Securities shall be proportionately decreased and the purchase price to be paid for such Pending Securities
shall be proportionately increased.
6.3
Certain
Other Matters
.
(a) All
calculations under this Article 6 shall be made to the nearest cent or whole Elemetal Share or NTR Share, as the case may be.
(b) No
adjustment in the Aggregate Consideration shall be required unless such adjustment would require an increase or decrease of at
least U.S.$0.01 per Elemetal Share or NTR Share, as applicable; provided, however, that any adjustments which by reason of this
Section 6.3(b) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.
(c) If,
as a result of an adjustment made pursuant to this Article 6, the Company shall be obligated to sell and issue, and the Purchasers
shall be required to purchase, shares of more than one class or series of capital stock of the Company, then the Board of Directors
of the Company (whose determination shall be final and conclusive) shall determine, in good faith, the allocation of the adjusted
Aggregate Consideration between or among the shares of such multiple classes or series of capital stock of the Company.
(d) If
any event shall occur as to which the other provisions of this Article 6 are not strictly applicable but as to which the failure
to make any adjustment would not fairly preserve the rights and obligations of the Company and the Purchasers under this Agreement
in accordance with the essential intent and principles of the adjustments set forth in this Article 6, then, in each such case,
the Board of Directors of the Company (whose determination shall be final and conclusive) shall determine, in good faith, the adjustment,
if any, on a basis consistent with the essential intent and principles established herein, necessary to fairly preserve the parties’
respective rights and obligations hereunder.
6.4
Certificate
as to Adjustments
. Upon the occurrence of each adjustment or readjustment pursuant to this
Article 6
, the Company shall
promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Purchasers a certificate
setting forth, in reasonable detail, the event requiring such adjustment or readjustment, the amount of such adjustment or readjustment,
the method by which such adjustment or readjustment was calculated, the adjusted or readjusted Aggregate Consideration and adjusted
or readjusted number of Pending Securities (including, if requested by Elemetal, a new Warrant reflecting such adjustments).
Article 7
Termination
7.1
Termination
of this Agreement
. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing
as follows: (a) by mutual written consent of the Company and the Purchasers; (b) by either the Company or the Purchasers: (i) after
the Company Stockholder Meeting, if, at the Company Stockholder Meeting, the Transactions do not receive the Required Shareholder
Approval or the Majority of the Minority Approval or the Amendment does not receive all requisite approvals of the Company’s
stockholders or (ii) on or after December 31, 2016, if the Transactions have not been consummated; or (c) by the Purchasers if
(i) the Company fails to include the Board Recommendation in the Proxy Statements or withdraws the Board Recommendation or modifies
the Board Recommendation in a manner adverse thereto or (ii) the Company fails to call the Company Stockholder Meeting or fails
to deliver the Proxy Statements to its stockholders in accordance with this Agreement.
7.2
Effect
of Termination
. (a) Either party electing to terminate this Agreement pursuant to
Section 7.1(b)
above may effect such
termination only by promptly delivering written notice thereof to the other party and (b) the Purchasers may terminate this Agreement
pursuant to
Section 7.1(c)
above by promptly delivering written notice thereof to the Company. Following any termination
duly effected pursuant to
Section 7.1
, no party shall have any further obligations under this Agreement.
Article 8
Miscellaneous
8.1
Legends
.
(a) Each
stock certificate representing the Elemetal Shares and the NTR Shares shall have conspicuously endorsed thereon the following legend:
THE SECURITIES REPRESENTED 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 OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
(b) The
Warrant shall be transferrable without the prior written consent of the Company, but shall have conspicuously endorsed thereon
the legend set forth on the first page of the Form of Warrant attached hereto as
Exhibit A
.
(c) To
the extent the Warrant is exercised, any stock certificate representing the Warrant Shares acquired upon such exercise shall have
conspicuously endorsed thereon the legends set forth in
Section 5
of the Form of Warrant attached hereto as
Exhibit A
.
8.2
Brokerage
.
Each party will indemnify and hold harmless the other party against and in respect of any claim for brokerage or other commissions
relative to this Agreement or the Transactions, based in any way on agreements, arrangements or understandings made or claimed
to have been made by such party with any third party.
8.3
Survival
.
Except for the representations and warranties of (a) the Company contained in
Sections 2.1
,
2.2
and
2.7(a)
,
and (b) the Purchasers contained in
Sections 3.4 and 3.5
, which representations and warranties shall survive the Closing,
the respective representations of the Company and Purchasers contained in this Agreement shall not survive the Closing, and thereafter
none of the Company, any Purchaser or any officer, director, employee, or Affiliate of the Company, or any Purchaser shall have
any liability whatsoever (whether pursuant to this Agreement or otherwise) with respect to such representation or warranty. This
Section 8.3
shall have no effect upon any other obligations of the parties hereto under this Agreement, whether to be performed
before, at or after the Closing, which shall survive until fulfilled or the expiration of the time thereof in accordance with their
terms.
8.4
Parties
in Interest
. All representations, warranties, covenants and agreements contained in this Agreement by or on behalf of either
party shall bind and inure to the benefit of the respective successors and permitted assigns of such party whether so expressed
or not;
provided, however
, no party may assign, in whole or in part, this Agreement or any right or obligation hereunder,
except as otherwise specified herein, without the prior written consent of the other party.
8.5
Notices
.
All notices and other communications hereunder shall be in writing and shall be deemed to have been duly received: (a) on the date
given if delivered personally or by facsimile or electronic transmission; (b) one day after being sent by internationally recognized
overnight delivery service; or (c) five days after having been mailed by registered or certified mail (postage prepaid, return
receipt requested); in the case of each of the foregoing, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to the Company:
|
DGSE Companies, Inc.
|
|
15850 Dallas Parkway, Suite 140
|
|
Dallas, Texas 75248
|
|
Facsimile: (972) 674-2596
|
|
Email:mpeakes@dgse.com
|
|
Attention: President/ CEO
|
|
|
If to Elemetal:
|
Elemetal, LLC
|
|
15850 Dallas Parkway
|
|
Dallas, Texas 75248
|
|
Facsimile: (469) 533-1622
|
|
Email: bleroy@elemetal.com
|
|
Attention: Bill LeRoy, President/CEO
|
|
|
If to NTR:
|
NTR Metals, LLC
|
|
10720 Composite Drive
|
|
Dallas, Texas 75220
|
|
Facsimile: (469) 522-1100
|
|
Email: tgum@elemetal.com
|
|
Attention: Carl (Trey) Gum, General Counsel
|
8.6
Governing
Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas for all purposes and
in all respects, without regard to the conflict of law provisions of such state.
8.7
Entire
Agreement
. This Agreement constitutes the sole and entire agreement of the parties with respect to the subject matter hereof.
8.8
Counterparts
.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
8.9
Amendments
and Waivers
. This Agreement may be amended or modified in whole or in part at any time only by a writing signed by the parties
hereto. Any term, condition or provision of this Agreement may be waived in writing at any time by the party which is entitled
to the benefits thereof. Any waiver by any party hereto of any of its rights or remedies under this Agreement shall not constitute
a waiver of any of its other rights or remedies hereunder.
8.10
Severability
.
If any term or provision of this Agreement is finally deemed by a court of competent jurisdiction to be invalid, illegal or incapable
of being enforced, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long
as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.
8.11
Injunctive
Relief
. It is possible that remedies at law may be inadequate and, therefore, the parties shall be entitled to equitable relief,
including, without limitation, injunctive relief, specific performance or other equitable remedies, in addition to all other remedies
provided hereunder or available to the parties at law or in equity.
8.12
Titles
and Subtitles
. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing
or interpreting any term or provision of this Agreement.
[ SIGNATURE PAGE FOLLOWS ]
IN WITNESS WHEREOF, each
of the parties has caused this Agreement to be duly executed as of the date first above written.
|
THE COMPANY:
|
|
|
|
DGSE Companies, Inc.
,
|
|
a Nevada corporation
|
|
|
|
|
By:
|
/s/ Matthew Peakes
|
|
Name: Matthew Peakes
|
|
Title: Chief Executive Officer and President
|
Stock Purchase Agreement
Signature Page
|
THE PURCHASERS
:
|
|
|
|
Elemetal, LLC
,
|
|
a Delaware limited liability company
|
|
|
|
|
By:
|
/s/ William E. LeRoy
|
|
Name: William E. LeRoy
|
|
Title: President/CEO
|
|
|
|
NTR Metals, LLC
,
|
|
a Texas limited liability company
|
|
|
|
|
By:
|
/s/ John Loftus
|
|
Name: John Loftus
|
|
Title: Member
|
Stock Purchase Agreement
Signature Page
APPENDIX C
FORM OF
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
DGSE COMPANIES, INC.
THIS WARRANT AND THE SHARES
(AS HEREINAFTER DEFINED) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THIS WARRANT (this “
Warrant
”)
CERTIFIES THAT, upon the terms and subject to the conditions set forth herein, Elemetal, LLC, a limited liability company organized
and existing under the laws of the State of Delaware (the “
Holder
”), for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, has been granted the right to purchase from DGSE Companies, Inc., a Nevada
corporation (the “
Company
”), during the Term (as hereinafter defined), 1,000,000 shares (the “
Shares
”)
of the Company’s common stock, par value $0.01 per share (“
Common Stock
”), at an exercise price of U.S.
$0.65 per Share (the “
Exercise Price
”) (subject to adjustment hereunder). Until the earlier of the Expiration
Date (as hereinafter defined) and such time as this Warrant is exercised in full, the Exercise Price and the number of Shares (or
consideration) issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. Capitalized terms used
and not otherwise defined herein shall have the meanings set forth in that certain Stock Purchase Agreement, dated June 20, 2016
(the “
Stock Purchase Agreement
”), among the Company, the Holder and NTR Metals, LLC, a limited liability company
organized and existing under the laws of the State of Texas.
1.
Term
.
Upon the terms and subject to the conditions set forth herein, this Warrant shall be exercisable, in whole or in part, at any time,
or from time to time, during the period (such period, the
“
Term
”
)
commencing at 5:00 p.m., Eastern time, on ______________, 2016 (the
“
Effective
Date
”
) and ending at 5:00 p.m., Eastern time, on _____________,
2018 (the
“
Expiration Date
”
).
Any portion of this Warrant remaining unexercised at the Expiration Date shall thereafter be void.
2.
Exercise
.
(a)
Manner
of Exercise
. The purchase rights represented by this Warrant are exercisable by the Holder in whole or in part, at any
time, or from time to time, during the Term: (i) by the surrender of this Warrant and the Notice of Exercise (in the form attached
hereto as
Exhibit A
), duly completed and executed on behalf of the Holder, at the principal executive office of the Company
located at 15850 Dallas Parkway, Suite 140, Dallas, Texas 75248, or such other office as the Company shall notify the Holder of
in writing (the
“
Principal Office
”
);
and (ii) upon payment, by wire transfer of immediately available funds to an account designated by the Company of the aggregate
Exercise Price for the Shares to be purchased, or other payment method agreeable to the Company (except that any payment must be
made in accordance with applicable securities laws).
(b)
Time
of Exercise
. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date
of its surrender for exercise as provided above (the
“
Exercise
Date
”
), and the Holder (or other individual or entity
(
“
Person
”
)
entitled to receive the Shares issuable upon such exercise in accordance with the terms hereof) shall be treated for all purposes
as the holder of record of such Shares as of the close of business on such date.
(c)
Delivery
of Certificate and Balance Warrant
. As promptly as practicable on or after the Exercise Date and in any event within three
(3) days thereafter, the Company, at its expense, will issue and deliver to the Holder (or other Person entitled to receive the
Shares issuable upon exercise of this Warrant in accordance with the terms hereof) a certificate or certificates for the Shares
issuable upon such exercise or, if such Shares are not certificated, other appropriate written evidence of the issuance of the
Shares. In the event that this Warrant is exercised in part, the Company at its expense shall execute and deliver to the Holder
(or its successor or permitted assignee) a new warrant of like tenor exercisable for the number of Shares for which this Warrant
may then be exercised after giving effect to all previous exercises and adjustments.
(d)
Rescission
Rights
.
If the Company fails to issue or cause to have issued the Shares issuable upon such exercise of the Warrant within
three (3) days of the Exercise Date, then the Holder will have the right to rescind such exercise.
(e)
Charges,
Taxes and Expenses
. Issuance of the Shares shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such Shares, all of which taxes and expenses shall be paid by the Company,
and such Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder in the Notice
of Exercise. The Company shall pay all fees required for same-day processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery
of the Shares.
(f)
No
Fractional Shares
. This Warrant may only be exercised for whole Shares, and in no event shall any fractional Share be issued
upon any exercise of this Warrant.
(g)
Limitation
on Exercise
. Notwithstanding anything to the contrary contained in this Warrant, in no event shall the Holder be entitled
to exercise this Warrant, or to receive Shares issuable upon exercise of this Warrant, for an amount of Shares which, as of the
date of such exercise, is in excess of the number of shares of Common Stock that the Company has sold and issued, and the Holder
has purchased, under the Stock Purchase Agreement, pursuant to which, among other things, this Warrant was issued.
3.
Adjustments
.
(a)
Reclassification
.
If the Company, at any time while this Warrant, or any portion hereof, is outstanding and unexpired, by reclassification of securities
or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then this Warrant shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as a result of such change with respect to the securities that were subject
to the purchase rights under this Warrant immediately prior to such reclassification or other change, and the Exercise Price shall
be proportionately adjusted, as appropriate.
(b)
Subdivision
or Combination of Shares
. If the Company, at any time while this Warrant, or any portion hereof, is outstanding and unexpired,
shall split or subdivide the securities for which this Warrant is exercisable into a greater number of securities of the same class,
then the amount of securities for which this Warrant is exercisable shall be proportionately increased and the Exercise Price shall
be proportionately decreased. If the Company, at any time while this Warrant, or any portion hereof, is outstanding and unexpired,
shall reverse split or combine the securities for which this Warrant is exercisable into a lesser number of securities of the same
class, then the amount of securities for which this Warrant is exercisable shall be proportionately decreased and the Exercise
Price shall be proportionately increased.
(c)
Adjustments
for Non-Cash Dividends
. If, at any time while this Warrant, or any portion thereof, is outstanding and unexpired, the holders
of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other
or additional securities or property (other than cash) of the Company by way of dividend or distribution (collectively, a
“
Dividend
”
),
then, in each case, this Warrant shall represent the right to acquire, in addition to the number of Shares receivable upon exercise
of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional securities
or property (other than cash) of the Company that the Holder (or its successor or permitted assignee) would hold on the date of
exercise of this Warrant had it been the holder of record of the security receivable upon exercise of this Warrant on the record
date fixed with respect to the Dividend and had thereafter, during the period from the date thereof through and including the date
of such exercise, retained such securities and all other additional securities which it would have received during such period
as a result of its ownership thereof, giving effect to all adjustments called for during such period by the provisions of this
Warrant.
4.
Fundamental
Transaction
. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more
related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more
related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held
by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a
“
Fundamental
Transaction
”
), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each Share that would have been issuable upon such exercise immediately
prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the
“
Alternate Consideration
”
)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. Upon the occurrence of any such Fundamental Transaction in which the Company is the survivor
(such surviving entity, the
“
Successor Entity
”
),
the Successor Entity shall succeed to, and be substituted for, the Company (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant and the other documents entered into in connection with the Transactions referring
to the
“
Company
”
shall refer instead to the Successor Entity), and the Successor Entity may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Warrant and the other documents entered into in connection with the Transactions
with the same effect as if such Successor Entity had been named as the Company herein.
5.
Certain
Other Matters
.
(a)
All
calculations under
Section 3
and
Section 4
shall be made to the nearest cent or whole Share, as the case may be.
For purposes of
Section 3
and
Section 4
, the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(b)
No
adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least U.S.
$0.01 per Share; provided, however, that any adjustments which by reason of this
Section 5(b)
are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
(c)
If,
as a result of an adjustment made pursuant to
Section 3
or
Section 4
, the Holder (or its successor or permitted assignee)
shall become entitled to receive shares of more than one class or series of capital stock of the Company, then the Board (whose
determination shall be final and conclusive) shall determine, in good faith, the allocation of the adjusted Exercise Price between
or among the shares of such multiple classes or series of capital stock of the Company.
(d)
If
any event shall occur as to which the other provisions of
Section 3
or
Section 4
are not strictly applicable but
as to which the failure to make any adjustment would not fairly preserve the purchase rights represented by this Warrant in accordance
with the essential intent and principles of the adjustments set forth in
Section 3
and
Section 4
, then, in each such
case, the Board (whose determination shall be final and conclusive) shall determine, in good faith, the adjustment, if any, on
a basis consistent with the essential intent and principles established herein, necessary to fairly preserve the purchase rights
represented by this Warrant.
6.
Certificate
as to Adjustments
. Upon the occurrence of each adjustment or readjustment pursuant to
Section 3
or
Section 4
,
the Company shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder
(or its successor or permitted assignee) a certificate setting forth, in reasonable detail, the event requiring such adjustment
or readjustment, the amount of such adjustment or readjustment, the method by which such adjustment or readjustment was calculated,
the adjusted or readjusted Exercise Price and adjusted or readjusted number of Shares or amount of other securities or property
that would be received upon the exercise of this Warrant.
7.
Legend
.
Each stock certificate representing Shares issued upon exercise of this Warrant shall have conspicuously endorsed thereon the following
legend:
THE SECURITIES REPRESENTED 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 OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
8.
Shares
to be Fully Paid
. When issued and delivered in accordance with this Warrant to the Holder (or its successor or permitted
assignee) upon payment to the Company of the applicable Exercise Price, the Shares issued by the Company pursuant to this Warrant
will be fully paid and non-assessable with no personal liability attaching to ownership thereof and will be free and clear of all
liens, charges and encumbrances of any nature whatsoever except for restrictions on transfer under the Stock Purchase Agreement
and under applicable federal and state securities laws.
9.
Company
to Reserve Shares
. At all times while this Warrant, or any portion hereof, is outstanding and unexpired, the Company shall
reserve and keep available, free from preemptive rights, out of its authorized but unissued capital stock, for the purpose of effecting
the exercise of this Warrant, the full number of Shares then deliverable upon the exercise of this Warrant. The issuance of this
Warrant shall constitute full authority to those officers of the Company who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for Shares upon exercise of this Warrant.
10.
Exchange
of Warrant
. If this Warrant shall be mutilated, lost, stolen or destroyed, then the Company shall execute and deliver to
the Holder (or its successor or permitted assignee) a new warrant of like tenor and denomination and deliver the same (i) in exchange
and substitution for and upon surrender and cancellation of any mutilated Warrant or (ii) in lieu of any Warrant lost, stolen or
destroyed, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant (including,
without limitation, a reasonably detailed affidavit with respect to the circumstances of any loss, theft or destruction) and upon
receipt of indemnity reasonably satisfactory to the Company.
11.
No
Rights as Stockholder
. Except as otherwise provided herein, this Warrant, to the extent not exercised, will not entitle
the Holder to any of the rights, including, without limitation, voting rights, information rights and rights to receive dividends
or distributions, of a stockholder of the Company.
12.
Amendment
.
This Warrant may not be modified or amended, except with the prior written consent of the Holder (or its successor or permitted
assignee) and the Company. Any instrument given by or on behalf of the Holder (or its successor or permitted assignee) in connection
with any consent to any modification or amendment of this Warrant will be conclusive and binding on any and all subsequent holders
of this Warrant.
13.
Transfer
.
Neither this Warrant nor the Shares have been registered under the Securities Act of 1933, as amended, or any state securities
laws, and such securities may not be offered for sale, sold, assigned, pledged, or otherwise disposed of, unless they are registered
under the Securities Act of 1933, as amended, and such state laws or the transaction is exempt from the registration requirements
thereof. Subject to the foregoing, upon surrender of this Warrant as a result of a transfer hereof, the Company, at the expense
of the Company, will issue and deliver to, or to the order of, the transferee a new Warrant in the name of such transferee, exercisable
for the number of Shares for which this Warrant may then be exercised after giving effect to all previous exercises and adjustments.
Subject to the foregoing, nothing herein shall be construed to limit the number of transfers of the Warrant (including transfers
of fractional interests herein).
14.
Successors
and Assigns
. This Warrant shall be binding upon the Company and its successors and assigns and shall inure to the benefit
of the Holder and its successors and permitted assigns.
15.
Titles
and Subtitles
. The titles and subtitles used in this Warrant are for convenience only and are not to be considered in construing
or interpreting any term or provision of this Warrant.
16.
Governing
Law
. This Warrant shall be governed by and construed in accordance with the laws of the State of Texas for all purposes
and in all respects, without regard to the conflict of law provisions of such state.
[
SIGNATURE PAGE FOLLOWS
]
IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its duly authorized officer as of the Effective Date set forth above.
|
DGSE Companies, Inc.
,
|
|
a Nevada corporation
|
|
|
|
|
By:
|
|
|
Name: Matthew Peakes
|
|
Title: Chief Executive Officer and President
|
W
arrant
S
ignature
P
age
EXHIBIT A
NOTICE OF EXERCISE
Dated: ________, 20__
The undersigned hereby
elects to purchase ____ shares (the “
Shares
”) of common stock of DGSE Companies, Inc. (the “
Company
”)
pursuant to the terms of the warrant issued to the undersigned, effective as of ______________, 2016, a copy of which is attached
hereto (the “
Warrant
”), and tenders herewith payment to the Company of U.S. $0.65 per Share, for an aggregate
purchase price of U.S. $__________, representing payment in full for the Shares in accordance with the terms of the Warrant. Such
aggregate purchase price is being paid by wire transfer of immediately available funds to an account designated by the Company,
or other payment method agreeable to the Company. Until the earlier of the Expiration Date (as defined in the Warrant) and such
time as the Warrant is exercised in full, the Exercise Price (as defined in the Warrant) and the number of Shares (or consideration)
issuable upon exercise of the Warrant are subject to adjustment as provided in the Warrant.
Please issue certificate(s)
representing the Shares, and a new warrant for the unexercised portion of the Warrant [strike if not applicable], in the name of
the undersigned, and deliver such certificate(s) and new warrant [strike if not applicable] to the undersigned at the following
address:
Elemetal, LLC
15850 Dallas Parkway
Dallas, Texas 75248
Attn: President/CEO
|
Elemetal, LLC
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
APPENDIX D
FORM OF
REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS
AGREEMENT
(this “
Agreement
”), is made and entered into as of ______________, 2016, by and among DGSE Companies,
Inc., a Nevada corporation (the “
Company
”), Elemetal, LLC, a Delaware limited liability company (“
Elemetal
”),
NTR Metals, LLC, a Texas limited liability company (“
NTR
”). Elemetal and NTR are collectively referred to herein
as the “Stockholders.”
This Agreement is made
pursuant to the Stock Purchase Agreement between the Company and the Stockholders dated as of June 20, 2016 (the “
Purchase
Agreement
”). In order to induce the Stockholders to enter into the Purchase Agreement, the Company has agreed to provide
the registration and other rights set forth in this Agreement.
The parties agree as follows:
Article
I
Section 1.01
Definitions
.
Capitalized terms used herein without definition shall have the meanings given to them in the Purchase Agreement. The terms set
forth below are used herein as so defined:
“
Beneficial Ownership
”
shall have the meaning specified in Rule 13d-3 under the Exchange Act.
“
Commission
”
has the meaning specified therefor in Section 1.02 of this Agreement.
“
Common Stock
”
means the common stock, par value $0.01 per share, of the Company.
“
Exchange Act
”
shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“
Holder
”
means any Stockholder who owns Registrable Securities.
“
Initial Requesting
Holder
” has the meaning specified therefor in Section 2.01 of this Agreement.
“
Inspectors
”
has the meaning specified therefor in Section 4.01 this Agreement.
“
Losses
”
has the meaning specified therefor in Section 4.06 of this Agreement.
“
Participating
Holder
” has the meaning specified therefor in Section 3.01 of this Agreement.
“
Person
”
means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, business
trust, trust or unincorporated entity.
“
Records
”
has the meaning specified therefor in Section 4.01 of this Agreement.
“
Registrable Securities
”
means the Common Stock acquired by the Stockholders pursuant to the Purchase Agreement and all other shares of Common Stock Beneficially
Owned by the Stockholders on the date hereof until such time as such securities cease to be Registrable Securities pursuant to
Section 1.02 hereof.
“
Registration
Statement
” means a registration statement on a Form S-3 or Form S-1 (or successor form to either).
“
Requesting Holders
”
has the meaning specified therefor in Section 2.01 of this Agreement.
“
Required Period
”
has the meaning specified therefor in Section 2.07 of this Agreement.
“
Securities Act
”
has the meaning specified therefor in Section 1.02 of this Agreement.
“
Selling Holder
”
means a Holder who is selling Registrable Securities pursuant to a Registration Statement.
“
Underwriter’s
Maximum Number
” has the meaning specified therefore in Section 2.09 of this Agreement.
“
WKSI
”
means a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act.
Section 1.02
Registrable
Securities
. Any Registrable Security will cease to be a Registrable Security when (i) a Registration Statement covering such
Registrable Security has been declared effective by the Securities and Exchange Commission (the “
Commission
”)
and such Registrable Security has been sold or disposed of pursuant to such effective Registration Statement; (ii) such Registrable
Security is disposed of pursuant to Rule 144 (or any similar provision then in force) under the Securities Act of 1933, as amended
(the “
Securities Act
”); (iii) such Registrable Security is held by the Company or one of its subsidiaries; or
(iv) such Registrable Securities are sold by a person in a transaction in which the rights under the provisions of this Agreement
are not assigned.
Article
II
Section 2.01
Requests
for Registration
. At any time and from time to time on or following the date hereof, any Stockholder may, subject to the provisions
of this Agreement, request in writing that the Company effect the registration of any or all of the Registrable Securities held
by such Stockholder (an “Initial Requesting Holder”) with the Commission under and in accordance with the provisions
of the Securities Act, which notice shall specify (i) the then-current name and address of such Initial Requesting Holder or Initial
Requesting Holders, (ii) the amount of Registrable Securities proposed to be registered and (iii) the intended method or methods
and plan of disposition thereof, including whether such requested registration is to involve an underwritten offering. The Company
shall give prompt written notice of such registration request to all other Holders. Except as otherwise provided in this Agreement
and subject to Section 2.08 in the case of an underwritten offering, the Company shall prepare and use its best efforts to file
a Registration Statement with the Commission promptly after such request has been given with respect to (i) all Registrable Securities
included in the Initial Requesting Holder’s request and (ii) all Registrable Securities included in any request for inclusion
delivered by any other Holder (together with the Initial Requesting Holder, the “Requesting Holders”) within fifteen
(15) days after delivery of the Company’s notice of the Initial Requesting Holder’s registration request to such other
Holders, in each case subject to Section 2.08 if such offering is an underwritten offering. Thereafter, the Company shall use its
best efforts to effect the registration under the Securities Act and applicable state securities laws of such Registrable Securities
for disposition in accordance with the intended method or methods of disposition stated in such request; provided, however, that
the Company will not be required to take any action pursuant to this Article II if a Registration Statement is effective at the
time such request is made and such Registration Statement may be used for the offering and sale of the Registrable Securities requested
to be registered. Subject to Section 2.09, the Company may include in such registration other securities of the Company for sale,
for the Company’s account or for the account of any other Person.
Section 2.02
S-1
or S-3 Registration; Shelf Registration
.
(a)
Each
Stockholder shall have the right pursuant to
Section 2.01
and subject to
Section 2.04
, to make up to six (6) requests
for registration on Form S-1 (or any successor form) or Form S-3 (or any successor form), for the Company to register all or a
portion of its Registrable Securities held by it so long as such Stockholder holds at least five percent (5%) of the shares of
Common Stock outstanding on the date of this Agreement, including for an offering to be made on a continuous or delayed basis pursuant
to Rule 415 under the Securities Act (or any similar rule that may be adopted by the Commission covering such Registrable Securities);
provided
,
however
, that the number of Registrable Securities that are the subject of any such request must be at
least 10,000 in the aggregate.
(b)
In
the case of a registration pursuant to this Section 2.02, (i) if the Company is then a WKSI, it shall use its best efforts to,
as promptly as practicable after the receipt of the request from the Initial Requesting Holder, file and cause to be immediately
effective a Registration Statement that shall constitute an automatic shelf registration with respect to all Registrable Securities
requested by the Requesting Holders to be included therein, and (B) if the Company is not then a WKSI, it shall use its best efforts
to file the Registration Statement and cause it to become effective as promptly as practicable after the receipt of the request
from the Initial Requesting Holder.
Section 2.03
Delay
for Disadvantageous Condition
. If, in connection with any request for registration pursuant to this
Article II
, the
Company provides a certificate, signed by the president or chief executive officer of the Company, to the Requesting Holders stating
that, in the good faith judgment of the Board of Directors of the Company and its counsel, it would be materially detrimental to
the Company or its stockholders for such Registration Statement either to become effective or to remain effective for as long as
such Registration Statement otherwise would be required to remain effective, then the Company shall have the right to defer taking
action with respect to such filing and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly,
for a period of not more than ninety (90) days after the request of the Initial Requesting Holder is given;
provided
,
however
,
that the Company may not invoke this right more than once in any twelve (12) month period.
Section 2.04
Limitation
on Successive Registrations
. The Company shall not be required to effect a registration pursuant to
Section 2.02
for
one hundred twenty (120) days immediately following the effective date of a Registration Statement filed pursuant to the prior
exercise of any Holder’s registration rights provided for in
Section 2.02
and within six (6) months of any registration
initiated by the Company to make a primary offering of equity securities, provided that the Company is employing best efforts to
cause such Registration Statement to become effective. In addition, the Company shall not be required to effect more than two (2)
registrations during any twelve (12) month period pursuant to
Section 2.02
.
Section 2.05
Demand
Withdrawal
. Any Requesting Holder may, at any time prior to the effective date of the Registration Statement relating to any
requested registration, withdraw its Registrable Securities from a requested registration. If all Registrable Securities are so
withdrawn, the Company shall cease all efforts to effect such registration upon such request, without liability to any Requesting
Holder. Such registration will be not deemed an effected registration for purposes of
Section 2.02
or
Section 2.04
.
Section 2.06
Effective
Registration
.
(a)
The
Company may satisfy its obligations under Section 2.01 by amending (to the extent permitted by applicable law) any Registration
Statement previously filed by the Company under the Securities Act so that such amended Registration Statement will permit the
disposition (in accordance with the intended methods of disposition specified as aforesaid) of all of the Registrable Securities
for which a demand for registration has been made under
Section 2.01
.
(b)
Notwithstanding
any other provision of this Agreement to the contrary, a registration requested pursuant to this Article II will not be deemed
to be effected by the Company if it has not been declared effective by the Commission or become effective in accordance with the
Securities Act and kept effective as contemplated by
Section 2.06(c)
hereof.
(c)
The
Company will use its best efforts to keep a Registration Statement that has become effective as contemplated by this
Article
II
continuously effective, and not subject to any stop order, injunction or other similar order or requirement of the Commission,
until the earlier of (i) the expiration of the Required Period and (ii) the date on which all Registrable Securities covered by
such Registration Statement (x) have been disposed of pursuant to such Registration Statement or (y) cease to be Registrable Securities;
provided
,
however
, that in no event will such period expire prior to the expiration of the applicable period referred
to in Section 4(a)(3) of the Securities Act and Rule 174 promulgated thereunder. For purposes of this
Section 2.06
, “
Required
Period
” shall mean, with respect to a Registration Statement on Form S-3, three (3) years following the first day of
effectiveness, and with respect to any other Registration Statement, one hundred eight (180) days following the first day of effectiveness
of such Registration Statement. In the event of any stop order, injunction or other similar order or requirement of the Commission
relating to any Registration Statement, the Required Period for such Registration Statement will be extended by the number of days
during which such stop order, injunction or similar order or requirement is in effect.
Section 2.07
Selection
of Underwriters
. Requesting Holders of a majority of the Registrable Securities to be included in any registration requested
under this
Article II
may request that the registration be effected as an underwritten offering and such Requesting Holders
shall have the right to select the managing underwriter or underwriters for the offering.
Section 2.08
Priority
.
If a registration under this
Article II
involves an underwritten offering and the managing underwriter(s) in its good faith
judgment advises the Company that the number of Registrable Securities requested to be included in the Registration Statement by
the Requesting Holders exceeds the number of securities that can be sold without adversely affecting the price, timing, distribution
or sale of securities in the offering (the “
Underwriter’s Maximum Number
”), the Company shall be required
to include in such Registration Statement only such number of securities as is equal to the Underwriter’s Maximum Number
and the Company and the Requesting Holders shall participate in such offering in the following order of priority:
(a)
First,
the Company shall be obligated and required to include in the Registration Statement the number of Registrable Securities that
the Requesting Holders have requested to be included in the Registration Statement and that does not exceed the Underwriter’s
Maximum Number; provided that the Registrable Securities to be included in the Registration Statement shall be allocated among
all the Requesting Holders in proportion, as nearly as practicable, to the respective number of Registrable Securities held by
them on the date of the request for registration pursuant to
Article II
. If any Requesting Holder would thus be entitled
to include more Registrable Securities than such Requesting Holder requested to be registered, the excess shall be allocated among
other Requesting Holders pro rata in the manner described in the preceding sentence.
(b)
Second,
the Company shall be entitled to include in such Registration Statement and underwriting that number of shares of Common Stock
and/or other securities of the Company that it proposes to offer and sell for its own account or the account of any other Person
to the full extent of the remaining portion of the Underwriter’s Maximum Number.
Article
III
Section 3.01
Piggyback
Registration Rights
. If the Company proposes to register any of its equity securities under the Securities Act for sale to
the public, (other than (i) in connection with a registration of any employee benefit, retirement or similar plan, (ii) with respect
to a transaction pursuant to Rule 145 under the Securities Act, or (iii) in connection with an exchange offer), whether or not
for sale for its own account, each such time it will give written notice to all Holders of its intention to do so no less than
30 days prior to the anticipated filing date. Upon the written request received by the Company from any Holder no later than the
15th day after receipt by such Holder of the notice sent by the Company (which request shall state the intended method of disposition
thereof), the Company will use best efforts to cause the Registrable Securities as to which registration shall have been so requested
to be included in the securities to be covered by such Registration Statement, all to the extent required to permit the sale or
other disposition by each Holder (in accordance with its written request) (each, a “
Participating Holder
”) of
such Registrable Securities so registered;
provided, however
, that the Company may at any time prior to the effectiveness
of any such Registration Statement, in its sole discretion and upon written notice to the Participating Holders, abandon any proposed
offering by the Company in which any Holder had requested to participate. The number of Registrable Securities to be included in
such a registration may be reduced or eliminated if and to the extent, in the case of an underwritten offering, the managing underwriter
(which shall be an underwriter reasonably acceptable to the Participating Holders in the case of any underwritten offering) shall
advise the Company that such inclusion would materially jeopardize the successful marketing of the securities (including the Registrable
Securities) proposed to be sold therein;
provided, however,
that such number of shares of Registrable Securities shall not
be reduced if any securities included in such registration are included other than for the account of the Company unless the shares
included in the Registration for the account of such Persons are also reduced on a pro rata basis.
Section 3.02
Priority
.
If a registration under this Article III involves an underwritten offering and the managing underwriter(s) in its good faith judgment
advises the Company that the number of Registrable Securities requested to be included in the Registration Statement by the Participating
Holders exceeds the Underwriter’s Maximum Number, the Company shall be required to include in such Registration Statement
only such number of securities as is equal to the Underwriter’s Maximum Number and the Company and the Participating Holders
shall participate in such offering in the following order of priority:
(a)
First,
the Company shall be entitled to include in such Registration Statement the equity securities that the Company proposes to offer
and sell for its own account in such registration and that does not exceed the Underwriter’s Maximum Number;
(b)
Second,
the Company shall be obligated and required to include in such Registration Statement that number of Registrable Securities that
the Participating Holders shall have requested to be included in such offering to the full extent of the remaining portion of the
Underwriter’s Maximum Number, provided, that if the Registrable Securities of the Participating Holders exceeds such remaining
portion of the Underwriter’s Maximum Number, the Registrable Securities shall be allocated among all Participating Holders
requesting to be included in such offering in proportion, as nearly as practicable, to the respective number of Registrable Securities
held by them on the date of the Company’s notice pursuant to
Section 3.01
. If any Participating Holder would thus
be entitled to include more Registrable Securities than such Participating Holder requested to be registered, the excess shall
be allocated among other Participating Holders pro rata in the manner described in the preceding sentence;
(c)
Third,
the Company shall be entitled to include in such Registration Statement that number of equity securities that the Company proposes
to offer and sell for the account of any other Person, pursuant to piggyback registration rights or otherwise, to the full extent
of the remaining portion of the Underwriter’s Maximum Number.
Section 3.03
Not
a Demand Registration
. No registration of Registrable Securities effected under this
Article III
shall relieve the Company
of its obligation to effect a registration of Registrable Securities pursuant to
Article II
.
Article
IV
Section 4.01
Registration
Procedures
. If and whenever the Company is required pursuant to this Agreement to effect the registration of any of the Registrable
Securities under the Securities Act, the Company will, as expeditiously as possible:
(a)
prepare
and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for the period requisite to permit the disposition
of the Registrable Securities to be so registered;
(b)
furnish
to each Selling Holder and to each underwriter such number of copies of the Registration Statement and the prospectus included
therein (including each preliminary prospectus and each document incorporated by reference therein to the extent then required
by the rules and regulations of the Commission) as such Persons may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities covered by such Registration Statement;
(c)
if
applicable, use best efforts to register or qualify the Registrable Securities covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as the Selling Holders shall reasonably request, provided that the Company will
not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to
take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject;
(d)
immediately
notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act,
of the happening of any event as a result of which the prospectus contained 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 the light of the circumstances then existing and as promptly as practicable amend
or supplement the prospectus or take other appropriate action so that the prospectus does 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 the light of the circumstances then existing;
(e)
make
available for inspection by the Selling Holders designated by a majority thereof, and any attorney, accountant or other agent retained
by such representative of the Selling Holders (the “
Inspectors
”), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the “
Records
”), and cause the Company’s
officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with such
Registration Statement;
(f)
cause
all of the Registrable Securities to be listed on the New York Stock Exchange MKT if the Common Stock continues to be so listed;
(g)
use
best efforts to keep effective and maintain for the period of distribution, qualification, approval or listing obtained to cover
the Registrable Securities as may be necessary for the Selling Holders to dispose thereof and shall from time to time amend or
supplement any prospectus used in connection therewith to the extent necessary in order to comply with applicable law;
(h)
use
best efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to enable the Selling Holders to consummate the disposition
of such Registrable Securities; and
(i)
take
such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite, facilitate
or consummate the disposition of such Registrable Securities.
Section 4.02
Furnish
Information
. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement
that the Selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by
them and the intended method of disposition of such securities as shall be reasonably required to effect the registration of their
Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.
Section 4.03
Expenses.
(a)
“
Registration
Expenses
” means all expenses incident to the Company’s performance under or compliance with this Agreement, including
without limitation, all registration and filing fees, blue sky fees and expenses, printing expenses, listing fees, fees and disbursements
of counsel and independent public accountants for the Company, fees of the Financial Industry Regulatory Authority, Inc., transfer
taxes, fees of transfer agents and registrars, costs of insurance and reasonable out-of-pocket expenses (including without limitation,
reasonable legal fees of one counsel for all Selling Holders), but excluding any Selling Expenses. “
Selling Expenses
”
means all underwriting fees, discounts and selling commissions allocable to the sale of the Registrable Securities.
(b)
The
Company will pay all Registration Expenses in connection with each Registration Statement filed pursuant to this Agreement, whether
or not the Registration Statement becomes effective, and the Selling Holders shall pay all Selling Expenses in connection with
any Registrable Securities registered pursuant to this Agreement.
Section 4.04
Underwriting
Requirements
. The Company shall not be required under
Section 3.01
to include any of the Registrable Securities in an
underwritten offering of the Company’s securities unless the Participating Holders accept the terms of the underwriting as
agreed upon between the Company and the underwriters;
provided, however
, that any such agreement shall be reasonably satisfactory
in substance and form to each such Holder and the underwriters and contain such representations and warranties by the Company (for
the benefit of such Holders) and such other terms as are generally prevailing in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in
Section 4.06
below, and no Holder shall be required to make in any
such agreement any representations or warranties to or agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, such Holder’s Registrable Securities and such Holder’s intended method
of distribution and any other representation required by law. In the case of any underwritten offering, the Company shall also
furnish to each Participating Holder a signed counterpart, addressed to such Holder, of (a) an opinion of counsel for the Company,
dated the date of dated the date of the closing under the underwriting agreement), reasonably satisfactory in form and substance
to the Participating Holders, and (b) a “comfort” letter dated the date of the closing under the underwriting agreement,
signed by the independent public accountants who have certified the Company’s financial statements included in such registration
statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants’ letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the
underwriters in underwritten public offerings of securities and, in the case of the accountants’ letter, such other financial
matters, and, in the case of the legal opinion, such other legal matters, as the Participating Holders may reasonably request.
Section 4.05
Delay
of Registration
. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration
of the Company as the result of any controversy that might arise with respect to the interpretation or implementation of this Agreement.
Section 4.06
Indemnification.
(a)
In
the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless each Selling Holder thereunder and each Person, if any, who controls such Selling Holder within the
meaning of the Securities Act and the Exchange Act, against any losses, claims, damages or liabilities (including reasonable attorneys’
fees) (“
Losses
”), joint or several, to which such Selling Holder or controlling Person may become subject under
the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which
such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading,
and will reimburse or advance, if so requested, each such Selling Holder and each such controlling Person for any legal or other
expenses reasonably incurred or to be incurred by them in connection with investigating or defending any such Loss or actions;
provided
,
however
, that the Company will not be liable in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by such Selling Holder, such underwriter or such controlling Person in
writing specifically for use in such Registration Statement or prospectus.
(b)
Each
Selling Holder agrees to indemnify and hold harmless the Company, its directors, officers, employees and agents and each Person,
if any, who controls the Company within the meaning of the Securities Act or of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Selling Holder, but only with respect to information regarding such Selling Holder furnished
in writing by or on behalf of such Selling Holder expressly for inclusion in any Registration Statement or prospectus relating
to the Registrable Securities, or any amendment or supplement thereto;
provided
,
however
, that the liability of such
Selling Holder shall not be greater in amount than the dollar amount of the proceeds received by such Selling Holder from the sale
of the Registrable Securities giving rise to such indemnification, except in the case of the willful misconduct of the Selling
Holder.
(c)
Promptly
after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified
party. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not
be liable to such indemnified party under this
Section 4.06
for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel as so elected;
provided
,
however
, that, (i) if the indemnifying party has failed to assume the defense and employ counsel or (ii)
if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified
party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or
additional to those available to the indemnifying party or that the interests of the indemnified party reasonably may be deemed
to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate
counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the expenses and fees
of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party is incurred.
The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled
with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified
Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying
Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been
a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an
unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from
all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission
of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
(d)
If
the indemnification provided for in this
Section 4.06
is unavailable to the Company or the Selling Holders or is insufficient
to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a result of such Losses as between the Company on the
one hand and each Selling Holder on the other, in such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and of each Selling Holder on the other in connection with the statements or omissions which resulted in such Losses,
as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and each Selling Holder
on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statements of a material
fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such
party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement
or omission.
No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person
who is not guilty of such fraudulent misrepresentation.
Article
V
Section 5.01
Communications
.
All notices and other communications provided for or permitted hereunder shall be made in writing by electronic facsimile or electronic
transmission, courier service or personal delivery;
(a)
if
to a Holder, at the most current address given by such holder to the Company in accordance with the provisions of this
Section
5.01
,
(b)
if
to the Company, initially at its address set forth in its reports filed with the Commission, and
(c)
for
each, thereafter at such other address, notice of which is given in accordance with the provisions of this
Section 5.01
.
All such notices and communications
shall be deemed to have been received at the time delivered by hand, if personally delivered; when receipt acknowledged, if by
electronic facsimile or electronic transmission; and on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Section 5.02
Successor
and Assigns
. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties.
Section 5.03
Counterparts
.
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 5.04
Headings
.
The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
Section 5.05
Governing
Law
. THE LAWS OF THE STATE OF TEXAS SHALL GOVERN THIS AGREEMENT WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 5.06
Severability
of Provisions
. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting
or impairing the validity or enforceability of such provision in any other jurisdiction.
Section 5.07
Entire
Agreement
. This Agreement, together with the Purchase Agreement and the other documents provided for therein are intended by
the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company
with respect to the securities sold pursuant to the Purchase Agreement. This Agreement, the Purchase Agreement and the other documents
provided for therein supersede all prior agreements and understandings between the parties with respect to such subject matter
except as specified in the Purchase Agreement.
Section 5.08
Attorneys’
Fees
. In any action or proceeding brought to enforce any provision of this Agreement, the successful party shall be entitled
to recover reasonable attorneys’ fees in addition to its costs and expenses and any other available remedy.
Section 5.09
Amendment
.
This Agreement may be amended only by means of a written amendment signed by the Company and by the Holders of a majority of the
Registrable Securities.
Section 5.10
Assignment
of Rights
. The rights of any Holder under this Agreement may not be assigned to any Person without the prior written consent
of the Company.
[
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
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COMPANY:
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DGSE COMPANIES, INC., a Nevada corporation
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By:
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Name: Matthew Peakes
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Title: Chief Executive Officer
and President
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STOCKHOLDERS:
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ELEMETAL, LLC, a Delaware limited liability company
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By:
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Name: William E. LeRoy
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Title: President/CEO
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NTR METALS, LLC, a Texas limited liability company
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By:
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Name:
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Title:
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R
egistration
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APPENDIX E
APPENDIX F
DGSE COMPANIES, INC.
2016 EQUITY INCENTIVE PLAN
ARTICLE I. ESTABLISHMENT AND PURPOSE
1.1 Establishment.
DGSE Companies, Inc., a Nevada corporation (“DGSE”), hereby establishes the DGSE Companies, Inc. 2016 Equity Incentive
Plan for the benefit of certain officers, directors, employees, consultants and others performing services for DGSE and its Affiliates,
as set forth in this Plan.
1.2 Purpose.
The purposes of this Plan are to attract and retain highly qualified individuals to perform services for DGSE and its Affiliates,
to further align the interests of those individuals with those of the shareholders of DGSE, and to more closely link compensation
with the performance of DGSE and its Affiliates. DGSE is committed to creating long-term shareholder value. DGSE’s compensation
philosophy is based on the belief that DGSE can best create shareholder value if employees, officers, directors, consultants and
others performing services for DGSE and its Affiliates act and are rewarded as business owners. DGSE believes that an equity stake
through equity compensation programs effectively aligns service provider and shareholder interests by motivating and rewarding
performance that will enhance shareholder value.
1.3 Effectiveness
and Term.
This Plan shall become effective on August 23, 2016, which is the date of its adoption by the Board (the “Effective
Date”), provided that the Plan is approved within 12 months following such date by the holders of at least a majority of
the votes cast at an annual or special meeting of the shareholders of DGSE duly held in accordance with applicable law. If the
Plan is not so approved by DGSE’s shareholders, the Plan will terminate and any Awards granted hereunder will be null and
void. Unless terminated earlier in accordance with the preceding sentence or by the Board pursuant to Section 14.1, this Plan
shall terminate on the day prior to the tenth anniversary of the Effective Date.
ARTICLE II. DEFINITIONS
2.1
“
Affiliate
”
means (a) with respect to Incentive Stock Options, a “parent corporation” or a “subsidiary corporation”
of DGSE, as those terms are defined in Sections 424(e) and (f) of the Code, respectively, and (b) with respect to other Awards,
an organization that is aggregated and treated as a single employer with DGSE under Section 414(b) of the Code (controlled group
of corporations) or Section 414(c) of the Code (group of trades or businesses under common control), as applicable.
2.2
“
Award
”
means an award granted to a Participant in the form of Options, SARs, Restricted Stock, Restricted Stock Units, Performance Awards,
Stock Awards or Other Incentive Awards, whether granted singly or in combination.
2.3
“
Award
Agreement
” means a written agreement between DGSE and a Participant that sets forth the terms, conditions, restrictions
and limitations applicable to an Award.
2.4
“
Board
”
means the Board of Directors of DGSE.
2.5 “Cash
Dividend Right”
means a contingent right, granted in tandem with a specific Restricted Stock Unit Award, to receive an
amount in cash equal to the cash distributions made by DGSE with respect to a share of Common Stock during the period such Award
is outstanding.
2.6
“
Cause
”
means, unless otherwise defined in an Employee Agreement entered into by the Participant, any of the following: (a) a Participant’s
conviction of, or plea of nolo contendere to, any felony or to any crime or offense causing substantial harm to the Company or
involving acts of theft, fraud, embezzlement, moral turpitude or similar conduct; (b) a Participant’s repeated intoxication
by alcohol or drugs during the performance of his duties in a manner that materially and adversely affects the Participant’s
performance of such duties; (c) malfeasance in the conduct of the Participant’s duties, including, but not limited to
(i) willful and intentional misuse or diversion of funds or assets of the Company, (ii) embezzlement or (iii) fraudulent
or willful and material misrepresentations or concealments on any written reports submitted to the Company; (d) a Participant’s
material violation of any provision of any employment, nonsolicitation, noncompetition or other agreement with, or policy of, the
Company; or (e) a Participant’s material failure to perform the duties of the Participant’s employment or material
failure to follow or comply with the reasonable and lawful written directives of the Board or senior officers of DGSE, in any case
under clause (d) or (e) only after the Participant shall have been informed in writing of such material failure and given a period
of not more than 30 days to remedy same.
2.7
“
Change
in Control
” means the occurrence of any of the following events after the Effective Date:
(i) Any
one person, or more than one person acting as a group (other than the Elemetal Parties), acquires ownership of stock of DGSE that,
together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power
of the stock of DGSE.
(ii) DGSE
is merged, consolidated or reorganized into or with another corporation or other legal person (an “Acquiror”) and
as a result of such merger, consolidation or reorganization, less than 51% of the outstanding voting securities or other capital
interests of the surviving, resulting or acquiring corporation or other legal person are owned in the aggregate by the stockholders
of DGSE, directly or indirectly, immediately prior to such merger, consolidation or reorganization, other than by the Acquiror
or any corporation or other legal person controlling, controlled by or under common control with the Acquiror.
(iii) A
majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed
by a majority of the members of the Board before the date of the appointment or election.
(iv) Any
one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) assets from DGSE that have a total gross fair market value equal to or
more than 80% of the total gross fair market value of all of the assets of DGSE immediately before such acquisition or acquisitions.
A transfer of assets shall not be treated as a “Change in Control” when the transfer is made to an entity that is controlled
by the shareholders of DGSE.
Notwithstanding the preceding provisions of
this Section 2.7, with respect to any Award that consists of deferred compensation within the meaning of Section 409A of the Code,
unless provided otherwise in the Award Agreement, a “Change in Control” shall not be deemed to have occurred with respect
to an event unless such event also constitutes a “change in control event,” as defined in Treasury Regulation Section
1.409A-3(i)(5).
2.8
“
Code
”
means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions
and regulations.
2.9
“
Committee
”
means the Compensation Committee of the Board or such other committee of the Board as may be designated by the Board to administer
the Plan, which committee shall consist of two or more members of the Board; provided, however, that with respect to the application
of the Plan to Awards made to Outside Directors, the “Committee” shall be the Board. During such time as the Common
Stock is registered under Section 12 of the Exchange Act, each member of the Committee shall be an Outside Director. To the extent
that no Committee exists that has the authority to administer the Plan, the functions of the Committee shall be exercised by the
Board. If for any reason the appointed Committee does not meet the requirements of Rule 16b-3 or Section 162(m) of the Code (to
the extent applicable), such noncompliance with such requirements shall not affect the validity of Awards, grants, interpretations
or other actions of the Committee.
2.10
“
Common
Stock
” means the common stock of DGSE, or any stock or other securities hereafter issued or issuable in substitution
or exchange for the Common Stock.
2.11
“
Company
”
means DGSE or any Affiliate.
2.12
“
Consultant
”
means any natural person who is an individual consultant or advisor of the Company and who is not an Employee or director, provided
that bona fide services are rendered by the consultant or advisor and such services are not in connection with the offer or sale
of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for DGSE’s
securities.
2.13
“
Disability
”
means (a) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than
12 months or (b) if the Company has an accident or health plan covering its employees, the Participant is, by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident
or health plan covering employees of the Company; provided, however, that with respect to Options and SARs that are not deferred
compensation that is subject to Section 409A, “Disability” shall mean disabled within the meaning of Code Section 22(e)(3).
2.14
“
Dividend
Unit Right
” means a contingent right, granted in tandem with a specific Restricted Stock Unit Award, to have an additional
number of Restricted Stock Units credited to a Participant in respect of the Award equal to the number of shares of Common Stock
that could be purchased at Fair Market Value with the amount of each cash distribution made by DGSE with respect to a share of
Common Stock during the period such Award is outstanding.
2.15
“
Effective
Date
” means the date this Plan becomes effective as provided in Section 1.3.
2.16
“
Elemetal
Parties
” means Elemetal, LLC, a Delaware limited liability company, NTR Metals, LLC, a Texas limited liability company
and any of their affiliates.
2.17
“
Employee
”
means an employee of the Company; provided, however, that the term “Employee” does not include an Outside Director
or an individual performing services for the Company who is treated for federal tax purposes as an independent contractor at the
time of performance of services.
2.18
“
Employee
Agreement
” means any agreement between the Company and an Employee containing one or more of the following agreements
or covenants by the Employee: (i) an employment agreement, (ii) an agreement by the Employee to keep confidential certain information,
(iii) an agreement or covenant to refrain from competing with the Company, (iv) an agreement or covenant to refrain from soliciting
employees, contractors, customers, vendors or suppliers of the Company, or (v) an agreement to disclose and assign to the Company
certain intellectual property, including without limitation, ideas, inventions, discoveries, processes, designs, methods, substances,
articles, computer programs, and improvements.
2.19
“
Exchange
Act
” means the Securities Exchange Act of 1934, as amended.
2.20
“
Fair
Market Value
” means (a) if the Common Stock is listed on any established stock exchange or a national market system,
including without limitation Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq Capital Market, NYSE MKT LLC and the New
York Stock Exchange, the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange
or system for the date of the determination (or if there was no quoted price for such date, then for the last preceding business
day on which there was a quoted price), as reported in
The Wall Street Journal
or such other source as the Committee deems
reliable; (b) if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported,
the mean between the high bid and low asked prices for the Common Stock for the date of the determination, as reported in
The
Wall Street Journal
or such other source as the Committee deems reliable; or (c) if the Common Stock is not reported or quoted
by any such organization, (i) with respect to Incentive Stock Options, the fair market value of the Common Stock as determined
in good faith by the Committee within the meaning of Section 422 of the Code or (ii) with respect to other Awards, the fair market
value of the Common Stock as determined in good faith by the Committee using a “reasonable application of a reasonable valuation
method” within the meaning of Treasury Regulation § 1.409A-1(b)(5)(iv)(B).
2.21
“
Grant
Date
” means the date an Award is determined to be effective by the Committee upon the grant of such Award.
2.22
“
Incentive
Stock Option
” means an Option that is intended to meet the requirements of Section 422(b) of the Code.
2.23
“
Nonqualified
Stock Option
” means an Option that is not an Incentive Stock Option.
2.24
“
Option
”
means an option to purchase shares of Common Stock granted to a Participant pursuant to Article VII. An Option may be either an
Incentive Stock Option or a Nonqualified Stock Option, as determined by the Committee.
2.25
“
Other
Incentive Award
” means an incentive award granted to a Participant pursuant to Article XII.
2.26 “Outside
Director”
means a member of the Board who (a) meets the independence requirements of the principal exchange or quotation
system upon which the shares of Common Stock are listed or quoted, (b) from and after the date on which the remuneration paid pursuant
to the Plan becomes subject to the deduction limitation under Section 162(m) of the Code, qualifies as an “outside director”
under Section 162(m) of the Code, (c) qualifies as a “non-employee director” of DGSE under Rule 16b-3, and (d) satisfies
independence criteria under any other applicable laws or regulations relating to the issuance of shares of Common Stock to Employees.
2.27
“
Participant
”
means an Employee, director (including an Outside Director), Consultant or other individual performing services for the Company
that has been granted an Award; provided, however, that no Award that may be settled in Common Stock may be issued to a Participant
that is not a natural person.
2.28
“
Performance
Award
” means an Award granted to a Participant pursuant to Article XI to receive cash or Common Stock conditioned in
whole or in part upon the satisfaction of specified performance criteria.
2.29
“
Permitted
Transferee
” shall have the meaning given such term in Section 15.4(c).
2.30
“
Plan
”
means the DGSE Companies, Inc. 2016 Equity Incentive Plan, as in effect from time to time.
2.31
“
Restricted
Period
” means the period established by the Committee with respect to an Award of Restricted Stock or Restricted Stock
Units during which the Award remains subject to forfeiture.
2.32
“
Restricted
Stock
” means a share of Common Stock granted to a Participant pursuant to Article IX that is subject to such terms, conditions
and restrictions as may be determined by the Committee.
2.33
“
Restricted
Stock Unit
” means a fictional share of Common Stock granted to a Participant pursuant to Article X that is subject to
such terms, conditions and restrictions as may be determined by the Committee.
2.34
“
Rule
16b-3
” means Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule or regulation that may be
in effect from time to time.
2.35
“
SEC
”
means the United States Securities and Exchange Commission, or any successor agency or organization.
2.36
“
Section
409A
” means Section 409A of the Code and/or the Treasury Regulations issued thereunder.
2.37
“
Securities
Act
” means the Securities Act of 1933, as amended.
2.38
“
Stock
Appreciation Right
” or
“
SAR
” means a right granted to a Participant pursuant to Article VIII
with respect to a share of Common Stock to receive upon exercise cash, Common Stock or a combination of cash and Common Stock,
equal to the appreciation in value of a share of Common Stock.
2.39
“
Stock
Award
” means a share of Common Stock granted to a Participant pursuant to Article XII that is not subject to vesting
or forfeiture restrictions.
2.40
“
DGSE
”
means DGSE Companies, Inc., a Nevada corporation, or any successor thereto.
ARTICLE III. PLAN ADMINISTRATION
3.1 Plan
Administrator and Discretionary Authority.
This Plan shall be administered by the Committee. The Committee shall have total
and exclusive responsibility to control, operate, manage and administer this Plan in accordance with its terms. The Committee shall
have all the authority that may be necessary or helpful to enable it to discharge its responsibilities with respect to this Plan.
Without limiting the generality of the preceding sentence, the Committee shall have the exclusive right to (a) interpret this Plan
and the Award Agreements executed hereunder, (b) decide all questions concerning eligibility for, and the amount of, Awards granted
under this Plan, (c) construe any ambiguous provision of this Plan or any Award Agreement, (d) prescribe the form of Award Agreements,
(e) correct any defect, supply any omission or reconcile any inconsistency in this Plan or any Award Agreement, (f) issue
administrative guidelines as an aid in administering this Plan and make changes in such guidelines as the Committee from time to
time deems proper, (g) make regulations for carrying out this Plan and make changes in such regulations as the Committee from time
to time deems proper, (h) determine whether Awards should be granted singly or in combination, (i) to the extent permitted under
this Plan, grant waivers of Plan terms, conditions, restrictions and limitations, (j) accelerate the exercise, vesting or payment
of an Award, (k) require Participants to hold a stated number or percentage of shares of Common Stock acquired pursuant to an Award
for a stated period, and (l) take any and all other actions the Committee deems necessary or advisable for the proper operation
or administration of this Plan. The Committee shall have authority in its sole discretion with respect to all matters related to
the discharge of its responsibilities and the exercise of its authority under this Plan, including without limitation its construction
of the terms of this Plan and its determination of eligibility for participation in, and the terms of Awards granted under, this
Plan. The decisions of the Committee and its actions with respect to this Plan shall be final, conclusive and binding on all persons
having or claiming to have any right or interest in or under this Plan, including without limitation Participants and their respective
Permitted Transferees, estates, beneficiaries and legal representatives. In the case of an Award intended to be eligible for the
performance-based compensation exemption under Section 162(m) of the Code, the Committee shall exercise its discretion consistent
with qualifying the Award for such exemption. In the case of an Award intended to be exempt from or compliant with Section 409A,
the Committee shall exercise its discretion consistent with such intent. The Committee shall have the authority, in its sole and
absolute discretion, to delegate its duties and functions under the Plan to the Chief Executive Officer or other named executive
officer of DGSE or such other agents as it may appoint from time to time, provided the Committee may not delegate its duties where
such delegation would violate state corporate law or with respect to making Award to, or otherwise with respect to Awards granted
to, individuals who are covered employees receiving Awards that are intended to constitute “performance-based compensation”
within the meaning of Section 162(m) of the Code.
3.2 Liability;
Indemnification.
No member of the Committee, nor any person to whom it has delegated authority, shall be personally liable
for any action, interpretation or determination made in good faith with respect to this Plan or Awards granted hereunder, and each
member of the Committee (or delegatee of the Committee) shall be fully indemnified and protected by DGSE with respect to any liability
he may incur with respect to any such action, interpretation or determination, to the maximum extent permitted by applicable law.
ARTICLE IV. SHARES SUBJECT TO THE PLAN
4.1 Available
Shares.
(a) Subject
to adjustment as provided in Section 4.2, the maximum number of shares of Common Stock that shall be available for grant of Awards
under this Plan shall be 1,100,000 shares of Common Stock.
(b) The
maximum aggregate number of shares of Common Stock that may be issued pursuant to Incentive Stock Options is 1,100,000 shares.
The maximum number of shares of Common Stock that may be subject to Options and SARs granted under the Plan to any one Participant
during a fiscal year is 500,000 shares. The maximum number of shares of Common Stock that may be subject to Awards (other than
Options and SARs) granted under the Plan to any one Participant during a fiscal year is 200,000 shares. The limitations provided
in this Section 4.1(b) shall be subject to adjustment as provided in Section 4.2.
(c) Shares
of Common Stock issued pursuant to this Plan may be original issue or treasury shares or any combination of the foregoing, as the
Committee, in its sole discretion, shall from time to time determine. During the term of this Plan, DGSE will at all times reserve
and keep available such number of shares of Common Stock as shall be sufficient to satisfy the requirements of this Plan. If, after
reasonable efforts, which efforts shall not include registration of the Plan or Awards under the Securities Act, DGSE is unable
to obtain authority from any applicable regulatory body, which authorization is deemed necessary by legal counsel for DGSE for
the lawful issuance of shares under the Plan, DGSE shall be relieved of any liability with respect to its failure to issue and
sell the shares for which such requisite authority was so deemed necessary unless and until such authority is obtained.
(d) Notwithstanding
any provision of this Plan to the contrary, the Board or the Committee shall have the right to substitute or assume awards in connection
with mergers, reorganizations, separations or other transactions to which Section 424(a) of the Code applies, provided such substitutions
or assumptions are permitted by Section 424 of the Code (or, if applicable, Section 409A) and the regulations promulgated thereunder.
4.2 Adjustments
for Recapitalizations and Reorganizations.
Subject to Article XIII, if there is any change in the number or kind of shares
of Common Stock outstanding (a) by reason of a stock dividend, spin-off, recapitalization, stock split or combination or exchange
of shares, (b) by reason of a merger, reorganization or consolidation, (c) by reason of a reclassification or change in par value
or (d) by reason of any other extraordinary or unusual event affecting the outstanding Common Stock as a class without DGSE’s
receipt of consideration, or if the value of outstanding shares of Common Stock is reduced as a result of a spin-off or DGSE’s
payment of an extraordinary cash dividend, or distribution, or dividend or distribution consisting of any assets of DGSE other
than cash, the maximum number and kind of shares of Common Stock available for issuance under this Plan, the maximum number and
kind of shares of Common Stock for which any individual may receive Awards in any fiscal year or under this Plan, the number and
kind of shares of Common Stock covered by outstanding Awards, and the price per share or the applicable market value or performance
target of such Awards shall be appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or
change in the kind or value of, issued shares of Common Stock to preclude, to the extent practicable, the enlargement or dilution
of rights under such Awards; provided, however, that any fractional shares resulting from such adjustment shall be eliminated.
Notwithstanding the provisions of this Section 4.2, (i) the number and kind of shares of Common Stock available for issuance as
Incentive Stock Options under this Plan shall be adjusted only in accordance with Sections 422 and 424 of the Code and the regulations
thereunder, and (ii) outstanding Awards and Award Agreements shall be adjusted in accordance with (A) Sections 422 and 424 of the
Code and the regulations thereunder with respect to Incentive Stock Options and (B) Section 409A with respect to Nonqualified Stock
Options, SARs and, to the extent applicable, other Awards.
4.3 Adjustments
for Awards.
The Committee shall have sole discretion to determine the manner in which shares of Common Stock available for
grant of Awards under this Plan are counted. Without limiting the discretion of the Committee under this Section 4.3, unless otherwise
determined by the Committee, the following rules shall apply for the purpose of determining the number of shares of Common Stock
available for grant of Awards under this Plan:
(a)
Options,
Restricted Stock and Stock Awards.
The grant of Options, Restricted Stock or Stock Awards shall reduce the number of shares
of Common Stock available for grant of Awards under this Plan by the number of shares of Common Stock subject to such an Award.
(b)
SARs.
The grant of SARs that may be paid or settled (i) only in Common Stock or (ii) in either cash or Common Stock shall reduce the
number of shares available for grant of Awards under this Plan by the number of shares subject to such an Award.
The grant
of SARs that may be paid or settled only for cash shall not affect the number of shares available for grant of Awards under this
Plan.
(c)
Restricted
Stock Units.
The grant of Restricted Stock Units (including those credited to a Participant in respect of a Dividend Unit Right)
that may be paid or settled (i) only in Common Stock or (ii) in either cash or Common Stock shall reduce the number of shares available
for grant of Awards under this Plan by the number of shares subject to such an Award. The grant of Restricted Stock Units that
may be paid or settled only for cash shall not affect the number of shares available for grant of Awards under this Plan.
(d)
Performance
Awards and Other Incentive Awards.
The grant of a Performance Award or Other Incentive Award in the form of Common Stock or
that may be paid or settled (i) only in Common Stock or (ii) in either Common Stock or cash shall reduce the number of shares available
for grant of Awards under this Plan by the number of shares subject to such an Award. The grant of a Performance Award or Other
Incentive Award that may be paid or settled only for cash shall not affect the number of shares available for grant of Awards under
this Plan.
(e)
Cancellation,
Forfeiture and Termination.
If any Award referred to in Sections 4.3(a), (b), (c) or (d) (other than an Award that may be paid
or settled only for cash) is canceled or forfeited, or terminates, expires or lapses, for any reason, the shares then subject to
such Award shall again be available for grant of any Awards under this Plan.
ARTICLE V. ELIGIBILITY
The Committee shall select
Participants from those Employees, directors (including Outside Directors), Consultants and other individuals providing services
to the Company that, in the opinion of the Committee, are in a position to make a positive contribution to the success of the Company.
Once a Participant has been selected for an Award by the Committee, the Committee shall determine the type and size of Award to
be granted to the Participant and shall establish in the related Award Agreement the terms, conditions, restrictions and limitations
applicable to the Award, in addition to those set forth in this Plan and the administrative guidelines and regulations, if any,
established by the Committee.
ARTICLE VI. FORM OF AWARDS
6.1 Form
of Awards.
Awards may be granted under this Plan, in the Committee’s sole discretion, in the form of Options pursuant
to Article VII, SARs pursuant to Article VIII, Restricted Stock pursuant to Article IX, Restricted Stock Units pursuant to Article
X, Performance Awards pursuant to Article XI and Stock Awards and Other Incentive Awards pursuant to Article XII, or any combination
thereof. All Awards shall be subject to the terms, conditions, restrictions and limitations of this Plan. The Committee may, in
its sole discretion, subject any Award to such other terms, conditions, restrictions and/or limitations (including without limitation
the time and conditions of exercise, vesting or payment of an Award and restrictions on transferability of any shares of Common
Stock issued or delivered pursuant to an Award), provided they are not inconsistent with the terms of this Plan. The Committee
may, but is not required to, subject an Award to such conditions as it determines are necessary or appropriate to ensure that an
Award constitutes “qualified performance based compensation” within the meaning of Section 162(m) of the Code and the
regulations thereunder. Awards under a particular Article of this Plan need not be uniform, and Awards under more than one Article
of this Plan may be combined in a single Award Agreement. Any combination of Awards may be granted at one time and on more than
one occasion to the same Participant. Subject to compliance with applicable tax law (including Section 409A), an Award Agreement
may provide that a Participant may elect to defer receipt of income attributable to the exercise or vesting of an Award.
6.2 No
Repricing or Reload Rights.
Except for adjustments made pursuant to Section 4.2, no Award may be repriced, replaced, regranted
through cancellation or otherwise modified without shareholder approval, if the effect would be to reduce the exercise price for
the shares underlying such Award. The Committee may not cancel an outstanding Option having an exercise price that is known to
be more than the Fair Market Value of the Common Stock for the purpose of granting a replacement Award of a different type.
ARTICLE VII. OPTIONS
7.1 General.
Awards may be granted in the form of Options that may be Incentive Stock Options or Nonqualified Stock Options, or any combination
of both. Incentive Stock Options may be granted only to Employees. Subject to Article V, Nonqualified Stock Options may be granted
only to Employees, directors (including Outside Directors), Consultants or other individuals performing services for DGSE or a
corporation or other type of entity in a chain of corporations or other entities in which each corporation or other entity has
a “controlling interest” in another corporation or entity in the chain, starting with DGSE and ending with the corporation
or other entity for which the Employee, director (including an Outside Director) or other individual performs services. For purposes
of this Section 7.1, “controlling interest” means (a) in the case of a corporation, ownership of stock possessing at
least 50% of total combined voting power of all classes of stock entitled to vote of such corporation or at least 50% of the total
value of shares of all classes of stock of such corporation; (b) in the case of a partnership, ownership of at least 50% of the
profits interest or capital interest of such partnership; (c) in the case of a sole proprietorship, ownership of the sole proprietorship;
or (d) in the case of a trust or estate, ownership of an actuarial interest (as defined in Treasury Regulation § 1.414(c)-2(b)(2)(ii))
of at least 50% of such trust or estate.
7.2 Terms
and Conditions of Options.
An Option shall be exercisable in whole or in such installments and at such times as may be determined
by the Committee. The price at which a share of Common Stock may be purchased upon exercise of an Option shall be determined by
the Committee, but such exercise price shall not be less than 100% of the Fair Market Value per share of Common Stock on the Grant
Date unless the Option is granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals
who became Employees (or other service providers) as a result of a merger, consolidation, acquisition or other corporate transaction
involving the Company in a manner that complies with Section 409A of the Code with respect to a Nonqualified Stock Option or Section
422 of the Code with respect to an Incentive Stock Option. Except as otherwise provided in Section 7.3, the term of each Option
shall be as specified by the Committee; provided, however, that no Options shall be exercisable later than 10 years after the Grant
Date. Options may be granted with respect to Restricted Stock or shares of Common Stock that are not Restricted Stock, as determined
by the Committee in its sole discretion.
7.3 Restrictions
Relating to Incentive Stock Options.
(a) Options
granted in the form of Incentive Stock Options shall, in addition to being subject to the terms and conditions of Section 7.2,
comply with Section 422(b) of the Code. To the extent the aggregate Fair Market Value (determined as of the dates the respective
Incentive Stock Options are granted) of Common Stock with respect to which Incentive Stock Options are exercisable for the first
time by an individual during any calendar year under all incentive stock option plans of DGSE and its Affiliates exceeds $100,000,
such excess Incentive Stock Options shall be treated as options that do not constitute Incentive Stock Options. The Committee shall
determine, in accordance with the applicable provisions of the Code, which of a Participant’s Incentive Stock Options will
not constitute Incentive Stock Options because of such limitation and shall notify the Participant of such determination as soon
as practicable after such determination. The price at which a share of Common Stock may be purchased upon exercise of an Incentive
Stock Option shall be determined by the Committee, but such exercise price shall not be less than 100% of the Fair Market Value
of a share of Common Stock on the Grant Date. No Incentive Stock Option shall be granted to an Employee under this Plan if, at
the time such Option is granted, such Employee owns stock possessing more than 10% of the total combined voting power of all classes
of stock of DGSE or of its Affiliates unless (i) on the Grant Date of such Option, the exercise price of such Option is at least
110% of the Fair Market Value of the Common Stock subject to the Option and (ii) such Option by its terms is not exercisable after
the expiration of five years from the Grant Date of the Option.
(b) Each
Participant awarded an Incentive Stock Option shall notify DGSE in writing immediately after the date he or she makes a disqualifying
disposition of any shares of Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition
is any disposition (including any sale) of such Common Stock before the later of (i) two years after the Grant Date of the Incentive
Stock Option or (ii) one year after the date of exercise of the Incentive Stock Option.
7.4 Exercise
of Options.
(a) Subject
to the terms and conditions of this Plan, Options shall be exercised by the delivery of a written notice of exercise to DGSE, setting
forth the number of whole shares of Common Stock with respect to which the Option is to be exercised, accompanied by full payment
for such shares.
(b) Upon
exercise of an Option, the exercise price of the Option shall be payable to DGSE in full either (i) in cash or an equivalent
acceptable to the Committee, (ii) in the sole discretion of the Committee and in accordance with any applicable administrative
guidelines established by the Committee, (A) by tendering one or more previously acquired nonforfeitable, unrestricted shares of
Common Stock having an aggregate Fair Market Value at the time of exercise equal to the total exercise price or (B) by surrendering
a sufficient portion of the shares with respect to which the Option is exercised having an aggregate Fair Market Value at the time
of exercise equal to the total exercise price or (iii) in a combination of the forms specified in (i) or (ii) of this subsection.
(c) During
such time as the Common Stock is registered under Section 12 of the Exchange Act, to the extent permissible under applicable law,
payment of the exercise price of an Option may also be made, in the absolute discretion of the Committee, by delivery to DGSE or
its designated agent of an executed irrevocable option exercise form together with irrevocable instructions to a broker-dealer
to sell or margin a sufficient portion of the shares with respect to which the Option is exercised and deliver the sale or margin
loan proceeds directly to DGSE to pay the exercise price and any required withholding taxes.
(d) As
soon as reasonably practicable after receipt of written notification of exercise of an Option and full payment of the exercise
price and any required withholding taxes, DGSE shall (i) deliver to the Participant, in the Participant’s name or the name
of the Participant’s designee, a stock certificate or certificates in an appropriate aggregate amount based upon the number
of shares of Common Stock purchased under the Option or (ii) cause to be issued in the Participant’s name or the name of
the Participant’s designee, in book-entry form, an appropriate number of shares of Common Stock based upon the number of
shares purchased under the Option.
7.5 Termination
of Employment or Service.
Each Award Agreement embodying the Award of an Option may set forth the extent to which the Participant
shall have the right to exercise the Option following termination of the Participant’s employment or service with the Company.
Such provisions shall be determined by the Committee in its absolute discretion, need not be uniform among all Options granted
under this Plan and may reflect distinctions based on the reasons for termination of employment or service. In the event a Participant’s
Award Agreement embodying the Award of an Option does not set forth such termination provisions, the following termination provisions
shall apply with respect to such Award:
(a)
Termination
For Cause.
If the employment or service of a Participant shall terminate for Cause, each outstanding Option held by the Participant
shall automatically terminate as of the date of such termination of employment or service, and the right to exercise the Option
shall immediately terminate.
(b)
Termination
By Reason of Death or Disability.
In the event of a Participant’s termination of employment or service on account of
death or Disability while employed by or in the service of DGSE or an Affiliate, each outstanding Option shall remain outstanding
and may be exercised by the person who acquires the Option by will or the laws of descent and distribution, or by the Participant,
as the case may be, but only (i) within the one year period following the date of death or termination on account of Disability
(if otherwise prior to the date of expiration of the Option), and not thereafter, and (ii) to purchase the number of shares of
Common Stock, if any, that could be purchased upon exercise of the Option at the time of death or termination on account of Disability.
(c)
Termination
For Reasons Other Than Cause, Death or Disability.
If a Participant’s employment or service with DGSE or an Affiliate
is terminated voluntarily by the Participant or by action of DGSE or an Affiliate for reasons other than for Cause under circumstances
that are not covered by subsections (a) or (b) of this Section 7.5, an Option may be exercised, but only (i) within three
months after such termination (if otherwise prior to the date of expiration of the Option), and not thereafter, and (ii) to
purchase the number of shares of Common Stock, if any, that could be purchased upon exercise of the Option at the date of termination
of the Participant’s employment or service.
Notwithstanding the foregoing, except in the
case of a Participant’s death, an Option will not be treated as an Incentive Stock Option unless at all times beginning on
the Grant Date and ending on the day three months (one year in the case of a Participant who is “disabled” within the
meaning of Section 22(e)(3) of the Code) before the date of exercise of the Option, the Participant is an employee of DGSE or a
“parent corporation” or a “subsidiary corporation” of DGSE, as those terms are defined in Sections 424(e)
and (f) of the Code, respectively (or a corporation or a parent or subsidiary corporation of such corporation issuing or assuming
an option in a transaction to which Section 424(a) of the Code applies).
ARTICLE VIII. STOCK APPRECIATION RIGHTS
8.1 General.
(a) The
Committee may grant Awards in the form of SARs in such numbers and at such times as it shall determine. SARs shall vest and be
exercisable in whole or in such installments and at such times as may be determined by the Committee. The price at which SARs may
be exercised shall be determined by the Committee but shall not be less than 100% of the Fair Market Value per share of Common
Stock on the Grant Date unless the SARs are granted through the assumption of, or in substitution for, outstanding awards previously
granted to individuals who became Employees (or other service providers) as a result of a merger, consolidation, acquisition or
other corporate transaction involving the Company in a manner that complies with Section 409A of the Code. The term of each SAR
shall be as specified by the Committee; provided, however, that no SAR shall be exercisable later than 10 years after the Grant
Date. At the time of an Award of SARs, the Committee may, in its sole discretion, prescribe additional terms, conditions, restrictions
and limitations applicable to the SARs, including without limitation rules pertaining to the termination of employment or service
(by reason of death, permanent and total disability, or otherwise) of a Participant prior to exercise of the SARs, as it determines
are necessary or appropriate, provided they are not inconsistent with this Plan.
(b) Subject
to Article V, SARs may be granted only to Employees, directors (including Outside Directors), Consultants or other individuals
performing services for DGSE or a corporation or other type of entity in a chain of corporations or other entities in which each
corporation or other entity has a “controlling interest” in another corporation or entity in the chain, starting with
DGSE and ending with the corporation or other entity for which the Employee, director (including an Outside Director) or other
individual performs services. For purposes of this Section 8.1(b), “controlling interest” means (a) in the case of
a corporation, ownership of stock possessing at least 50% of total combined voting power of all classes of stock entitled to vote
of such corporation or at least 50% of the total value of shares of all classes of stock of such corporation; (b) in the case of
a partnership, ownership of at least 50% of the profits interest or capital interest of such partnership; (c) in the case of a
sole proprietorship, ownership of the sole proprietorship; or (d) in the case of a trust or estate, ownership of an actuarial interest
(as defined in Treasury Regulation § 1.414(c)-2(b)(2)(ii)) of at least 50% of such trust or estate.
8.2 Exercise
of SARs.
SARs shall be exercised by the delivery of a written notice of exercise to DGSE, setting forth the number of whole
shares of Common Stock with respect to which the Award is being exercised. Upon the exercise of SARs, the Participant shall be
entitled to receive an amount equal to the excess of the aggregate Fair Market Value of the shares of Common Stock with respect
to which the Award is exercised (determined as of the date of such exercise) over the aggregate exercise price of such shares.
Such amount shall be payable to the Participant in cash or in shares of Common Stock, as provided in the Award Agreement.
ARTICLE IX. RESTRICTED STOCK
9.1 General.
Awards may be granted in the form of Restricted Stock in such numbers and at such times as the Committee shall determine. The Committee
shall impose such terms, conditions and restrictions on Restricted Stock as it may deem advisable, including without limitation
prescribing the period over which and the conditions upon which the Restricted Stock may become vested or be forfeited and/or providing
for vesting upon the achievement of specified performance goals pursuant to a Performance Award. A Participant shall not be required
to make any payment for Restricted Stock unless required by the Committee pursuant to Section 9.2.
9.2 Purchased
Restricted Stock.
The Committee may in its sole discretion require a Participant to pay a stipulated purchase price for each
share of Restricted Stock.
9.3 Restricted
Period.
At the time an Award of Restricted Stock is granted, the Committee shall establish a Restricted Period applicable to
such Restricted Stock. Each Award of Restricted Stock may have a different Restricted Period in the sole discretion of the Committee.
9.4 Other
Terms and Conditions.
Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes.
Restricted Stock awarded to a Participant under this Plan shall be registered in the name of the Participant or, at the option
of DGSE, in the name of a nominee of DGSE, and shall be issued in book-entry form or represented by a stock certificate. Subject
to the terms and conditions of the Award Agreement, a Participant to whom Restricted Stock has been awarded shall have the right
to receive dividends thereon during the Restricted Period, to vote the Restricted Stock and to enjoy all other shareholder rights
with respect thereto, except that (a) DGSE shall retain custody of any certificates evidencing the Restricted Stock during the
Restricted Period and (b) the Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Restricted
Stock during the Restricted Period. A breach of the terms and conditions established by the Committee pursuant to the Award of
the Restricted Stock may result in a forfeiture of the Restricted Stock. At the time of an Award of Restricted Stock, the Committee
may, in its sole discretion, prescribe additional terms, conditions, restrictions and limitations applicable to the Restricted
Stock, including without limitation rules pertaining to the termination of employment or service (by reason of death, permanent
and total disability, retirement, cause or otherwise) of a Participant prior to expiration of the Restricted Period.
9.5 Miscellaneous.
Nothing in this Article shall prohibit the exchange of shares of Restricted Stock pursuant to a plan of merger or reorganization
for stock or other securities of DGSE or another corporation that is a party to the reorganization, provided that the stock or
securities so received in exchange for shares of Restricted Stock shall, except as provided in Article XIII, become subject to
the restrictions applicable to such Restricted Stock. Any shares of Common Stock received as a result of a stock split or stock
dividend with respect to shares of Restricted Stock shall also become subject to the restrictions applicable to such Restricted
Stock.
ARTICLE X. RESTRICTED STOCK UNITS
10.1 General.
Awards may be granted in the form of Restricted Stock Units in such numbers and at such times as the Committee shall determine.
The Committee shall impose such terms, conditions and restrictions on Restricted Stock Units as it may deem advisable, including
without limitation prescribing the period over which and the conditions upon which a Restricted Stock Unit may become vested or
be forfeited and/or providing for vesting upon the achievement of specified performance goals pursuant to a Performance Award.
Upon the lapse of restrictions with respect to each Restricted Stock Unit, the Participant shall be entitled to receive one share
of Common Stock or an amount of cash equal to the Fair Market Value of one share of Common Stock, as provided in the Award Agreement.
A Participant shall not be required to make any payment for Restricted Stock Units.
10.2 Restricted
Period.
At the time an Award of Restricted Stock Units is granted, the Committee shall establish a Restricted Period applicable
to such Restricted Stock Units. Each Award of Restricted Stock Units may have a different Restricted Period in the sole discretion
of the Committee.
10.3 Cash
Dividend Rights and Dividend Unit Rights.
To the extent provided by the Committee in its sole discretion, a grant of Restricted
Stock Units may include a tandem Cash Dividend Right or Dividend Unit Right grant. A grant of Cash Dividend Rights may provide
that such Cash Dividend Rights shall be paid directly to the Participant at the time of payment of the related dividend, be credited
to a bookkeeping account subject to the same vesting and payment provisions as the tandem Award (with or without interest in the
sole discretion of the Committee), or be subject to such other provisions or restrictions as determined by the Committee in its
sole discretion. A grant of Dividend Unit Rights may provide that such Dividend Unit Rights shall be subject to the same vesting
and payment provisions as the tandem Award or be subject to such other provisions and restrictions as determined by the Committee
in its sole discretion.
10.4 Other
Terms and Conditions.
At the time of an Award of Restricted Stock Units, the Committee may, in its sole discretion, prescribe
additional terms, conditions, restrictions and limitations applicable to the Restricted Stock Units, including without limitation
rules pertaining to the termination of employment or service (by reason of death, Disability, retirement, Cause or otherwise) of
a Participant prior to expiration of the Restricted Period.
ARTICLE XI. PERFORMANCE AWARDS
11.1 General.
Awards may be granted in the form of Performance Awards that may be payable in the form of cash, shares of Common Stock or any
combination of both, in such amounts and at such times as the Committee shall determine. Performance Awards shall be conditioned
upon the level of achievement of one or more stated performance goals over a specified performance period that shall not be shorter
than one year. Performance Awards may be combined with other Awards to impose performance criteria as part of the terms of such
other Awards.
11.2 Terms
and Conditions.
Each Award Agreement embodying a Performance Award shall set forth (a) the amount, including a target and maximum
amount if applicable, a Participant may earn in the form of cash or shares of Common Stock or a formula for determining such amount,
(b) the performance criteria and level of achievement versus such criteria that shall determine the amount payable or number of
shares of Common Stock to be granted, issued, retained and/or vested, (c) the performance period over which performance is to be
measured, (d) the timing of any payments to be made, (e) restrictions on the transferability of the Award and (f) such other terms
and conditions as the Committee may determine that are not inconsistent with this Plan.
11.3 Code
Section 162(m) Requirements.
From and after the date on which remuneration paid (or Awards granted) pursuant to this Plan becomes
subject to the deduction limitation of Section 162(m) of the Code, the Committee shall determine in its sole discretion whether
all or any portion of a Performance Award shall be intended to satisfy the requirements for “performance-based compensation”
under Section 162(m) of the Code (the “162(m) Requirements”). The performance criteria for any Performance Award that
is intended to satisfy the 162(m) Requirements shall be established in writing by the Committee based on one or more performance
goals of the type described in Section 11.4 not later than 90 days after commencement of the performance period with respect to
such Award, provided that the outcome of the performance in respect of the goals remains substantially uncertain as of such time.
The maximum amount that may be paid in cash pursuant to Performance Awards granted to a Participant with respect to a fiscal year
that are intended to satisfy the 162(m) Requirements is $1,000,000; provided, however, that such maximum amount with respect to
a Performance Award that provides for a performance period longer than one fiscal year shall be the foregoing limit multiplied
by the number of full fiscal years in the performance period. At the time of the grant of a Performance Award and to the extent
permitted under Code Section 162(m) and regulations thereunder for a Performance Award intended to satisfy the 162(m) Requirements,
the Committee may provide for the manner in which the performance goals will be measured in light of specified corporate transactions,
extraordinary events, accounting changes and other similar occurrences.
11.4 Performance
Goals.
The performance measure(s) to be used for purposes of Performance Awards shall be set in the Company’s sole discretion
and may be described in terms of objectives that are related to the individual Participant or objectives that are Company-wide
or related to a subsidiary, division, department, region, function or business unit of the Company in which the Participant is
employed or with respect to which the Participant performs services, and may consist of one or more or any combination of the following
criteria: (a) earnings or earnings per share (whether on a pre-tax, after-tax, operational or other basis), (b) growth
in earnings or earnings per share (whether on a pre-tax, after-tax, operational or other basis), (c) return on equity, (d) return
on assets or net assets, (e) return on capital or invested capital and other related financial measures, (f) cash flow, EBITDA
or adjusted EBITDA, (g) revenues, (h) income, or operating income, (i) expenses or costs or expense levels or cost levels
(absolute or per unit), (j) one or more operating ratios, (k) stock price, (l) total shareholder return, (m) operating profit,
(n) profit margin, (o) capital expenditures, (p) market share, (q) contract awards or backlog, (r) overhead or other expense
reduction, (s) credit rating, (t) strategic plan development and implementation, (u) improvement in workforce diversity, (v) improved
attrition rates, (w) net borrowing, debt leverage levels, credit quality or debt ratings, (x) the accomplishment of mergers, acquisitions,
dispositions, public offerings or similar extraordinary business transactions, including without limitation a Change in Control,
(y) net asset value per share, (z) economic value added, and (aa) individual business objectives. The performance goals based on
these performance measures may be made relative to the performance of other business entities.
11.5 Certification
and Negative Discretion.
Prior to the payment of any compensation pursuant to a Performance Award that is intended to satisfy
the 162(m) Requirements, the Committee shall certify the extent to which the performance goals and other material terms of the
Award have been achieved or satisfied. The Committee in its sole discretion shall have the authority to reduce, but not to increase,
the amount payable and the number of shares to be granted, issued, retained or vested pursuant to a Performance Award.
ARTICLE XII. STOCK AWARDS AND OTHER INCENTIVE
AWARDS
12.1 Stock
Awards.
Stock Awards may be granted to Participants upon such terms and conditions as the Committee may determine. Shares of
Common Stock issued pursuant to Stock Awards may be issued for cash consideration or for no cash consideration. The Committee shall
determine the number of shares of Common Stock to be issued pursuant to a Stock Award. The Committee may in its sole discretion
require a Participant to pay a stipulated purchase price for each share of Common Stock covered by a Stock Award.
12.2 Other
Incentive Awards.
Other Incentive Awards may be granted in such amounts, upon such terms and at such times as the Committee
shall determine. Other Incentive Awards may be granted based upon, payable in or otherwise related to, in whole or in part, shares
of Common Stock if the Committee, in its sole discretion, determines that such Other Incentive Awards are consistent with the purposes
of this Plan. Each grant of an Other Incentive Award shall be evidenced by an Award Agreement that shall specify the amount of
the Other Incentive Award and the terms, conditions, restrictions and limitations applicable to such Award. Payment of Other Incentive
Awards shall be made at such times and in such form, which may be cash, shares of Common Stock or other property (or any combination
thereof), as established by the Committee, subject to the terms of this Plan.
ARTICLE XIII. CHANGE IN CONTROL
13.1 Vesting
of Awards.
Notwithstanding any provision of this Plan to the contrary, in the event of a Change in Control, the Committee,
in its sole discretion, may accelerate or waive any time periods, conditions or contingencies relating to the exercise or realization
of, or lapse of restrictions under, an Award granted hereunder and then outstanding (including treating any Performance Awards
as if all performance criteria and other conditions were achieved or fulfilled to the maximum extent possible) so that:
(a) if
no exercise of the Award is required, the Award may be realized in full at the time of the occurrence of the Change in Control
(the “Change Effective Time”), or
(b) if
exercise of the Award is required, the Award may be exercised in full as of the Change Effective Time;
provided that any such action contemplated
under this Section 13.1 shall be effective only to the extent that such action will not cause any Award that is designed to satisfy
Section 409A to fail to satisfy such section.
13.2 Assumption
of Awards.
Upon a Change in Control where DGSE is not the surviving entity (or survives only as a subsidiary of another entity),
unless the Committee determines otherwise, all outstanding Options and SARs that are not exercised at or before the Change Effective
Time will be assumed by or replaced with comparable options and rights in the surviving entity (or a parent of the surviving entity)
in accordance with Code Section 424 or Section 409A and the Treasury Regulations and other guidance thereunder, as applicable,
and other outstanding Awards will be converted into similar awards of the surviving entity (or a parent of the surviving entity).
13.3 Cancellation
of Awards.
Notwithstanding the foregoing, in the event of a Change in Control of DGSE, then the Committee, in its sole discretion,
may, no later than the Change Effective Time, require any Participant holding an Award to surrender such Award in exchange for
(a) with respect to each share of Common Stock subject to an Option or SAR (whether or not vested), payment by the Company (or
a successor), in cash, of an amount equivalent to the excess of the value of the consideration received for each share of Common
Stock by holders of Common Stock in connection with such Change in Control (the “Change in Control Consideration”)
over the exercise price or grant price per share, (b) with respect to each share of Common Stock subject to an Award of Restricted
Stock Units or Other Incentive Awards, and related Cash Dividend Rights and Dividend Unit Rights (if applicable), payment by the
Company (or a successor), in cash, of an amount equivalent to the value of any such Cash Dividend Rights and Dividend Unit Rights
plus the value of the Change in Control Consideration for each share covered by the Award, assuming all restrictions or limitations
(including risks of forfeiture) have lapsed and (c) with respect to a Performance Award, payment by the Company (or a successor),
in cash, of an amount equivalent to the value of such Award, as determined by the Committee, taking into account, to the extent
applicable, the Change in Control Consideration, and assuming all performance criteria and other conditions to payment of such
Awards are achieved or fulfilled to the maximum extent possible. Payments made upon a Change in Control pursuant to this Section
13.3 shall be made no later than the Change Effective Time.
ARTICLE XIV. AMENDMENT AND TERMINATION
14.1 Plan
Amendment and Termination.
The Board may at any time suspend, terminate, amend or modify this Plan, in whole or in part; provided,
however, that no amendment or modification of this Plan shall become effective without the approval of such amendment or modification
by the shareholders of DGSE if (a) such amendment or modification increases the maximum number of shares subject to this Plan (except
as provided in Article IV) or changes the designation or class of persons eligible to receive Awards under this Plan or (b) counsel
for DGSE determines that such approval is otherwise required by or necessary to comply with applicable law or the listing requirements
of an exchange or association on which the Common Stock is then listed or quoted. An amendment to this Plan generally will not
require shareholder approval if it curtails rather than expands the scope of this Plan, nor if it is made to conform this Plan
to statutory or regulatory requirements, such as, without limitation, Section 409A. Upon termination of this Plan, the terms and
provisions of this Plan shall, notwithstanding such termination, continue to apply to Awards granted prior to such termination.
Except as otherwise provided herein, no suspension, termination, amendment or modification of this Plan shall adversely affect
in any material way any Award previously granted under this Plan, without the consent of the Participant (or the Permitted Transferee)
holding such Award.
14.2 Award
Amendment and Cancellation.
The Committee may amend the terms of any outstanding Award granted pursuant to this Plan, but except
as otherwise provided herein, no such amendment shall adversely affect in any material way the Participant’s (or a Permitted
Transferee’s) rights under an outstanding Award without the consent of the Participant (or the Permitted Transferee) holding
such Award. Notwithstanding the foregoing, DGSE may amend any Award Agreement to be exempt from Section 409A or to comply with
the requirements of Section 409A or to modify any provision that causes an Award that is intended to be classified as an “equity
instrument” under FASB Accounting Standards Codification, Topic 718 to be classified as a liability on DGSE’s financial
statements.
ARTICLE XV. MISCELLANEOUS
15.1 Award
Agreements.
After the Committee grants an Award under this Plan to a Participant, DGSE and the Participant shall enter into
an Award Agreement setting forth the terms, conditions, restrictions and limitations applicable to the Award and such other matters
as the Committee may determine to be appropriate. The Committee may permit or require a Participant to defer receipt of the payment
of cash or the delivery of shares of Common Stock that would otherwise be due to the Participant in connection with any Award;
provided, however, that any permitted deferrals shall be structured to meet the requirements of Section 409A. The terms and provisions
of the respective Award Agreements need not be identical. All Award Agreements shall be subject to the provisions of this Plan,
and in the event of any conflict between an Award Agreement and this Plan, the terms of this Plan shall govern. All Awards under
this Plan are intended to be structured in a manner that will either comply with or be exempt from Section 409A.
15.2 Listing;
Suspension.
(a) If
and as long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association,
the issuance of any shares of Common Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange
or system. DGSE shall have no obligation to issue such shares unless and until such shares are so listed, and the right to exercise
any Option or other Award with respect to such shares shall be suspended until such listing has been effected.
(b) If
at any time counsel to DGSE or its Affiliates shall be of the opinion that any sale or delivery of shares of Common Stock pursuant
to an Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on DGSE or its Affiliates under
the laws of any applicable jurisdiction, DGSE or its Affiliates shall have no obligation to make such sale or delivery, or to make
any application or to effect or to maintain any qualification or registration under the Securities Act, or otherwise, with respect
to shares of Common Stock or Awards, and the right to exercise any Option or other Award shall be suspended until, in the opinion
of such counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on DGSE or its Affiliates.
(c) Upon
termination of any period of suspension under this Section 15.2, any Award affected by such suspension that shall not then have
expired or terminated shall be reinstated as to all shares available before such suspension and as to shares that would otherwise
have become available during the period of such suspension, but no such suspension shall extend the term of any Award unless otherwise
determined by the Committee in its sole discretion.
15.3 Additional
Conditions.
Notwithstanding anything in this Plan to the contrary (a) the Committee may, if it shall determine it necessary
or desirable in its sole discretion, at the time of grant of any Award or the issuance of any shares of Common Stock pursuant to
any Award, require the recipient of the Award or such shares of Common Stock, as a condition to the receipt thereof, to deliver
to DGSE a written representation of present intention to acquire the Award or such shares of Common Stock for his own account for
investment and not for distribution, (b) the certificate for shares of Common Stock issued to a Participant may include any legend
that the Committee deems appropriate to reflect any restrictions on transfer and (c) all certificates for shares of Common Stock
delivered under this Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or association
upon which the Common Stock is then listed or quoted, any applicable federal or state securities law, and any applicable corporate
law, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such
restrictions.
15.4 Transferability.
(a) All
Awards granted to a Participant shall be exercisable during his lifetime only by such Participant, or if applicable, a Permitted
Transferee as provided in subsection (c) of this Section 15.4; provided, however, that in the event of a Participant’s legal
incapacity, an Award may be exercised by his guardian or legal representative. When a Participant dies, the personal representative,
beneficiary, or other person entitled to succeed to the rights of the Participant may acquire the rights under an Award. Any such
successor must furnish proof satisfactory to DGSE of the successor’s entitlement to receive the rights under an Award under
the Participant’s will or under the applicable laws of descent and distribution.
(b) Except
as otherwise provided in this Section 15.4, no Award shall be subject to execution, attachment or similar process, and no Award
may be sold, transferred, pledged, exchanged, hypothecated or otherwise disposed of, other than by will or pursuant to the applicable
laws of descent and distribution. Any attempted sale, transfer, pledge, exchange, hypothecation or other disposition of an Award
not specifically permitted by this Plan or the Award Agreement shall be null and void and without effect.
(c) If
provided in the Award Agreement, Nonqualified Stock Options may be transferred by a Participant to a Permitted Transferee. For
purposes of this Plan, “Permitted Transferee” means (i) a member of a Participant’s immediate family, (ii) trusts
in which a person listed in (i) above has more than 50% of the beneficial interest, (iii) a foundation in which the Participant
or a person listed in (i) above controls the management of assets, (iv) any other entity in which the Participant or a person
listed in (i) above owns more than 50% of the voting interests, provided that in the case of the preceding clauses (i) through
(iv), no consideration is provided for the transfer and (v) any transferee permitted under applicable securities and tax
laws as determined by counsel to DGSE. In determining whether a person is a “Permitted Transferee,” immediate family
members shall include a Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including
adoptive relationships.
(d) Incident
to a Participant’s divorce, the Participant may request that DGSE agree to observe the terms of a domestic relations order
which may or may not be part of a qualified domestic relations order (as defined in Code Section 414(p)) with respect to all or
a part of one or more Awards made to the Participant under this Plan. DGSE’s decision regarding such a request shall be made
by the Committee, in its sole and absolute discretion, based upon the best interests of DGSE. The Committee’s decision need
not be uniform among Participants. As a condition of participation, a Participant agrees to hold DGSE harmless from any claim that
may arise out of DGSE’s observance of the terms of any such domestic relations order.
15.5 Withholding
Taxes.
The Company shall be entitled to deduct from any payment made under this Plan, regardless of the form of such payment,
the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment, may require
the Participant to pay to the Company such withholding taxes prior to and as a condition of the making of any payment or the issuance
or delivery of any shares of Common Stock under this Plan, and shall be entitled to deduct from any other compensation payable
to the Participant any withholding obligations with respect to Awards. In accordance with any applicable administrative guidelines
it establishes, the Committee may allow a Participant to pay the amount of taxes required by law to be withheld from or with respect
to an Award by (a) withholding shares of Common Stock from any payment of Common Stock due as a result of such Award, or (b) permitting
the Participant to deliver to the Company previously acquired shares of Common Stock, in each case having an aggregate Fair Market
Value equal to the amount of such required withholding taxes. No payment shall be made and no shares of Common Stock shall be issued
pursuant to any Award unless and until the applicable tax withholding obligations have been satisfied.
15.6 No
Fractional Shares.
No fractional shares of Common Stock shall be issued or delivered pursuant to this Plan or any Award granted
hereunder, provided that the Committee in its sole discretion may round fractional shares down to the nearest whole share or settle
fractional shares in cash.
15.7 Notices;
Method of Delivery.
All notices required or permitted to be given or made under this Plan or pursuant to any Award Agreement
(unless provided otherwise in such Award Agreement) shall be in writing and shall be deemed to have been duly given or made if
(a) delivered personally, (b) transmitted by first class registered or certified United States mail, postage prepaid,
return receipt requested, (c) sent by prepaid overnight courier service or (d) sent by telecopy or facsimile transmission,
with confirmation receipt, to the person who is to receive it at the address that such person has theretofore specified by written
notice delivered in accordance herewith. Such notices shall be effective (i) if delivered personally or sent by courier service,
upon actual receipt by the intended recipient, (ii) if mailed, upon the earlier of five days after deposit in the mail or
the date of delivery as shown by the return receipt therefore or (iii) if sent by telecopy or facsimile transmission, when
the answer back is received. DGSE or a Participant may change, at any time and from time to time, by written notice to the other,
the address that it or such Participant had theretofore specified for receiving notices. Until such address is changed in accordance
herewith, notices hereunder or under an Award Agreement shall be delivered or sent (A) to a Participant at his address as
set forth in the records of the Company or (B) to DGSE at the principal executive offices of DGSE clearly marked “Attention:
Chief Financial Officer.” Any provision of this Plan to the contrary notwithstanding, any provision in this Plan setting
forth a requirement for delivery of a written notice, agreement, consent, acknowledgement, or other documentation in writing, including
a written signature, may be satisfied by electronic delivery of such notice, agreement, consent, acknowledgment, or other documentation,
in a manner that the Committee has prescribed or that is otherwise acceptable to the Committee, provided that evidence of the intended
recipient’s receipt of the electronic delivery is available to the Committee and that such delivery is not prohibited by
applicable laws and regulations.
15.8 Compliance
with Law and Stock Exchange or Association Requirements.
It is the intent of DGSE that Options designated Incentive Stock Options
comply with the applicable provisions of Section 422 of the Code, that Awards intended to constitute “qualified performance-based
awards” comply with the applicable provisions of Section 162(m) of the Code, and that all Awards either be exempt from Section
409A or, if not exempt, comply with the requirements of Section 409A. To the extent that any legal requirement of Sections 422,
162(m) or 409A as set forth in this Plan ceases to be required under Sections 422, 162(m) or 409A, that Plan provision shall cease
to apply. Any provision of this Plan to the contrary notwithstanding, the Committee may revoke any Award if it is contrary to law,
governmental regulation or stock exchange or association requirements or modify an Award to bring it into compliance with any government
regulation or stock exchange or association requirements. The Committee may agree to limit its authority under this Section 15.8.
15.9 Clawback.
By accepting or exercising any Award granted under the Plan, the Participant agrees to abide and be bound by any policies adopted
by DGSE, including without limitation any policies adopted to comply with Section 954 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act and any rules or exchange listing standards promulgated thereunder, providing for the repayment and/or
forfeiture of any Award or payment resulting from an accounting restatement or similar circumstances. Such repayment and/or forfeiture
provisions shall apply whether or not the Participant is employed by or affiliated with the Company.
15.10 Binding
Effect.
The obligations of DGSE under this Plan shall be binding upon any successor corporation or organization resulting from
the merger, consolidation or other reorganization of DGSE, or upon any successor corporation or organization succeeding to all
or substantially all of the assets and business of DGSE. The terms and conditions of this Plan shall be binding upon each Participant
and his Permitted Transferees, heirs, legatees, distributees and legal representatives.
15.11 Severability.
If any provision of this Plan or any Award Agreement is held to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions of this Plan or such agreement, as the case may be, but such provision shall be fully
severable and this Plan or such agreement, as the case may be, shall be construed and enforced as if the illegal or invalid provision
had never been included herein or therein.
15.12 No
Restriction of Corporate Action.
Nothing contained in this Plan shall be construed to prevent DGSE or any Affiliate from taking
any corporate action (including any corporate action to suspend, terminate, amend or modify this Plan) that is deemed by DGSE or
such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on this Plan
or any Awards made or to be made under this Plan. No Participant or other person shall have any claim against DGSE or any Affiliate
as a result of such action.
15.13 Governing
Law.
This Plan shall be governed by and construed in accordance with the internal laws (and not the principles relating to
conflicts of laws) of the State of Nevada except as superseded by applicable federal law.
15.14 No
Right, Title or Interest in Company Assets.
No Participant shall have any rights as a shareholder of DGSE as a result of participation
in this Plan until the date of issuance of Common Stock in his name and, in the case of Restricted Stock, unless and until such
rights are granted to the Participant pursuant to this Plan. To the extent any person acquires a right to receive payments from
the Company under this Plan, such rights shall be no greater than the rights of an unsecured general creditor of the Company, and
such person shall not have any rights in or against any specific assets of the Company. All Awards shall be unfunded.
15.15 Risk
of Participation.
Nothing contained in this Plan shall be construed either as a guarantee by DGSE or its Affiliates, or their
respective shareholders, directors, officers or employees, of the value of any assets of this Plan or as an agreement by DGSE or
its Affiliates, or their respective shareholders, directors, officers or employees, to indemnify anyone for any losses, damages,
costs or expenses resulting from participation in this Plan.
15.16 No
Guarantee of Tax Consequences.
No person connected with this Plan in any capacity, including without limitation DGSE and its
Affiliates and their respective directors, officers, agents and employees, makes any representation, commitment or guarantee that
any tax treatment, including without limitation federal, state and local income, estate and gift tax treatment, will be applicable
with respect to any Awards or payments thereunder made to or for the benefit of a Participant under this Plan or that such tax
treatment will apply to or be available to a Participant on account of participation in this Plan.
15.17 Continued
Employment or Service.
Nothing contained in this Plan or in any Award Agreement shall confer upon any Participant the right
to continue in the employ or service of the Company, or interfere in any way with the rights of the Company to terminate a Participant’s
employment or service at any time, with or without cause. The loss of existing or potential profit in Awards will not constitute
an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation
of an obligation of DGSE or an Affiliate to the Participant.
15.18 Miscellaneous.
Headings are given to the articles and sections of this Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction of this Plan or any provisions hereof. The use of the masculine
gender shall also include within its meaning the feminine. Wherever the context of this Plan dictates, the use of the singular
shall also include within its meaning the plural, and vice versa.
IN WITNESS WHEREOF, this
Plan has been executed on this 23rd day of August, 2016.
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DGSE COMPANIES, INC.
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By:
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/s/ Matthew Peakes
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Name: Matthew Peakes
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Title: Chief Executive Officer and President
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