EXHIBIT 10.2
EXHIBIT A
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 ACT, AS AMENDED (THE "1933 ACT"). THE HOLDER
HEREOF, BY PURCHASING THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE
BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, OR (C) IF REGISTERED UNDER
THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, A
SECURITIES PURCHASE AGREEMENT ("PURCHASE AGREEMENT"), DATED THE DATE
HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS AMONG THE
PARTIES, INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH LIMIT THE
EXERCISE RIGHTS OF THE HOLDER AND SPECIFY MANDATORY REDEMPTION OBLIGATIONS
OF THE COMPANY.
XRG, INC.
COMMON STOCK PURCHASE A WARRANT
Number of shares: 54,166,666
Holder: Xxxxxx Partners LP
c/o Xxxxxx Xxxxxx Xxxxxx
Managing Partner
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
tel 000-000-0000
fax 000-000-0000
cell 000-000-0000
xxx@xxxxxxxxxxxxxx.xxx
Expiration Date: March 31, 2009
Exercise Price per Share: $0.10
XRG Inc, a company organized and existing under the laws of the State of
Delaware (the "COMPANY"), hereby certifies that, for value received, Xxxxxx
Partners LP, or its registered assigns (the "WARRANT HOLDER"), is entitled,
subject to the terms set forth below, to purchase from the Company 54,166,666
shares (the "WARRANT SHARES") of common stock, $0.001 par value (the "COMMON
STOCK"), of the Company (each such
share, a "WARRANT SHARE" and all such shares, the "WARRANT SHARES") in exchange
for (a) one (1) Warrant and (b) $0.10 per share (as adjusted from time to time
as provided in Section 7, per Warrant Share (the "EXERCISE PRICE"), at any time
and from time to time from and after the date thereof and through and including
5:00 p.m. New York City time on March 31, 2009 (or eighteen months of
effectiveness of a Registration Statement subsequent to the issuance herein,
whichever is longer)(the "Expiration Date"), and subject to the following terms
and conditions:
1. REGISTRATION OF WARRANT. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Warrant Holder hereof from time to time.
The Company may deem and treat the registered Warrant Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or nay
distribution to the Warrant Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
2. INVESTMENT REPRESENTATION. The Warrant Holder by accepting this Warrant
represents that the Warrant Holder is acquiring this Warrant for its own account
or the account of an affiliate for investment purposes and not with the view to
any offering or distribution and that the Warrant Holder will not sell or
otherwise dispose of this Warrant or the underlying Warrant Shares in violation
of applicable securities laws. The Warrant Holder acknowledges that the
certificates representing any Warrant Shares will bear a legend indicating that
they have not been registered under the United States Securities Act of 1933, as
amended (the "1933 ACT") and may not be sold by the Warrant Holder except
pursuant to an effective registration statement or pursuant to an exemption from
registration requirements of the 1933 Act and in accordance with federal and
state securities laws. If this Warrant was acquired by the Warrant Holder
pursuant to the exemption from the registration requirements of the 1933 Act
afforded by Regulation S thereunder, the Warrant Holder acknowledges and
covenants that this Warrant may not be exercised by or on behalf of a Person
during the one year distribution compliance period (as defined in Regulation S)
following the date hereof. "PERSON" means an individual, partnership, firm,
Limited Liability Company, trust, joint venture, association, corporation, or
any other legal entity.
3. VALIDITY OF WARRANT AND ISSUE OF SHARES. The Company represents and
warrants that this Warrant has been duly authorized and validly issued and
warrants and agrees that all of Common Stock that may be issued upon the
exercise of the rights represented by this Warrant will, when issued upon such
exercise, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof. The
Company further warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. REGISTRATION OF TRANSFERS AND EXCHANGE OF WARRANTS.
a. Subject to compliance with the legend set forth on the face of
this Warrant, the Company shall register the transfer of any portion of this
Warrant in the Warrant in the Warrant Register, upon surrender of this Warrant
with the Form of Assignment attached hereto duly completed and signed, to the
Company at the office specified in or pursuant to Section 9. Upon any such
registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "NEW WARRANT"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Warrant Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a Warrant
Holder of a Warrant.
b. This Warrant is exchangeable, upon the surrender hereof by the
Warrant Holder to the office of the Company specified in or pursuant to Section
9 for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased hereunder. Any
such New Warrant will be dated the date of such exchange.
5. EXERCISE OF WARRANTS.
a. Upon surrender of this Warrant with the Form of Election to
Purchase attached hereto duly completed and signed to the Company, at its
address set forth in Section 9, and upon payment and delivery of the Exercise
Price per Warrant Share multiplied by the number of Warrant Shares that the
Warrant Holder intends to purchase hereunder, in lawful money of the United
States of America, in cash or by certified or official bank check or checks, to
the Company, all as specified by the Warrant Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 7 business days
after the Date of Exercise [as defined herein]) issue or cause to be issued and
cause to be delivered to or upon the written order of the Warrant Holder and in
such name or names as the Warrant Holder may designate (subject to the
restrictions on transfer described in the legend set forth on the face of this
Warrant), a certificate for the Warrant Shares issuable upon such exercise, with
such restrictive legend as required by the 1933 Act. Any person so designated by
the Warrant Holder to receive Warrant Shares shall be deemed to have become
holder of record of such Warrant Shares as of the Date of Exercise of this
Warrant.
b. A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the Warrant Holder to be
purchased.
c. This Warrant shall be exercisable at any time and from time to
time for such number of Warrant Shares as is indicated in the attached Form of
Election To Purchase. If less than all of the Warrant Shares which may be
purchased under this
Warrant are exercised at any time, the Company shall issue or cause to be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares for which no exercise has been evidenced by
this Warrant.
d. (i) Notwithstanding anything contained herein to the contrary,
the holder of this Warrant may, at its election exercised in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the "NET NUMBER" of shares of Common Stock determined according to the
following formula (a "CASHLESS EXERCISE"):
Net Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
A= the total number shares with respect to which this
Warrant is then being exercised.
B= the last reported sale price (as reported by
Bloomberg) of the Common Stock on immediately preceding
the date of the Exercise Notice.
C= the Warrant Exercise Price then in effect at the time
of such exercise.
e. The holder of this Warrant agrees not to elect for a period of
one (1) year a Cashless Exercise. The holder of this Warrant also agrees not to
elect a Cashless Exercise so long as there is an effective registration
statement for the shares underlying this Warrant.
6. CALL BY THE COMPANY. This Warrant contains a callable feature until
March 31, 2005 requiring the automatic exercise at any time prior to the
Expiration Date if the closing public market price of the Company's common stock
is equal to or in excess of the callable price of $1.00 for a period of twenty
(20) consecutive days and there is an effective Registration Statement covering
the shares of Common Stock underlying this Warrant ("Automatic Exercise") during
such twenty (20) consecutive day period. Upon occurrence of the Automatic
Exercise, the Company shall provide the Holder with notice of such Automatic
Conversion ("Automatic Exercise Notice"). Upon receipt of the Automatic Exercise
Notice, the Holder must (i) exercise, in whole or in part, this Warrant within
ten (10) days; or (ii) notify the Company of its intent to transfer this Warrant
pursuant to Section 4 of this Warrant. In the event that the Holder elects to
transfer this Warrant pursuant to Section 4 of this Warrant, then the subsequent
holder of this Warrant must exercise this Warrant on or before the thirtieth
(30) day after notification of intent to transfer this Warrant. In the event
that this Warrant is exercised, the Holder must deliver to the Company at its
office at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000 Attention: Xxxxx
Xxxxxxx, on or before 5:00 p.m., Eastern Time,
on the required date, (i) Form of Election to Purchase properly executed and
completed by Holder or an authorized officer thereof, (ii) a check payable to
the order of the Company, in an amount equal to the product of the Exercise
Price MULTIPLIED BY the number of Warrant Shares specified in the Exercise
Notice, AND (iii) this Warrant. If the Holder does not exercise this Warrant
within ten (10) days from receipt of the Automatic Exercise Notice or, in the
event that this Warrant has been transferred pursuant to Section 4 of this
Warrant, the subsequent holder of this Warrant does not exercise this Warrant
within thirty (30) days after notification of intent to transfer this Warrant,
then this Warrant will expire.
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The character of the
shares of stock or other securities at the time issuable upon exercise of this
Warrant and the Exercise Price therefore, are subject to adjustment upon the
occurrence of the following events:
a. ADJUSTMENT FOR STOCK SPLITS, STOCK DIVIDENDS, RECAPITALIZATIONS,
ETC. The Exercise Price of this Warrant and the number of shares of Common Stock
or other securities at the time issuable upon exercise of this Warrant shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
of shares, reclassification, recapitalization or other similar event affecting
the number of outstanding shares of stock or securities.
b. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In
case of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "REORGANIZATION"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or effective date
of such Reorganization (the "EFFECTIVE DATE"), shall receive, in lieu of the
shares of stock or other securities at any time issuable upon the exercise of
the Warrant issuable on such exercise prior to the Effective Date, the stock and
other securities and property (including cash) to which such holder would have
been entitled upon the Effective Date if such holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).
c. CERTIFICATE AS TO ADJUSTMENTS. In case of any adjustment or
readjustment in the price or kind of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the holder of
this Warrant in the form of a certificate, certified and confirmed by the Board
of Directors of the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment or
readjustment is based.
d. THE COMPANY FAILS TO MEET CERTAIN EARNINGS PER SHARE PROJECTIONS.
In the event the Company earns between $.014 and $.00014 per share (where such
earnings in this paragraph shall always be defined as earnings on a fully taxed
fully diluted basis as reported for the fiscal year ended March 31, 2005 from
recurring operations before any non recurring items), the warrant exercise price
shall be
reduced proportionately by 0% if the earnings are $.014 per share and by 99% if
the earnings are $.00014 per share. For example, if the Company earns $.0112 per
share, or 20% below $.014 per share, then the warrant exercise price shall be
reduced by 20%. Such reduction shall be made at the time the March 31, 2005
financial results are reported and shall be made from the starting exercise
price of the warrants being the exercise price of the warrants at that time, and
shall be cumulative upon any other changes to the exercise price of the warrant
that may already have been made. In the event the Company earns below $.00014,
or has a loss, the warrant exercise price shall be reduced by 99%.
e. THE COMPANY SELLS, GRANTS OR ISSUES ANY SHARES, OPTIONS,
WARRANTS, OR ANY INSTRUMENT CONVERTIBLE INTO SHARES OR EQUITY IN ANY FORM BELOW
$.10 PER SHARE. In the event the Company sells, grants or issues any shares,
options, warrants, or any instrument convertible into shares or equity in any
form below $.10 per share the warrant exercise price shall be reduced
proportionately. For example, if the Company sells, grants or issues any shares,
options, warrants, or any instrument convertible into shares or equity in any
form at $.08 per share, or 20% below $.10 per share, then the warrant exercise
price shall be reduced by 20%. Such reduction shall be made at the time such
transaction is made, and shall be cumulative upon any other changes to the
exercise of the warrant that may already have been made.
8. FRACTIONAL SHARES. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. The
number of full Warrant Shares that shall be issuable upon the exercise of this
Warrant shall be computed on the basis of the aggregate number of Warrants
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 8, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.
9. NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified mail
confirmation; (iii) on the date delivered by an overnight courier service; or
(iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
If to the Company:
XRG Inc.
Attn: Xxxxx X. Xxxxxxx
XRG, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Johnson, Pope, Xxxxx, Xxxxxx & Xxxxx, P.A.
000 Xxxxxxxx Xxxxxx
X.X Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Warrant Holder:
Xxxxxx Xxxxxx Xxxxxx
Managing Partner
Xxxxxx Partners LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
tel 000-000-0000
10. MISCELLANEOUS.
a. This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing and signed by the Company and the Warrant
Holder.
b. Nothing in this Warrant shall be construed to give to any person
or corporation other than the Company and the Warrant Holder any legal or
equitable right, remedy or cause of action under this Warrant; this Warrant
shall be for the sole and exclusive benefit of the Company and the Warrant
Holder.
c. This Warrant shall be governed by, construed and enforced in
accordance with the internal laws of the State of Florida without regard to the
principles of conflicts of law thereof.
d. The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
e. In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceablilty of
the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
f. The Warrant Holder shall not, by virtue hereof, be entitled to
any voting or other rights of a shareholder of the Company, either at law or
equity, and the rights of the Warrant Holder are limited to those expressed in
this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of the date first above stated.
XRG, Inc.
By: ___________________________________
Name: _________________________________
Title: ________________________________
FORM OF ELECTION TO PURCHASE
(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)
To: XRG, INC.:
In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase ______________ shares of
Common Stock ("Common Stock"), $0.001 par value, of XRG Inc and encloses one
warrant and $0.10 for each Warrant Share being purchased or an aggregate of
$________________ in cash or certified or official bank check or checks, which
sum represents the aggregate Exercise Price (as defined in the Warrant) together
with any applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
______________________________________________________________
______________________________________________________________
______________________________________________________________
(Please print name and address)
______________________________________________________________
(Please insert Social Security or Tax Identification Number)
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
______________________________________________________________
______________________________________________________________
______________________________________________________________
(Please print name and address)
Dated: ___________________ Name of Warrant Holder:
(Print)_____________________________________
(By:)_______________________________________
(Name:)_____________________________________
(Title:)_____________________________
Signature must conform in all respects to
name of Warrant Holder as specified on the
face of the Warrant
