Exhibit 10.2

 

AMENDMENT TO

 

TO

 

COMMON STOCK PURCHASE WARRANT

 

magnegas corporation

 

THIS AMENDMENT TO COMMON STOCK PURCHASE WARRANT (the “Amendment”) dated as of
May 11, 2016, is between MagneGas Corporation, a Delaware corporation (the
“Company”) and Alpha Capital Anstalt (the “Investor”), a Liechtenstein
corporation.

 

WHEREAS, in connection with that certain Securities Purchase Agreement between
the Company and the Investor dated March 24, 2014, the Company issued to the
Investor a Common Stock Purchase Warrant for 1,724,138 shares of the Company’s
common stock on March 28, 2014 (the “March 2014 Warrant”);

 

WHEREAS, the March 2014 Warrant contained a provision allowing for “cashless
exercise”: (a) at the option of the Investor if there was no effective
registration statement for the shares underlying the March 2014 Warrant; or (b)
automatically upon the Termination Date;

 

WHEREAS, the Company and the Investor wish to clarify that the March 2014
Warrant “cashless exercise” provision should always have contained sentences
clarifying that if the Company could not deliver registered shares upon
settlement of the cashless exercise, the Company is not required to pay cash in
lieu of such registered shares;

 

WHEREAS, the March 2014 Warrant contained a provision that upon the occurrence
of a Fundamental Transaction (as defined in the March 2014 Warrant) the Investor
would have the option to receive cash for the remaining unexercised portion of
the March 2014 Warrant.

 

WHEREAS, the Company and the Investor wish to clarify that the March 2014
Warrant should never have contained a provision for the Investor to have the
option, upon the occurrence of a Fundamental Transaction, to receive cash for
the remaining unexercised portion of the March 2014 Warrant;

 

WHEREAS, since March 28, 2014, the Investor has not exercised any of the shares
of the March 2014 Warrant;

 

WHEREAS, since March 28, 2014, there have been no cashless exercises of the
March 2014 Warrant by the Investor;

 

WHEREAS, since March 28, 2014, no Fundamental Transaction has occurred;

 

WHEREAS, the Company and the Investor wish to amend the March 2014 Warrant to
revise the “cashless exercise” and Fundamental Transaction provisions
retroactive to March 28, 2014; and

 

WHEREAS, the Company, separate and apart from making the corrections to the
March 2014 Warrant described above, wishes to give the Investor the right to
participate in any potential offerings of securities between May 11, 2016 and
December 31, 2017.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Amendment, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Investor agree as
follows:

 

  

 

  

ARTICLE I

 

AMENDMENT TO MARCH 2014 WARRANT

 

Section 1.1 Amendments to Cashless Exercise Provision.

 

(a)The following underlined and bolded words shall be added to Section 2(c) of
the March 2014 Warrant:

 

If at any time after the six month anniversary of the date of the Purchase
Agreement, there is no effective Registration Statement registering, or no
current prospectus available for, the resale of the Warrant Shares by the
Holder, then this Warrant may also be exercised, in whole or in part, at such
time by means of a “cashless exercise” in which the Holder shall be entitled to
receive a number of Warrant Shares equal to the quotient obtained by utilizing
the formula below. The Company is not required to pay cash if it can only
deliver upon settlement of a non-Termination Date “cashless exercise” Warrant
Shares that are not registered under the Securities Act. The formula consists of
dividing [(A-B) (X)] by (A), where

 

(A) = the VWAP on the Trading Day immediately preceding the date on which Holder
elects to exercise this Warrant by means of a “cashless exercise,” as set forth
in the applicable Notice of Exercise;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this
Warrant in accordance with the terms of this Warrant if such exercise were by
means of a cash exercise rather than a cashless exercise.

 

Notwithstanding anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise pursuant to this
Section 2(c). The Company is not required to pay cash if it can only deliver
upon settlement of the Termination Date “cashless exercise” Warrant Shares that
are not registered under the Securities Act.

 

(b)The following words that have a strikethrough and are bolded shall be deleted
from Section 5(f) of the March 2014 Warrant:

 

The Holder acknowledges that the Warrant Shares acquired upon the exercise of
this Warrant, if not registered and the Holder does not utilize cashless
exercise, will have restrictions upon resale imposed by state and federal
securities laws

 

Section 1.2 Amendments to Fundamental Transaction Provision. Section 3(e) of the
March 2014 Warrant shall be deleted in its entirety and replaced with the
following:

 

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e)         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 Warrant Share that would
have been issuable upon such exercise immediately prior to the occurrence of
such Fundamental Transaction, at the option of the Company (without regard to
any limitation in Section 2(e) on the exercise of this Warrant), 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
(without regard to any limitation in Section 2(e) on the exercise of this
Warrant). 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. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction, at the Company’s option, exercisable at any time
concurrently with, or within 30 days after, the consummation of the Fundamental
Transaction, the Company or any Successor Entity (as defined below) shall
purchase this Warrant from the Holder by paying, at the option of the Company,
to the Holder within ten Business Days after such request (or, if later, on the
effective date of the Fundamental Transaction) in an amount equal to the Black
Scholes Value of the remaining unexercised portion of this Warrant on the
effective date of such Fundamental Transaction, either: (a) Common Stock (or
corresponding Corporate Event Consideration, as applicable) valued at the value
of the consideration received by the shareholders in such Fundamental
Transaction, or (y) cash. “Corporate Event Consideration” means, collectively,
such shares of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights) which the Holder
would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the
applicable Fundamental Transaction (without regard to any limitations on the
exercise of this Warrant). “Black Scholes Value” means the value of this Warrant
based on the Black and Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of
consummation of the applicable Fundamental Transaction for pricing purposes and
reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate
for a period equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date, (B) an expected
volatility equal to the greater of 100% and the 100 day volatility obtained from
the HVT function on Bloomberg as of the Trading Day immediately following the
public announcement of the applicable Fundamental Transaction, (C) the
underlying price per share used in such calculation shall be the sum of the
price per share being offered in cash, if any, plus the value of any non-cash
consideration, if any, being offered in such Fundamental Transaction and (D) a
remaining option time equal to the time between the date of the public
announcement of the applicable Fundamental Transaction and the Termination Date.
The Company shall cause any successor entity in a Fundamental Transaction in
which the Company is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section 3(e)
pursuant to written agreements in form and substance reasonably satisfactory to
the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the
Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this
Warrant which is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to the shares
of Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise
price hereunder to such shares of capital stock (but taking into account the
relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such exercise price being for the purpose of protecting the
economic value of this Warrant immediately prior to the consummation of such
Fundamental Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the provisions of
this Warrant and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and 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 Transaction Documents with the same effect as
if such Successor Entity had been named as the Company herein.

 

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Section 1.3 Renumbering of Section 5 Miscellaneous. The current Section 5 of the
March 2014 Warrant is hereby renumbered as Section 6.

 

Section 1.4 New Section 5 Right of Participation. A new Section 5 of the March
2014 Warrant is inserted as follows:

 

Section 5. Right of Participation.

 

a)       Definitions. In addition to the terms defined elsewhere in this
Warrant, the following terms have the meanings set forth in this Section 5(a):

 

“Institutional Investor” means an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3) or (a)(7) under the Securities Act.

 

“Offering” means any offering by the Company prior to January 1, 2018, whether
pursuant to an effective registration statement under the Securities Act or not,
of debt securities, Common Stock or Common Stock Equivalents.

 

“Offering Notice” means a written notice, whether sent vie email, facsimile, or
a letter sent via U.S. nationally recognized overnight courier service, by the
Company to the Holder stating its bona fide intention to engage in an Offering
and specifying the number and the price of Common Stock or Common Stock
Equivalents to be offered and the percentage allocation to any Institutional
Investors who are scheduled to participate in the Offering. In the event the
terms of the Offering change the Company shall provide a new Offering Notice.

 

“Offering Notice Period” means 5:30 p.m. (New York City time) on the fifth (5th)
Business Day following the Holder’s receipt of the Offering Notice. In the event
the terms of the Offering change, the Offering Notice Period shall be extended
until fifth (5th) Business Day following the Holder’s receipt of the new
Offering Notice.

 

b)       Mechanics of Participation.

 

i.      Upon receipt of an Offering Notice regarding an Offering solely
involving debt securities or involving debt securities in combination with
Common Stock or Common Stock Equivalents, the Holder shall have until the end of
the Offering Notice Period to offer to purchase up to 35% (thirty-five percent)
of the securities being offered in the Offering by delivering a written notice
to the Company stating that it offers to purchase the amount of securities
indicated in the Holder’s notice to the Company (the “Holder Notice of
Participation”).

 

ii.      Upon receipt of Offering Notice regarding an Offering solely involving
Common Stock or Common Stock Equivalents, the Holder shall have until the end of
the Offering Notice Period to offer to purchase up to 35% (thirty-five percent)
of the Common Stock or Common Stock Equivalents being offered in the Offering by
delivering a Holder Notice of Participation; provided, however, that in the
event the Holder elects to participate in an Offering solely involving Common
Stock or Common Stock Equivalents, the Holder must purchase a percentage of the
Common Stock or Common Stock Equivalents offered equal to the lower of (i) a
percentage equal to or greater than the lowest allocation to any other
Institutional Investor in the Offering as indicated in the Offering Notice; or
(ii) $3,000,000.

 

iii.      If the Holder does not deliver an Holder Notice of Participation prior
to the end of the Offering Notice Period, the Holder shall be deemed to have
waived all of the Holder’s rights to participate in the Offering under this
Section 5(b), and the Company shall be free to ask other potential investors to
participate in the Offering without any further obligation to the Holder
pursuant to this Section 5(b).

 

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ARTICLE II

 

MISCELLANEOUS

 

Section 2.1 Capitalized Terms. In addition to the terms defined elsewhere in
this Amendment, capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the March 2014 Warrant.

 

Section 2.2 No Other Amendments. This Amendment does not, other than as set
forth in Article I of this Amendment, amend any other provision of the March
2014 Warrant.

 

Section 2.3 Conflicts. To the extent there is any conflict between the terms of
this Amendment and the March 2014 Warrant, the terms of this Amendment shall
take precedence.

 

Section 2.4 Retroactive. The parties agree that Sections 1.1 and 1.2 of this
Amendment shall be retroactive to the date that the March 2014 Warrant was
originally issued.

 

Section 2.5 Amendment. The provisions of the March 2014 Warrant amended herein
may not be further modified or amended unless the Investor consents.

 

Section 2.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Amendment and shall not be deemed to limit or affect
any of the provisions hereof.

 

Section 2.7 Severability. If any term, provision, covenant or restriction of
this Amendment is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

(Signature Pages Follow)

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Common
Stock Purchase Warrant to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

MAGNEGAS CORPORATION   Addresses for Notice:       By: /s/ Luisa Ingargiola  
Mailing Address:          

Name: Luisa Ingargiola

Title: Chief Financial Officer

 

11885 44th Street N.

Clearwater, FL 33762

 

Email Address:

Fax Number:

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR INVESTOR FOLLOWS]

 

 

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[INVESTOR SIGNATURE PAGES TO AMENDMENT TO COMMON STOCK PURCHASE WARRANT]

 

IN WITNESS WHEREOF, the undersigned have caused this Amendment to Common Stock
Purchase Warrant to be duly executed by their respective authorized signatories
as of the date first indicated above.

 

Name of investor:  Alpha Capital Anstalt       Signature of Authorized Signatory
of Investor: /s/ Konrad Ackermann       Name of Authorized Signatory: Konrad
Ackermann       Title of Authorized Signatory: Director  

 

Email Address of Authorized Signatory:           Facsimile Number of Authorized
Signatory:    

 

Address for Notice to Investor:       Alpha Capital Anstalt   Lettstrasse 32  
9490 Vaduz   Principality of Liechtenstein  

 

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