EXHIBIT 10.2
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT (this
“Agreement”), dated as of March 19, 2009, by and among
Terra Energy & Resource Technologies, Inc., a Delaware
corporation (the “Company”), and Esterna Ltd., a
Cypriot limited company (the “Stockholder”). Each of
the Company and the Stockholder may be referred to individually
herein as a “Party” and, collectively, as the
“Parties”.
WHEREAS, the Stockholder is the
holder of 5,000,000 shares of the Company’s preferred stock
and warrants to purchase 20,000,000 shares of the Company’s
preferred stock;
NOW, THEREFORE, in consideration of
the promises and the mutual representations and covenants
hereinafter set forth, the Parties do hereby agree as
follows:
1. This
Agreement shall be voidable in the event of the failure of the
closings of those certain Securities Purchase Agreements, dated as
of March 19, 2009 (the “Investor Transactions”), in
accordance with the terms therein, by and among the Company and the
investors named therein in connection with the purchase and sale of
units of the Company’s securities, consisting of an aggregate
of 30 million shares of common stock and 30 million common stock
purchase warrants for the aggregate purchase price of
$500,000.
2. Subject to and
effective with the closings of the Investor Transactions (defined
above), the Stockholder hereby converts all of its 5,000,000 shares
of the Company’s preferred stock into 5,000,000 shares of the
Company’s common stock. Such preferred shares are represented
by the Company’s preferred stock certificates (the
“Preferred Certificates”) numbered 1 (dated December
27, 2007 and representing 2,500,000 shares of preferred stock) and
2 (dated April 23, 2008 and representing 2,500,000 shares of
preferred stock).
3. Subject to and
effective with the closings of the Investor Transactions (defined
above), the Stockholder hereby exchanges all of its warrants to
acquire 20,000,000 shares of preferred stock into warrants to
purchase 20,000,000 shares of common stock having a three year
exercise period from the date of exchange and an exercise price of
$0.05 per share. The common stock purchase warrants shall be in
substantially the form attached hereto as Exhibit A. Such preferred
stock purchase warrants are represented by the Company’s
preferred stock purchase warrants (the “Preferred Warrant
Certificates”) numbered P-1 (issued December 27, 2008 and
representing 10,000,000 warrants) and P-2 (issued April 23, 2008
and representing 10,000,000 warrants).
4. The
Stockholder agrees to promptly tender to the Company such Preferred
Certificates and Preferred Warrant Certificates. The Stockholder
represents and warrants that: such certificates have not been
endorsed; it is the unconditional owner of such certificates and
the securities represented thereby; that neither the certificates
nor the rights of the Stockholder therein have, in whole or in
part, been assigned, transferred, hypothecated, pledged or
otherwise disposed of, in any manner whatsoever, and that no
person, firm or corporation other than the Stockholder has any
right, title, claim, equity or intense in, to, or respec
