THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. THIS WARRANT AND, IF EXERCISED, THE UNDERLYING SHARES OF
COMMON STOCK, HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO THEIR
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
SURGE GLOBAL ENERGY, INC.
WARRANT TO PURCHASE COMMON STOCK
No. 2006- __ March 14, 2006
Void After March 14, 2011
THIS CERTIFIES THAT, for value received _______________ or his assigns (the
"Holder"), is entitled to subscribe for and purchase at the Exercise Price
(defined below) from SURGE GLOBAL ENERGY, INC., a Delaware corporation (the
"Corporation") an amount of common stock equal to __________________________
shares.
1. Definitions. AS USED HEREIN, THE FOLLOWING TERMS SHALL HAVE THE
FOLLOWING RESPECTIVE MEANINGS:
(a) "Exercise Period" shall mean the period commencing with the date
hereof and ending five years from the date hereof, unless sooner terminated as
provided below.
(b) "Exercise Price" shall mean $2.00 per share, subject to
adjustment pursuant to Section 5 below and subject to adjustment pursuant to
Section 2(b) of the Registration Rights Agreement of even date herewith between
the Holder and the Corporation.
(c) "Exercise Shares" shall mean the shares of Common Stock issuable
upon exercise of this Warrant.
2. Exercise of Warrant. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Corporation at its address set forth above (or
at such other address as it may designate by notice in writing to the Holder):
(a) An executed Notice of Exercise in the form attached hereto;
(b) Payment of the Exercise Price either in cash or by check; and
(c) This Warrant.
Upon the exercise of the rights represented by this Warrant, a certificate
or certificates for the Exercise Shares so purchased, registered in the name of
the Holder or persons affiliated with the Holder, if the Holder so designates,
shall be issued and delivered to the Holder within a reasonable time after the
rights represented by this Warrant shall have been so exercised.
The person in whose name any certificate or certificates for Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
3. Covenants of the Corporation.
3.1 Covenants as to Exercise Shares. The Corporation covenants and
agrees that all Exercise Shares that may be issued upon the exercise of the
rights represented by this Warrant will, upon receipt of the Exercise Price and
issuance, be validly issued and outstanding, fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issuance thereof.
Subject to the immediately preceding paragraph, the Corporation further
covenants and agrees that the Corporation will at all times during the Exercise
Period, have authorized and reserved, free from preemptive rights, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant. If at any time during the Exercise Period the
number of authorized but unissued shares of Common Stock shall not be sufficient
to permit exercise of this Warrant, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes.
3.2 No Impairment. Except and to the extent as waived or consented
to by the Holder, the Corporation will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.
3.3 Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to the
Holder, at least ten (10) days prior to the date specified herein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution.
2
4. Representations of Holder.
4.1 Acquisition of Warrant for Personal Account. The Holder
represents and warrants that it is acquiring the Warrant solely for its account
for investment and not with a view to or for sale or distribution of said
Warrant or any part thereof. The Holder also represents that the entire legal
and beneficial interests of the Warrant and Exercise Shares the Holder is
acquiring is being acquired for, and will be held for, its account only.
4.2 Securities Are Not Registered.
(a) The Holder understands that the Warrant and the Exercise
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act") on the basis that no distribution or public offering of
the stock of the Corporation is to be effected. The Holder realizes that the
basis for the exemption may not be present if, notwithstanding its
representations, the Holder has a present intention of acquiring the securities
for a fixed or determinable period in the future, selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise
distributing the securities. The Holder has no such present intention.
(b) The Holder recognizes that the Warrant and the Exercise
Shares must be held indefinitely unless they are subsequently registered under
the Act or an exemption from such registration is available. The Holder
recognizes that the Corporation has no obligation to register the Warrant or the
Exercise Shares of the Corporation (except as provided in the Registration
Rights Agreement of even date herewith between the Holder and the Corporation).
(c) The Holder is aware that neither the Warrant nor the
Exercise Shares may be sold pursuant to Rule 144 adopted under the Act unless
certain conditions are met, including, among other things, the existence of a
public market for the shares, the availability of certain current public
information about the Corporation, the resale following the required holding
period under Rule 144 and the number of shares being sold during any three month
period not exceeding specified limitations. Xxxxxx is aware that certain of the
conditions for resale set forth in Rule 144 have not been satisfied.
4.3 Disposition of Warrant and Exercise Shares. The Holder
understands and agrees that all certificates evidencing the shares to be issued
to the Holder may bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
3
5. Adjustment of Exercise Price. In the event of changes in the
outstanding Common Stock of the Corporation by reason of stock dividends,
split-ups, recapitalizations, reclassifications, combinations or exchanges of
shares, separations, reorganizations, liquidations, or the like prior to the
exercise of this Warrant (or portion thereof), the number and class of shares
available under the Warrant (or portion thereof) in the aggregate and the
Exercise Price shall be correspondingly adjusted to give the Holder of the
Warrant (or portion thereof), on exercise for the same aggregate Exercise Price,
the total number, class, and kind of shares as the Holder would have owned had
the Warrant (or portion thereof) been exercised immediately prior to the event
and had the Holder continued to hold such shares until after the event requiring
adjustment. The form of this Warrant need not be changed because of any
adjustment in the number of Exercise Shares subject to this Warrant.
6. Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All
Exercise Shares (including fractions) issuable upon exercise of this Warrant may
be aggregated for purposes of determining whether the exercise would result in
the issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Corporation shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then
current fair market value of an Exercise Share by such fraction.
7. No Stockholder Rights. This Warrant in and of itself shall not entitle
the Holder to any voting rights or other rights as a stockholder of the
Corporation.
8. Transfer of Warrant. Subject to applicable laws, the restriction on
transfer set forth on the first page of this Warrant, this Warrant and all
rights hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Xxxxxx. The transferee shall sign an
investment letter in form and substance satisfactory to the Corporation.
9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost,
stolen, mutilated or destroyed, the Corporation may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Corporation, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
10. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by telex, telegram,
express mail or other form of rapid communications, if possible, and if not then
such notice or communication shall be mailed by first-class mail, postage
prepaid, addressed in each case to the party entitled thereto at the following
addresses: (a) if to the Corporation, to Surge Global Energy, Inc., Attention:
Secretary, at 00000 Xx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx XXX 00000
Facsimile: (000) 000-0000 and (b) if to the Holder, to:
___________________________________________________
______________________________________________________________, or at such other
address as one party may furnish to the other in writing. Notice shall be deemed
effective on the date dispatched if by personal delivery, telecopy, telex or
telegram, two days after mailing if by express mail, or three days after mailing
if by first-class mail.
4
11. Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
12. Governing Law. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
SURGE GLOBAL ENERGY, INC.
By:
------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Executive Officer
5
NOTICE OF EXERCISE
TO: SURGE GLOBAL ENERGY, INC.
(1) The undersigned hereby elects to purchase ______________ shares of the
Common Stock of SURGE GLOBAL ENERGY, INC. (the "Corporation") pursuant to the
terms of the attached Warrant, and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
------------------------
(Name)
------------------------
------------------------
(Address)
The undersigned represents that (i) the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares;
(ii) the undersigned is aware of the Corporation's business affairs and
financial condition and has acquired sufficient information about the
Corporation to reach an informed and knowledgeable decision regarding its
investment in the Corporation; (iii) the undersigned is experienced in making
investments of this type and has such knowledge and background in financial and
business matters that the undersigned is capable of evaluating the merits and
risks of this investment and protecting the undersigned's own interests; (iv)
the undersigned understands that the shares of Common Stock issuable upon
exercise of this Warrant have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), by reason of a specific exemption from
the registration provisions of the Securities Act, which exemption depends upon,
among other things, the bona fide nature of the investment intent as expressed
herein, and, because such securities have not been registered under the
Securities Act, they must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available;
(v) the undersigned is aware that the aforesaid shares of Common Stock may not
be sold pursuant to Rule 144 adopted under the Securities Act unless certain
conditions are met and until the undersigned has held the shares for the number
of years prescribed by Rule 144 and that among the conditions for use of the
Rule is the availability of current information to the public about the
Corporation; and (vi) the undersigned agrees not to make any disposition of all
or any part of the aforesaid shares of
6
Common Stock unless and until there is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with said registration statement, or the undersigned has
provided the Corporation with an opinion of counsel satisfactory to the
Corporation, stating that such registration is not required.
--------------------------------- ---------------------------------
(Print Name) (Signature)
Date: ____________________________
7
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
Name:
--------------------------------------------------------------------------
(Please Print)
Address:
-----------------------------------------------------------------------
(Please Print)
Dated: _________________
Holder's Signature: _____________________________________
Holder's Address: _____________________________________
_____________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
8