AGREEMENT FOR PURCHASE AND SALE OF ASSETS
AGREEMENT
FOR PURCHASE AND SALE OF ASSETS
This
Agreement ("Agreement") is made as of October 1, 2010, by and
between Surge Global Energy Inc., a Delaware corporation ("Buyer"), and Xxxxx
XxXxxxx, an individual dba SEC-Compliance, and SEC-Compliance, Inc. (“Seller”)
with reference to the following facts:
A.
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Seller
owns the assets of SEC Compliance and all of the shares of SEC Compliance,
Inc.
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B.
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Buyer
desires to purchase from Seller and Seller desires to sell to Buyer, on
the terms and subject to the conditions contained in this Agreement, all
of the assets set forth
herein.
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C.. Buyer acknowledges that Seller will suffer damages if the transactions
contemplated by this Agreement are not consummated
THEREFORE,
the parties hereto agree as follows:
1. Transfer
of Assets. Subject to the terms and conditions set forth in this Agreement,
Seller and agrees to sell, convey, transfer, assign, and deliver to Buyer, and
Buyer agree to those assets (the "Assets") listed on Schedule
A hereto.
2. Consideration
for Transfer. The consideration for the transfer of the Assets shall be One
Hundred Thousand Dollars
($100,000.00) plus
Five Million (5,000,000)
shares of common stock of Buyer (collectively, the Purchase
Price).
(a)
as a deposit on its purchase of the Assets from Seller, Buyer has previously
delivered a cash deposit in the amount of Twenty Thousand Dollars 20,000.00) in
the form of a wire transfer directly to Seller (the Deposit"). In the event that
this transaction does not close, Buyer shall be entitled to the return
of $18,000.00 of this deposit.
(b)
As payment for the transfer of the Assets by Seller to Buyer, Buyer shall
deliver to Seller at the closing, in accordance with the provisions of paragraph
13, the following:
(i) | (Buyers' secured installment promissory note ("Secured Note"), in the principal amount of Eighty Thousand Dollars ($80,000), dated as of the closing date. The Secured Note shall be in the form of Exhibit A, and:. and shall be secured by a lien on all of the Assets set forth in Schedule A pursuant to a Security Agreement in the form of Exhibit B, including filings as are necessary to perfect such security interest; and |
(ii)
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Stock
certificates in Seller’s name representing Five Million (5,000,000)
shares of common stock of Buyer.
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4. Reserved
5. Taxes and Fees.
(a)
Buyer shall pay all sales and use taxes arising out of the transfer of the
Assets. Buyer shall not be responsible for any income,
sales, business, occupation, withholding, or similar tax, or any
taxes of any kind related to any period before the closing date, unless
specifically assumed as a liability by Buyer pursuant to this
Agreement.
(b)
Buyer shall issue to Seller a Form 1099 for the year ended December
31, 2010 for the value of the assets purchased by Buyer and Seller shall be
responsible for all Federal and State income taxes thereon.
6.
Representations and Warranties of Seller. Seller represents and warrants
that:
6.1.
Authority. Seller has all necessary powers to carry on its business as now owned
and operated by Seller.
6.2.
Real Property. The Seller owns no real property.
6.3.
Schedule of Assets. Schedule A hereto lists the Assets sold pursuant to this
Agreement which represent all of the assets owned by Seller to and including
from August 1, 2010 to the date of closing.
6.4.
Litigation. Seller has no actual knowledge of any suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation
pending or threatened against or affecting the Assets, or any of its businesses,
assets, or financial condition.
6.5.
Authority and Consents. Seller has the right, power, legal capacity and
authority to enter into, and perform their respective obligations under this
Agreement.
6.6.
Disclaimer. Buyer acknowledges that prior to the closing of the transaction,
Seller has represented to Buyer the assets set forth on Schedule A as being all
of the assets of Seller and there are no liabilities other than $1,300.00 in
travel expenses. Buyer has not had an opportunity to inspect the Assets as fully
as Buyer desired. Xxxxx XxXxxxx has the authority to bind Seller to any
affirmation, representation, promise or warranty concerning the Assets and Buyer
has relied on his representations. The Assets are sold AS IS and with all
faults. BUYER AGREES THAT, AS
TO THE ASSETS, THE IMPLIED WARRANTY OF MERCHANTABILITY IS EXPRESSLY EXCLUDED
FROM THIS AGREEMENT AND THAT THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE
DESCRIPTION OF THE FACE HEREOF EXCEPT AS TO TITLE AND THAT THERE ARE NO LIENS OR
ENCUMBRANCES ON THE ASSETS. Buyer also acknowledges that no warranty has
arisen through trade or custom or course of dealing with Seller.
6.7.
Disclaimer as to Business Operations. Buyer is aware that Seller has previously
operated the business only between the dates of August 1, 2010 and through to
the date of this Agreement.
7.
Buyer's Representations and Warranties. Buyers represent and warrant
that:
7.1.
Obligations Binding on Buyer. The Agreement, Secured Note, Security Agreement
and Consulting Agreement when executed, will be duly authorized, validly
executed and shall constitute binding obligations of Buyer in accordance with
their terms.
7.2.
Authority and Consents. Buyer has the right, power, legal capacity and authority
to enter into, and perform its obligations under, this Agreement. All required
authorizations and consents of the Board of Directors and shareholders of Buyer
have been granted.
7.3 Organization,
Good Standing and Qualification. Buyer is a corporation that is duly-organized,
validly existing and in good standing under the laws of Delaware, has all
necessary corporate powers to own its properties and to carry out its
business.
7.4 The
Shares shall be validly issued, fully paid and non-assessable.
7.5.
Full Disclosure. None of the representations and warranties made by Buyer, or
made in any certificate, memorandum or schedule furnished or to be furnished by
Buyer, or on their behalf, contains or will contain any untrue statement of a
material fact, or omit any material fact, the omission of which would be
misleading.
7.6.
Bankruptcies. Except as disclosed to Seller in writing, Buyer has never been a
party to, or the debtor in, any bankruptcy or such other related debtor/creditor
proceeding, nor has Buyer petitioned for relief under the bankruptcy laws of the
United States.
7.7.
Survival. Buyer’s representations and warranties shall survive the Closing
until the Note has been paid in full.
8.
Sellers' Obligations before Closing. Seller covenants that from the date of this
Agreement until the closing:
8.1.
Conduct of Business in Normal Course. Seller will carry on with the business and
activities in substantially the same manner as they previously have been carried
out, and shall not make or institute any unusual or novel methods of
manufacture, purchase, sale, lease, management, accounting, or operation that
will vary materially from those methods used by the Seller as of the date of
this Agreement.
8.2.
New Transactions. Sellers shall not without Buyers' written consent, which shall
not be unreasonably withheld, do or agree to do any of the following
acts:
(a) Enter
into any contract, commitment, or transaction not in the usual and ordinary
course of Seller’s business without obtaining Buyer’s approval.
9.
Buyers' Obligations before Closing.
9.1.
Information to Be Held in Confidence. Buyer agrees to hold in confidence all
information acquired from Seller.
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9.2. Securing
Consents of Third Parties. As soon as reasonably practicable after the execution
and delivery of this Agreement, and in any event on or before the closing date,
if necessary, Buyer will obtain the consents of all necessary persons to their
performance of this Agreement and the Buyer's assumption of any obligations
under it.
10.
Seller’s Obligations before Closing.
10.1. Accuracy
of Seller’s Representations and Warranties. Except as otherwise permitted by
this Agreement, all representations and warranties by Seller in this Agreement
or in any written statement that shall be delivered to Buyers by any of them
under this Agreement shall be true on and as of the closing date as though made
at that time.
10.2. Performance
by Seller. Seller shall have performed, satisfied, and complied with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by them, or any of them, on or before the closing
date.
11.
Conditions Precedent to Seller’s Performance. The obligations of Seller to sell
and transfer the Assets under this Agreement are subject to the satisfaction, at
or before the closing date, of all the following conditions:
11.1.
Accuracy of Buyers' Representations and Warranties. All representations and
warranties contained in this Agreement or in any written statement delivered by
Buyer under this Agreement shall be true on and as of the closing date as though
such representations and warranties were made on and as of that
date.
11.2.
Buyer’s Performance. Buyer shall have performed and comply with all covenants
and agreements, and satisfied all conditions that are required by this Agreement
to be performed, complied with, or satisfied, before or at the closing
date.
11.3.
Absence of Litigation. No action, suit or proceeding before any court or any
governmental body or authority, pertaining to the transaction contemplated by
this Agreement or to its consummation, shall have been instituted or threatened
on or before the closing date against Buyer or Seller.
11.4.
Corporate Approval. This Agreement and the performance of Buyer’s covenants and
obligations under this Agreement shall have been duly authorized by all
necessary corporate action, and Seller shall have received copies of all
resolutions pertaining to that authorization, certified by the Secretary of
Corporation.
11.5.
No Material Adverse Change. During the period prior to the closing date, there
shall not have been any material adverse change in the financial condition of
the Buyer, and Buyer shall not have sustained any material loss or damage to its
assets, whether or not insured, which materially affect its ability to conduct a
material part of the business being acquired hereunder.
11.6.
Certification by Buyers and Corporation. Seller shall have received a
certificate, at the closing date, signed and verified by Buyer’s Chief Executive
Officer, in such detail as Seller and its counsel may reasonably request, that
the conditions specified in paragraphs 11.1 through 11.5 have been
fulfilled.
12.
Closing.
12.2.
Closing. The transfer of the Assets by Seller to Buyer (the "Closing") shall
take place at the office of Buyer at: 000 Xxxxxxxx Xxxxx Xxxxx 000 Xxxxxx
Xxxxx Xx 00000 or by signed documents sent via email on October 1,
2010. In the event that the conditions specified in this
Agreement have not been fulfilled by such date, the closing shall be extended,
but
not beyond October 15, 2010.
13.
Parties Obligations at Closing.
13.1.
Seller’s Obligations at Closing. At the Closing, Seller shall deliver or cause
to be delivered to Buyer:
(a)
Instruments of assignment and transfer of all of the Assets of Seller to
be transferred hereunder; and
(B)
Stock certificates representing all the issued and outstanding shares of SEC
Compliance, Inc. (“SEC Compliance Shares”).
Simultaneously,
with the consummation of the transfer, Seller will put Buyer into full
possession and enjoyment of all the Assets to be conveyed and transferred by
this Agreement.
13.2.
Buyer’s Obligations at Closing. At the Closing, Buyer’s shall deliver to Seller
the following instruments and documents against delivery of the items specified
in paragraph 13.1:
(a)
The Note;
(b)
Stock certificates in Seller’s name representing Five Million (5,000,000)
shares of common stock of Buyer;
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(c)
The Security Agreement evidencing the security interest granted Sellers in the
Assets and SEC Compliance Shares (“Collateral”);
(d) A UCC-1 financing statement (the "Financing Statement"), dated as of
the closing date, perfecting Sellers' security interest in the
Collateral;
(e) Any other document necessary to perfect Sellers' security interest in any Assets or the SEC Compliance Shares;
(f) Certified resolutions of Buyer's Board of Directors, in a form
satisfactory to counsel for Sellers authorizing the performance of obligations
under this Agreement; and
(g) The certificate required by paragraph 11.6.
14. Other Obligations of the Parties.
14.1. Seller’s Indemnities. Seller shall indemnify, defend, and hold
harmless Buyer against and in respect of and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable attorneys' fees, that it shall
incur or suffer, which arise, result from, or relate to any breach of, or
failure by Seller or from any lawsuits or claims subsequently made against Buyer
arising from Seller’s current or prior activities. Seller will perform all of
its representations, warranties, covenants, or agreements in this Agreement or
in any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by Seller under this Agreement and shall execute any documents
necessary to perfect the agreements set forth herein.
14.2.
Buyer’s Indemnities. Buyer shall indemnify, defend, and hold harmless Seller
against and in respect of all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including
interest, penalties, and reasonable attorneys' fees, that it shall incur or
suffer, which arise, result from, or relate to any breach of, or failure by
Buyer to perform any of its representations, warranties, covenants, or
agreements in this Agreement or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Buyer under this Agreement and shall
execute any documents necessary to perfect the agreements set forth
herein.
14.3.
Consulting Services by Xxxxx XxXxxxx. As a part of this Agreement, Xxxxx XxXxxxx
shall perform consulting services for Buyer in the operation of SEC Compliance
as described in the Consulting Agreement of even date herewith attached hereto
as Exhibit
“C”. Monies payable to Xxxxx XxXxxxx by Buyer under the
Consulting Agreement are an integral part of this transaction, and any breach by
Buyer with regard to payments under the Consulting Agreement to Xxxxx XxXxxxx
shall be deemed a default under the Note and Security Agreement if the Note is
unpaid.
14.4. Change in Control. Without first obtaining the written consent
of Seller and upon thirty (30) days written notice, which consent shall not be
unreasonably withheld, Buyer shall not assign, pledge or transfer a
majority interest, voluntarily or involuntarily, in or to any or all
of the SEC Compliance Assets or the SEC-Compliance, Inc. shares to any person or
entity except to another of the Buyer’s entities during the initial two year
term of Seller’s Engagement Agreement.
15.
Costs.
15.1. Expenses.
Each of the parties shall pay their own costs and expenses incurred or to be
incurred by them in negotiating and preparing this Agreement, and related
documents, and in closing and carrying out the transactions contemplated by this
Agreement.
16. Form
of Agreement.
16.1.
Effect of Headings. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.
16.2.
Entire Agreement; Modification; Waiver. This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter contained
in it and supersedes all prior and contemporaneous agreements, representations,
and understandings of the parties. No supplement, modification, or amendment of
this Agreement shall be binding unless executed in writing by all the parties.
No waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of and other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
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16.3.
Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17.
Parties.
17.1.
Parties in Interest. Nothing in this Agreement whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
17.2.
Assignment. his Agreement shall not be assignable nor its duties delegable
to any other person or entity without the express written approval of Seller,
which may be withheld in Seller’s sole and absolute discretion. Furthermore, if
Seller elects to allow the assignment of the Agreement to a third party, then
Seller may accelerate any obligations due to Seller under this Agreement, the
Secured Note, the Security Agreement or the Consulting Agreement.
17.3.
Binding Nature. This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective heirs, legal representatives,
successors, and assigns.
18.
Remedies.
18.1.
Recovery of Litigation Costs. If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
18.2.
18.2.
Defaults Permitting Termination. If either Buyer or Seller materially defaults
in the due and timely performance of any of their warranties, covenants, or
agreements under this Agreement, the non-defaulting party or parties may on the
closing date give notice of termination of this Agreement, in the manner
provided in paragraph 20. The notice shall specify with particularity the
default or defaults on which the notice is based. The termination shall be
effective five (5) days after the closing date, unless the specified default or
defaults have been cured on or before this effective date for
termination.
19.
Nature and Survival of Representations and Warranties. All representations,
warranties, covenants, agreements of the parties contained in this Agreement, or
in any instrument, or other writing provided for in it, shall survive the
closing for that period of time reasonably necessary to consummate this
transaction, and all its related performances and obligations.
20.
Notices. All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
To
Buyer:
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ATT:
E. Xxxxx Xxxxxxx, CEO
000
Xxxxxxxx Xxxxx Xxxxx 000
Xxxxxx
Xxxxx, XX 00000
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To
Seller:
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Xxxxx
XxXxxxx
00000
Xxxxxxxx Xxxx., Xxxxx #000
Xxx
Xxxxxxx, XX 00000
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Copy
to:
|
Xxxx
Xxxxx, ESQ
Xxxxxxxxxx
Xxxxxxx
Xxxxxxx
& Xxxxxx LLP
0000
Xxxx Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
T:
949.975.7500 / F: 949.975.7501
|
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Any
party may change its address for purposes of this paragraph by giving the other
parties written notice of the new address in the manner set forth
above.
22. Further
Assurances. From time to time as the circumstances require, the parties hereto
shall execute such additional documents or take such other further actions
reasonably necessary to implement the terms of this Agreement.
23. Severability.
If any provision of this Agreement or the application thereof to any person or
circumstances shall be invalid or unenforceable to any extent, the remainder of
this Agreement and the application of such provisions to the other persons or
circumstances shall not be affected thereby and shall be enforceable to the
greatest extent permitted by law.
24. Time
Is of the Essence. Time is of the essence in the performance of obligations
under this Agreement and any of its related documents.
25. Governing
Law. This agreement shall be construed in accordance with, and governed by; the
laws of the State of California and any actions relating to the transaction
hereto shall be initiated and maintained exclusively in any state court of
competent jurisdiction in San Diego County, or federal court in the federal
district in which San Diego County is located.
IN
WITNESS WHEREOF, the parties to this Agreement have duly executed it on the day
and year first above written.
SELLER: | BUYER: | ||
Xxxxx XxXxxxx | Surge Global Energy, Inc. | ||
/s/ Xxxxx XxXxxxx | /s/ E. Xxxxx Xxxxxxx | ||
Xxxxx XxXxxxx, | E. Xxxxx Xxxxxxx | ||
On behalf of SEC-Compliance and | By its: Chief Executive Officer | ||
SEC-Compliance, Inc. |
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EXHIBIT
“A”
(ASSET
PURCHASE AGREEMENT)
SECURED PROMISSORY
NOTE
$80,000.00 (US DOLLARS) | San
Diego, California October 1, 2010 |
1. Promise
to Pay. For value received, the undersigned parties
(hereinafter referred to as “Makers”) promises to pay to
Xxxxx XxXxxxx or his assignee (“Holder”), at: 00000 Xxxxxxxx
Xxxx., Xxxxx #000, Xxx Xxxxxxx, XX 00000, or such other place as Holder may from
time to time designate in writing, the principal sum of $80,000.00. This Secured
Promissory Note (“Note”)
is being executed in conjunction with that certain Agreement for Purchase and
Sale of Assets of even date herewith (“Asset Purchase Agreement”),
that certain Consulting Agreement of even date herewith (“Consulting Agreement”) and
that certain Security Agreement of even date herewith (“Security
Agreement”).
2. Terms of
Payments. This Note will be payable without interest as
follows: (i)
$20,000 will be payable via wire transfer on October 1, 2010 and
(ii) the remaining $60,000.00 will be payable in 6 monthly payments
of principal of $10,000.00, the first of which will be due on November 1,
2010. The Payments will
be made in lawful money of the United States of America.
3. Surrender
of Note; Prepayment. After all principal and late payment
penalties, as applicable, at any time owed on this Note have been paid in full;
this Note will be surrendered to Makers for cancellation and will not be
reissued. This Note may be prepaid in whole or in part at any time
without penalty or bonus.
5. Event of
Default. Each of the following events will constitute an
“Event of
Default:”
(a) Nonpayment
by Maker of any of the Payments under this Note or the within 5 business days
after the date when due; or
(b) Default
in the due observance or performance of any covenant, condition or agreement on
the part of Maker in this Note (excluding the Payments, as referred to in (a),
above) and such default is not cured within 5 days by Maker; or
(c) Maker
is adjudicated a bankrupt or insolvent, or consents to the appointment of a
receiver, trustee or liquidator of itself or of any material part of its
property, or admits in writing its inability to pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or files a
voluntary petition or an answer seeking reorganization or arrangement in a
proceeding under any applicable bankruptcy law (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
Maker in any such proceeding, or, by voluntary petition, answer or consent,
seeks relief under the provisions of any other existing or future bankruptcy or
other similar law providing for the reorganization or winding up of
corporations, or Maker or its directors or majority stockholders take action
looking to the dissolution or liquidation of Maker; or
(d) An
order, judgment or decree is entered by any court of competent jurisdiction
appointing, without the consent of Maker, a receiver, trustee or liquidator of
Maker or of any material part of its property, and such receiver, trustee or
liquidator has not been removed or discharged within 60 days thereafter, or any
material part of the property of Maker is, in any judicial proceeding,
sequestered and not returned to the possession of Maker within 60 days
thereafter; or
-7-
(e) A
petition against Maker in a proceeding under any bankruptcy law (as now or
hereinafter in effect) is filed and is not dismissed within 30 days after such
filing, or, in case the approval of such petition by a court of competent
jurisdiction is required, is filed and approved by such a court as properly
filed and such approval is not withdrawn or the proceeding dismissed within 30
days thereafter, or if, under the provisions of any other similar law providing
for reorganization or winding up of corporations and which may apply to Make any
court of competent jurisdiction, custody or control of Maker or of any material
part of its property and such jurisdiction, custody or control is not
relinquished or terminated within 30 days thereafter; or
6. Remedies. If
an Event of Default occurs and Maker fails to cure said default within 5
business days, then all obligations of Maker to Holder hereunder will
immediately become due and payable in full, and Holder may protect and enforce
its rights by a suit in equity, in arbitration and/or by any other appropriate
proceeding, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Note or in aid of the
exercise of any power granted in this Note, or may proceed to enforce the
payment of this Note or to enforce any other legal or equitable right of
Holder. Nothing contained in this Section will in any manner impair
that absolute and unconditional right of Maker to receive payment of the
principal and interest on this Note when the same becomes due and payable in
accordance with the terms hereof, and to institute suit for the enforcement of
such payment.
7. Waiver of Demand, Present, Protest, Etc. The Maker hereof waives demand, presentment for payment, protest, notice of protest and notice of nonpayment of this Note, and all other notices of any kind. To the fullest extent permitted by law, the defense of the statute of limitations is waived with respect to collection of amounts owing under this Note.
8. Late
Payments. Maker and Holder agree that, from the nature of the
matter, it will be extremely difficult to fix the actual damage, out of pocket
expense and administrative efforts which would accrue to Holder, in the event
Maker should not receive a Payment on or prior to the date the same is
due. Maker therefore agrees that a late charge of 10% of the amount
of the Payment will be added to the Payment which is paid to Holder more than 5
days after the date the Payment is due according to the terms hereof, without
the necessity of written notice, as liquidated damages to compensate Holder for
the damage Holder will sustain by reason of such late payment being made more
than 5 days after the date said installment is due. All late payments and any
penalties thereon shall accrue simple interest at a rate of 10% per annum until
paid in full after a payment is late. Interest shall be calculated based on a
360 day year.
9. Cumulative
Remedies; Waiver. No remedy herein conferred upon Holder is
intended to be exclusive of any other remedy, and each and every such remedy
will be cumulative and will be in addition to every other remedy given hereunder
or now or hereafter existing at law or in equity or by statute or otherwise and
may be pursued singularly, successively or together. No course of
dealing between Maker and Holder will operate as a waiver of any right of Holder
under this Note, and no delay on the part of Holder in exercising any right
hereunder will so operate. No single or partial exercise of any power
hereunder will preclude the exercise of any other power.
10. No
Offset. Maker agrees to pay all amounts under this Note
without offset, deduction, claim, counterclaim, defense or recoupment, all of
which are hereby waived.
11. Maximum
Interest Rate. In the event that this Note requires the
payment of interest in excess of the maximum amount permissible under applicable
law, then Maker’s obligations hereunder will, automatically and retroactively,
be deemed reduced to the highest maximum amount permissible under applicable
law. In the event Holder receives as interest an amount which would
exceed such maximum applicable rate, the amount of any excess interest will not
be applied to the payment of interest hereunder, but will, automatically and
retroactively, be applied to the reduction of the unpaid principal balance due
hereunder. In the event and to the extent such excess amount of
interest exceeds the outstanding unpaid principal balance hereunder, any such
excess amount will be immediately returned to Maker by Holder.
12. Xxxxxxxx.Xx secure
the payment of this Note, Maker and Holder are executing the Security Agreement
and Holder is filing a UCC-1 Financing Statement, which perfects Holder’s
security interest in all of the assets of only the Maker’s business acquired
from Holder under the Asset Purchase Agreement known as SEC Compliance or SEC
Compliance, Inc.
13. Modification. Neither
this Note nor any term hereof may be waived, amended, discharged, modified,
changed, or terminated orally, nor will any waiver of any provision hereof, be
effective except by an instrument in writing signed by Maker and
Holder.
-8-
14. Binding
Effect; Severability. Whenever used herein, the words “Maker” and “Holder” will be deemed to
include their respective heirs, personal representatives, successors and
assigns. This Note will be binding upon the successors and assigns of
Maker and will inure to the benefit of Holder and its heirs, endorsees and
assigns. In the event that any provision of this Note is deemed
invalid, illegal, or unenforceable, all other provisions of the Note which are
not affected by such invalidity, illegality or unenforceability will remain in
full force and effect. Further, the parties agree that such provision
deemed invalid, illegal or unenforceable will be reduced in scope, power or
effect only to the extent necessary to render the Note valid and
enforceable.
15. Time is
of the Essence. Time is of the essence with respect to each
and every provision of this Note.
16. Interpretation;
Headings; Gender. In the event an ambiguity or question
of intent or interpretation arises, this Note will be construed as if drafted
jointly by the parties and no presumption or burden of proof will arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions of
this Note. The subject headings of the sections and subsections of
this Note are included for purposes of convenience only, and will not affect the
construction or interpretation of any of its provisions. Whenever in
this Note as the context may so require, the masculine gender will be deemed to
refer to and include the feminine and neuter, and the singular will refer to and
include the plural, and vice versa.
17. Governing
Law; Jurisdiction; Venue. This Note will be construed,
interpreted, and enforced in accordance with, and governed by, the laws of the
State of California without regard to conflicts of law’s provisions
thereof. The parties agree that any action or proceeding brought to
enforce or declare rights arising out of or relating to this Note will be
brought exclusively in the State or Federal Courts in San Diego County,
California, and the parties further consent to the jurisdiction of said Courts
and waive any claims of forum non convenient or any other claims relating to
venue.
18. Arbitration. Any
controversy, dispute or claim of whatever nature in any way arising out of or
relating to this Note shall be resolved, at the request of Holder or Maker, by
final and binding arbitration in San Diego, California before J.A.M.S., also
known as Judicial Arbitration and Mediation Services, (“JAMS”) in accordance
with JAMS’ then-current policies and procedures for arbitration of disputes.
Notwithstanding, any claim by any party for equitable relief, including but not
limited to, a temporary restraining order, preliminary injunction or permanent
injunction against another party shall be excluded from binding arbitration
under this Agreement
19. Attorneys’
Fees. If any party brings an action, arbitration, or other
proceeding arising out of or relating to this Note, the Prevailing Party (as
hereinafter defined) will be entitled to recover its reasonable attorneys’ fees
and other costs incurred in the action, arbitration, or proceeding, in addition
to any other relief to which the Prevailing Party may be
entitled. The term “Prevailing Party” will
include, without limitation, a party who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other party of its claim or defense. The
attorneys’ fees award will not be computed in accordance with any court fee
schedule, but will be such as to fully reimburse all attorneys’ fees reasonably
incurred.
.
20. Notices. All
notices to be given under this Note must be in writing and will be deemed served
upon receipt by the addressee or, if mailed, upon the expiration of 48 hours
after deposit in the United States Postal Service, certified mail, postage
prepaid, addressed to the address of Maker or Holder as set forth in the Asset
Purchase Agreement.:
IN WITNESS WHEREOF, Maker has
caused this Note to be executed on the date first written above.
MAKER | |||
Surge Global Energy, Inc., | |||
A Delaware corporation | |||
By: | /s/ E. Xxxxx Xxxxxxx | ||
E. Xxxxx Xxxxxxx | |||
Its: | Chief Executive Officer |
-9-
EXHIBIT
“B”
(TO
ASSET PURCHASE AGREEMENT)
SECURITY
AGREEMENT
This Security Agreement (the “Agreement”) is dated October 1, 2010 (the
“Effective Date”), and is between Surge Global Energy, a Delaware corporation
(“Borrower”) and Xxxxx XxXxxxx, an individual (“Secured Party”). Borrower and
Secured Party are sometimes collectively referred to herein as “Parties” and
individually a “Party”.
RECITALS:
WHEREAS, Borrower is executing
that certain Secured Promissory Note of even date herewith (“Note”), that
certain Consulting Agreement of even date herewith (“Consulting Agreement”) and
that certain Agreement for Purchase and Sale of Assets of even date herewith
(“Asset Purchase Agreement”); and
WHEREAS, in order to induce
Secured Party to agree to the terms of the Note, Consulting Agreement and Asset
Purchase Agreement, Borrower agrees to provide a security interest in and to the
assets purchased by Borrower pursuant to the Asset Purchase
Agreement.
NOW, THEREFORE, in
consideration of the mutual promises, covenants, and undertakings specified
herein and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged hereby, and with the intent to be
obligated legally, the Parties agree as follows:
AGREEMENT:
1. Creation
of Security Interest; Collateral. As
collateral security for the payment of all Indebtedness of Borrower to Secured
Party, Borrower hereby grants and conveys to Secured Party a first priority
continuing security interest in and lien upon all now owned and hereafter
acquired property and assets of Borrower related to the business known as SEC
Compliance (the “Business”) and the Proceeds and products thereof (which
property, assets and Proceeds, together with all other collateral security for
the obligations now or hereafter granted to or otherwise acquired by Secured
Party, are referred to herein collectively as the “Collateral”), including, without
limitation, all property of Borrower acquired by Borrower pursuant to the Asset
Purchase Agreement and including without limitation the collateral described in
Schedule “1” attached hereto.
As used herein:
“Proceeds”
has
has the meaning ascribed to such term in the UCC and shall also include, but not
be limited to, (a) any and all proceeds of any and all insurance policies
(including, without limitation, life insurance, casualty insurance, business
interruption insurance and credit insurance), indemnity, warranty or guaranty
payable to Borrower from time to time with respect to any of the Collateral or
otherwise, (b) any and all payments (in any form whatsoever) made or due and
payable to Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental body, authority, bureau or agency, and (c) any
and all other amounts from time to time paid or payable under or in connection
with any of the Collateral.
“Indebtedness” means any and all present and future payment obligations of
Borrower to Secured Party, whether incurred pursuant to a loan, line of credit
or otherwise and whether consisting of obligations for principal, interest,
costs or attorneys’ fees charged against Borrower or other obligations of
Borrower to Secured Party.
“UCC”
means
the Uniform Commercial Code as presently enacted in California (or any
successor legislation thereto), and as the same may be amended from time to
time, and the state counterparts thereof as may be enacted in such states or
jurisdictions where any of the Collateral is located or held.
2. Warranties
by Borrower. Borrower hereby represents and warrants to
Secured Party as follows: (a) except for the security interest created by this
Agreement, Borrower has good and marketable title to all of the Collateral, free
of any levy, attachment, lien or encumbrance; (b) the execution and delivery of
this Agreement is authorized; and (c) the execution and delivery of this
Agreement does not constitute a breach or default under any other agreement to
which Borrower is a party.
-10-
3. Covenants
of Borrower. Until such time as the Indebtedness has been paid
in full, Borrower shall: (a) maintain the Collateral in good
condition and repair, except as to inventory or other Collateral sold in the
ordinary course of Borrower’s business; (b) keep such of the Collateral which is
insurable adequately insured with a reputable insurance company against all
material risks usually insured against by companies operating similar
businesses; (c) allow Secured Party, and any person designated by Secured Party,
free access to, and the right without judicial process to, inspect the
Collateral and any other property of Borrower, and inspect, audit, check and
make extracts from Borrower’s books, records, accounts, correspondence and other
data relating to Borrower’s business and any transactions into which Borrower
has entered; (d) provide Secured Party, in a form satisfactory to Secured Party,
such information as Secured Party may request regarding the Collateral; (e)
maintain complete and accurate books and records comprising a standard and
modern accounting system in accordance with generally accepted accounting
principles that record and specify accurately and correctly Borrower’s income,
expenses, assets and liabilities; (f) timely comply with all terms, covenants,
conditions and/or obligations it incurs with Secured Party and all other third
parties; (g) timely comply with all laws, statutes, regulations, ordinances and
insurance policies relating to the possession, operation, maintenance and
control of the Collateral; (h) not allow any levy, attachment, lien or
encumbrance to be made upon all or any part of the Collateral; and (i) not
surrender, sell, lease, rent, or otherwise dispose of or transfer any of the
Collateral or any interest therein (except as to inventory or other Collateral
sold or otherwise disposed of in the ordinary course of Borrower’s
business).
4. Default. The
following events shall constitute a Default under this Agreement:
(a) Borrower’s
failure to timely make any payment due pursuant to the Note or Consulting
Agreement and the occurrence of any event of default under the Note or
Consulting Agreement;
(b) Borrower’s
failure to timely pay any Indebtedness owing to Secured Party;
(c) Borrower’s
failure to comply with any other covenant, condition or obligation of this
Agreement;
(d) Borrower
makes, or has made, any material misstatement or misrepresentation to Secured
Party;
(e) Borrower’s default under any
covenant, representation, term or warranty contained in any agreement or
contract with a third party which default would result in liability to the
Borrower in excess of $25,000; or
(f) There
occurs any event or a change in the condition or affairs, financial or
otherwise, of Borrower which, in the reasonable opinion of Secured Party,
impairs Secured Party's security or ability of Borrower to discharge its
obligations hereunder or under the Note or which impairs the rights of Secured
Party in Borrower’s Collateral.
5. Rights
and Remedies upon Default. In the event of a Default, Secured
Party may then, or at any time thereafter as long as such Default exists, do
any, some or all of the following:
(a) Accelerate
and declare to be due and payable immediately any or all
Indebtedness;
(b) Take
possession of any or all of the Collateral and dispose of the Collateral in one
or more parcels at a public or private sale or sales at Secured Party’s option
in order to satisfy any part of the Indebtedness;
(c) Enter
onto any of Borrower’s premises without judicial process to search for, take
possession of, keep, store, or remove any of the Collateral and remain on such
premises or cause a custodian to remain thereon without charge for so long as
Secured Party deems necessary in order to complete the enforcement of his rights
pursuant to this Agreement or any other agreement;
(d) Exercise
any and all rights and remedies which Secured Party may have pursuant to the
Note and Consulting Agreement; and
(e) Take
any other lawful actions which Secured Party may have to collect the
Indebtedness.
-11-
6. Financing
Statements. Borrower hereby authorizes Secured Party to file Financing
Statements with respect to the Collateral in form acceptable to Secured Party
and its counsel, and hereby ratifies any actions taken by Secured Party prior to
the date hereof to file such Financing Statements. Borrower shall, at
all times, do, make, execute, deliver and record, register or file all Financing
Statements and other instruments, acts, pledges, leasehold or other mortgages,
amendments, modifications, assignments and transfers (or cause the same to be
done), and will deliver to Secured Party such instruments and/or documentation
evidencing items of Collateral, as may be requested by Secured Party to better
secure or perfect Secured Party's security interest in the Collateral or any
lien with respect thereto. Borrower acknowledges
that it is not authorized to file any Financing Statement or amendment or
termination statement with respect to any Financing Statement without the prior
written consent of Secured Party and agrees that it will not do so without the
prior written consent of Secured Party. For the purposes of this Agreement
“Financing Statements” means the UCC-1 Financing Statements to be filed with
applicable governmental authorities of each state or commonwealth or political
subdivisions thereof pursuant to which Secured Party shall perfect its security
interest in the Collateral.
7. Inconsistent
Terms. In the event of a conflict between this Agreement and the Note
and/or Consulting Agreement, to the maximum extent permitted by applicable law,
the terms and conditions set forth herein shall prevail over any other
conflicting document.
8. Other
Documents. Each of the Parties hereto shall execute and
deliver such other and further documents and instruments, and take such other
and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
9. Time of
Essence. Time is of the essence in the performance by Borrower
of the covenants, conditions and obligations set forth in this
Agreement.
10. Parties
in Interest. This Agreement shall be binding upon and inure to
the benefit of the Parties, and the heirs, personal representatives, permitted
successors and permitted assigns of the Parties.
11. Entire
Agreement. The Agreement and the Note together contain the
entire agreement between the Parties with respect to the subject matter hereof,
and supersede all prior agreements, understandings and writings between the
Parties with respect to the subject matter hereof.
12. Amendments
in Writing. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally. This Agreement may
be amended or any term changed, waived, discharged or terminated, only by an
agreement in writing signed by the Parties.
13. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which taken together shall constitute but one and
the same document.
14. Advice of
Counsel. Each Party acknowledges and agrees that they have
given mature and careful thought to this Agreement and that they have been given
the opportunity to independently review this Agreement with legal
counsel.
15. Ambiguities
Not Construed Against Drafting Party. In the event of an
ambiguity in or dispute regarding the interpretation of this Agreement, the
interpretation of same shall not be resolved by any rule of interpretation
providing for interpretation against the Party who causes the uncertainty to
exist or against the draftsman.
16. Unenforceable
Terms. Should any of the provisions of this Agreement be
declared by any court to be illegal or invalid, the validity of the remaining
parts, terms or provisions shall not be affected thereby, and said illegal or
invalid part, term or provision shall be deemed not to be part of this
Agreement.
17. Notices. All
notices, requests or demands and other communications hereunder must be in
writing and shall be deemed to have been duly made if personally delivered or
mailed, postage prepaid, to the Parties as provided in the Asset Purchase
Agreement:
-12-
18. Costs of
Collection. In the event of a default hereunder, the Borrower
agrees to pay any and all costs and expenses which may be incurred by the
Secured Party hereof in connection with the enforcement of any of its rights
under this Agreement and/ or the Note or under any such other instrument,
including court costs and reasonable attorneys' fees.
19. APPLICABLE LAW: THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, THE LAWS OF WHICH BORROWER HEREBY EXPRESSLY
ELECTS TO APPLY TO THIS AGREEMENT, WITHOUT GIVING EFFECT TO PROVISIONS FOR
CHOICE OF LAW THEREUNDER. BORROWER AGREES THAT ANY ACTION OR
PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL BE
COMMENCED IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT.
20. WAIVER OF
JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, BORROWER
HEREBY WAIVES ANY AND ALL RIGHTS THAT IT MAY NOW OR HEREAFTER HAVE UNDER THE
LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE TO A TRIAL BY JURY OF ANY AND
ALL ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING
BETWEEN BORROWER AND SECURED PARTY OR THEIR SUCCESSORS AND ASSIGNS, OUT OF OR IN
ANY WAY CONNECTED WITH THIS AGREEMENT OR THE NOTE. IT IS INTENDED
THAT SAID WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, AND/OR
COUNTERCLAIMS IN ANY ACTION OR PROCEEDINGS BETWEEN BORROWER AND SECURED
PARTY.
21. CONSENT TO
JURISDICTION. BORROWER
HEREBY (a) IRREVOCABLY SUBMITS AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CALIFORNIA, LOS ANGELES COUNTY,
WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT AND/OR
THE COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING THERETO, AND (b)
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR
FORUM NON CONVENIENS WITH
RESPECT THERETO. IN ANY SUCH ACTION OR PROCEEDING, BORROWER WAIVES
PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS AND PAPERS
THEREIN AND AGREES THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT ITS OFFICES SET FORTH IN THIS
AGREEMENT OR OTHER ADDRESS THEREOF OF WHICH SECURED PARTY HAS RECEIVED NOTICE AS
PROVIDED IN THIS AGREEMENT. NOTWITHSTANDING THE
FOREGOING, BORROWER CONSENTS TO THE COMMENCEMENT BY SECURED PARTY OF
ANY ACTION OR PROCEEDING IN ANY OTHER JURISDICTION TO ENFORCE ITS RIGHTS IN AND
TO THE COLLATERAL AND WAIVES ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY
SUCH ACTION OR PROCEEDING.
IN WITNESS WHEREOF, the
Parties have executed this Security Agreement as of the Effective
Date.
BORROWER | |||
Surge Global Energy, Inc., | |||
A Delaware Corporation | |||
By: | /s/ E. Xxxxx Xxxxxxx | ||
E. Xxxxx Xxxxxxx | |||
Its: Chief Executive Officer |
-13-
Acknowledgment
of, and agreement to, terms and conditions:
SECURED PARTY | |||
Xxxxx XxXxxxx, an individual | |||
By: | /s/ Xxxxx XxXxxxx | ||
Xxxxx XxXxxxx |
-14-
SCHEDULE
“1”
Collateral
All segregable properties, assets and
rights of the Borrower used in or in connection with the Business, whether
operated as a separate division by Borrower or otherwise, including, without
limitation, now owned or hereafter acquired at any time by Borrower or in which
the Borrower now has or at any time in the future may acquire any right, title
or interest, wherever located or situated, all As-Extracted Collateral, Chattel
Paper, Commercial Tort Claims, Consignments, Contracts, Copyrights, Copyright
Licenses, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles,
Goods, Instruments, Inventory, Investment Property, Letter-of-Credit Rights,
Letters of Credit, Patents, Patent Licenses, Payment Intangibles, Promissory
Notes, Receivables, Records, Software, Supporting Obligations, Trademarks,
Trademark Licenses, and Vehicles, and to the extent not otherwise included, all
Proceeds (including condemnation proceeds), all Accessions and additions
thereto, and all substitutions and replacements therefore and products of any
and all of the foregoing.
The capitalized terms used herein shall
have the meanings set forth below. All other terms used herein are
used as so defined in the UCC.
“Business” means the business currently
known as “SEC Compliance” or “SEC Compliance, Inc.”.
“Commercial
Tort Claims” means all Commercial Tort Claims as that term is defined in Article
9 of the UCC.
“Contracts” means the separate
contracts between the Borrower and its customers, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (a) all rights of the Borrower to receive moneys due and to become
due to it there under or in connection therewith, (b) all rights of the Borrower
to damages arising out of, or for, breach or default in respect thereof and (c)
all rights of the Borrower to perform and to exercise all remedies there under;
but excluding any contracts, the assignment or hypothecation of which, for
collateral purposes, would result in a default or require, or cause, a
forfeiture or permit a revocation of material rights under such
contract.
“Copyrights”
means (a) all copyrights of the United States or any other country, including;
(b) all copyright registrations filed in the United States or in any other
country; and (c) all proceeds thereof.
“Copyright License” means all
agreements, whether written or oral, providing for the grant by the Borrower of
any right to use any Copyright.
“Equipment” means all machinery,
equipment, furniture, fixtures, conveyors, tools, materials, laboratory
equipment, storage and handling equipment, hydraulic presses, cutting equipment,
computer equipment and hardware, including servers, central processing units,
terminals, drives, memory units, printers, keyboards, screens, peripherals and
input or output devices, molds, dies, stamps, vehicles, and other equipment of
every kind and nature and wherever situated now or hereafter owned by Borrower
or in which Borrower may have any interest as lessee or otherwise (to the extent
of such interest), together with all additions and accessions thereto, all
replacements and all accessories and parts therefore, all manuals, blueprints,
databases, know-how, warranties and records in connection therewith, all rights
against suppliers, warrantors, manufacturers, sellers or other in connection
therewith, and together with all substitutions for any of the
foregoing.
“Inventory” means all present and
future goods intended for sale, lease, or other disposition by Borrower
including, without limitation, all raw materials, work in process, finished
goods and other retail inventory, goods in the possession of outside processors
or other third parties, goods consigned to Borrower to the extent of its
interest therein as consignee, materials and supplies of any kind, nature or
description which are or might be used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of any such goods, and all
documents of title or documents representing the same.
“Investment Property” means any and all
investment property of Borrower as defined in UCC, including, without
limitation, all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity accounts,
and all financial assets held in any securities account or otherwise, wherever
located, and whether now existing or hereafter acquired or arising.
-15-
“Patents” means (a) all letters patent
of the United States and all reissues and extensions thereof, (b) all
applications for letters patent of the United States and all divisions,
continuations and continuations-in-part thereof or any other country, and (c)
all proceeds thereof, including the goodwill of the business connected with the
use of and symbolized by the Patents.
“Patent License” means all agreements,
whether written or oral, providing for the grant by the Borrower of any right to
manufacture, use or sell any invention covered by a Patent.
“Records” means all books, records,
customer lists, ledger cards, computer programs, computer tapes, disks,
printouts and records and other property and general intangibles at any time
evidencing or relating to any of the types (or items) of property covered by
this Schedule I, whether now in existence or hereafter created.
“Receivables” means all present and
future accounts and accounts receivable, together with all security therefore
and guaranties thereof and all rights and remedies relating thereto including
any right of stoppage in transit.
“Trademarks” means (a) all trademarks,
trade names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos and other source or business
identifiers and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether registered in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof or otherwise; (b) all renewals thereof; and (c) all proceeds thereof,
including the goodwill of the business connected with the use of and symbolized
by the Trademarks.
“Trademark License” means any
agreement, written or oral, providing for the grant by the Borrower of any right
to use any Trademark.
“Vehicles” means all cars, trucks,
trailers, construction and earth moving equipment and other vehicles covered by
a certificate of title law of any.
-16-
EXHIBIT
“C”
(TO
ASSET PURCHASE AGREEMENT)
This Engagement Agreement (the
“Agreement”), dated October 1,
2010, is made and entered into by and between Surge Global Energy, Inc.,
a Delaware corporation (the “Company”) and Xxxxx XxXxxxx, an individual residing
at: 00000 Xxxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx, XX 00000
(“Executive”).
ARTICLE
I
DUTIES
AND TERM
1.1 Engagement. In
consideration of their mutual covenants and other good and valuable
consideration, the receipt, adequacy and sufficiency of which is hereby
acknowledged, the Company agrees to hire Executive, and Executive agrees to
provide services to the Company, upon the terms and conditions herein
provided.
1.2 Position
and Responsibilities.
(a) Executive
will serve as the President of SEC Compliance, Inc. in charge of managing SEC
Compliance (or such other companies, title or titles, if any, as may be assigned
to Executive) reporting directly to the Company’s Chief Executive Officer, E.
Xxxxx Xxxxxxx (who, for purposes of this Agreement may be referred to as the
“President” ). Executive’s duties will also include marketing,
business development and financial advisory services. Executive
agrees to perform such services as may from time to time be assigned to him by
the President or by the Company’s Board of Directors provided that such services
are, at all times, commensurate with those services which would be typically
provided by a Vice President in charge of managing SEC Compliance. Executive
will perform the majority of his job responsibilities from his home office or
such other location as Executive and the Company agree. Executive
agrees that his position with the Company, overseeing SEC Compliance, will be
his primary occupation during the Term. In turn, the Company
acknowledges that Executive will devote a reasonable amount of professional time
to fulfilling Executive’s duties and obligations to other enterprises with which
Executive is affiliated or engaged.
(b) Executive
further agrees to serve, if elected, as a director of the Company or of any
subsidiary or affiliate of the Company, or officer of the company, Executive
shall have the right to refuse such appointment, and if he does, the options
provided for in the LOI shall not be granted.
(c) During
the period of his engagement hereunder, Executive will devote his reasonable
best efforts to the faithful performance of his duties
hereunder. Executive agrees not to engage in any business
activity that would materially interfere with Executive’s performance of his
duties under this Agreement. The Company acknowledges that
Executive’s current roles and responsibilities with respect to other enterprises
with which Executive is affiliated or engaged do not and shall not be deemed to
interfere with Executive’s performance of his obligations under this Agreement.
..
1.3 Term. The
term of Executive’s engagement under this Agreement will commence on October 1, 2010 and will continue
until October 31, 2012, unless earlier terminated by either party
pursuant to Article III. If not terminated by either party in
accordance with Article III, the Company will have the option to extend
Executive’s engagement for an additional three (3) year term. The entire period
during which Executive is engaged pursuant to this Agreement is referred to
herein as the “Term”.
1.4 Independent
Contractor Status. The Company and
Executive agree
that Executive will perform the services hereunder as an independent contractor
and not an employee of the Company until December 31, 2010. The
Company will treat Executive as an independent contractor and will, if required
to do so, issue Executive a Form 1099 in 2010. Executive will be
responsible for reporting and paying taxes on all compensation paid to Executive
under this Agreement. Executive will indemnify and hold the Company harmless
from any losses, penalties, or interest which it incurs by reason of Executive’s
failure to pay Executive’s taxes when due. At January 1, 2011, the Company and
Executive will re-evaluate Executive’s role with the Company in order to
determine whether or not Executive will be classified as an employee of the
Company or continue to be classified as an independent
contractor. Notwithstanding such a re-classification, this Agreement
shall remain in full force and effect unless and until superseded or amended by
writing signed by both parties.
-17-
ARTICLE
II
COMPENSATION
For all services rendered by Executive
in any capacity during his engagement under this Agreement, including, without
limitation, services as a director, officer or member of any committee of the
Board of the Company or of the Board of Directors of any subsidiary or affiliate
of the Company, the Company will compensate Executive as follows:
2.1 Base
Compensation. Commencing on October 1, 2010, the Company will
pay to Executive an annual base compensation of $120,000.00 (the “Base
Compensation”), in accordance with the Company’s standard payroll
policies including compliance with applicable withholding requirements in the
appropriate jurisdictions, or shall pay this compensation to a company of Xxxxx
XxXxxxx’x choice. The Base Compensation will be reviewed annually by
the Board or a committee designated by the Board and the Board or such committee
and Executive will negotiate in good faith, based upon the prior year’s
performance by Executive, to determine Executive’s Base Compensation for the
succeeding year. Executive will receive an annual compensation increase at
least commensurate with the base compensation increase, if any, that the Company
gives to its other senior executives.
2.2 Incentive
Compensation. In addition to the Base Compensation provided
for above, Company will pay Executive the following as incentive
compensation:
2.2.1 Share of
Increased Profits of the Company. Executive will be entitled
to receive a bonus equal to 10% of the amount by which the
Company’s Net Profits from its SEC Compliance divisions1 (but none other), for the fiscal year ending
December 31, 2011 and any subsequent complete fiscal year during which this
Agreement is still in effect exceed $120,000.00 (the “Incentive
Bonus”). Net Profits for the fiscal year December 31, 2011
will serve as the constant base year for purposes of calculating the Incentive
Bonus to be paid to Executive for each subsequent fiscal year. For
purposes of this Agreement, “Net Profits”, will be determined
consistent with the Company’s past accounting practices consistently applied and
means, generally speaking, the Company’s annual revenues derived from its SEC
Compliance divisions minus its expenses directly attributable to the SEC
Compliance divisions (which expenses will include allocated state and federal
tax payments, Executive’s Base Compensation, and its share of the
Company’s corporate overhead) The Company will pay Executive the
Incentive Bonus within 60 days of the date the Company determines its Net
Profits for the applicable fiscal year. If Executive’s engagement
with the Company terminates for any other reason other than Cause (as defined
below) the Company will pro-rate the Incentive Bonus for the corresponding
fiscal year through Executive’s last day of engagement. If the
Company terminates Executive’s engagement for Cause, Executive will not be
eligible to receive the Incentive Bonus for the fiscal year in which Executive’s
termination date falls.
As used in this Agreement, “Cause” is
defined as follows: (i) engaging in any act of illegal harassment,
discrimination, physical violence or other unlawful conduct that exposes the
Company to the risk of significant legal liability or which has a direct and
substantial adverse effect on the Company’s reputation and/or financial
well-being; (ii) unauthorized disclosure of Confidential Information of the
Company (as defined in Exhibit “A” hereof) (iii) falsifying or altering the
Company records; (iv) theft of, or deliberately causing harm to, Company
property; (v) breach of a fiduciary duty owed to the Company; (vi) engaging in
any act of misconduct which in any way has a direct and substantial adverse
effect on the Company’s reputation and/or financial well-being; (vii) failure to
devote a reasonable amount of time to the business and management of the Company
in accordance with the terms hereof or failure to satisfactorily perform the job
functions required by Executive’s position with the Company for a period of two
(2) consecutive months, for reasons other than the poor health of Executive,
following notice to Executive and a reasonable opportunity to cure.
2.2.2 Share of
Profits of New Businesses. Executive will be eligible, for as long as he
remains employed by the Company under this Agreement, to receive an additional
bonus of up to 10% of the Net
1 As
used herein “SEC Compliance divisions” means all subsidiaries or affiliates of
the Company whose business consists of Xxxxx compliance, securities compliance,
and financial printing.
-18-
Profits
received or earned by the Company (whether received as income, profits,
dividends, sale proceeds or in any other form that recognizes the
Company’s ownership interest, and whether received as a shareholder,
licensor, joint venture or otherwise), during the Term from any new company or
business founded or created at any time during the Term of this Agreement for
which Executive materially participates in its creation (“New Business
Bonus”). The Company will take all steps it deems necessary and
appropriate to secure or otherwise have recognized its ownership or other
payment rights with respect to such new businesses; to the extent it is
commercially reasonable and feasible to do so, in the Company’s reasonable
business judgment. Any bonus payable under this Section 2.2.2 will be
pro-rated as of Executive’s last day of engagement with the
Company. In addition, if during the Term of this Agreement, Executive
materially participates in the creation of any New Business (as defined below)
the Company and Executive agree to negotiate in good faith, on a case-by-case
basis, to determine an amount of compensation to be paid to Executive that
reasonably compensates Executive for his contribution, giving regard to the New
Business’ actual financial success and the industry, market sector and
geographical area(s) in which such New Business actually transacts
business. For purposes of this Agreement, “New Business” means: (i) a
business created or founded during the Term from which the Company (or its
shareholders or any company under common ownership with the Company) derives a
direct financial benefit; and (ii) that offers for sale goods or services which
are materially different to (or are delivered in a materially different manner
from) those goods and services that were offered for sale by the Company or its
affiliated companies at any time prior to the Term.
2.3 Stock
Options in Company. As additional compensation from the
Company, and in consideration for Executive’s ongoing advice and expertise and
agreeing to become a director of the Company, Executive will receive options to
purchase 400,000 shares of the Company’s common stock (the “Option”) vesting
monthly over a term of two years with vesting commencing on the date the stock
options are issued, which date shall be no later than October 15, 2010. The
exercise price per share of common stock shall be equal to the closing price of
the common stock on the OTC Bulletin Board on the date that Executive is elected
to the Surge Board of Directors on the date granted. The Option shall
accelerate and vest in its entirety if the Company terminates executive without
Cause and Executive shall have at least thirty days to exercise the entire
Option. If Executive ceases to be a director or employee of the Company, then
the options vested shall be determined on a pro rata basis from the date of
issuance to the date of termination. The Option shall be
further subject to the additional terms and conditions provided in the Option
Agreement, attached hereto as Exhibit “B”.
2.4 Additional
Benefits. If and when Executive becomes an employee of the
Company, Executive will receive health insurance for himself at the Company’s
expense. Executive may purchase health insurance for his family on
the same terms as such insurance is made available to other Executives of the
Company. If and when Executive becomes an employee of the Company,
Executive will be entitled to participate in such other Executive benefit and
welfare programs, plans and arrangements (including, without limitation,
pension, supplemental pension and other retirement plans, group disability
benefits, travel or accident insurance plans) and to receive fringe benefits,
such as dues and fees of professional organizations and associations, which are
from time to time available to the Company’s executive personnel; provided, however, there will
be no duplication of termination or severance benefits, and to the extent that
such benefits are specifically provided by the Company to Executive under other
provisions of this Agreement, the benefits available under the foregoing plans
and programs will be reduced by any benefit amounts paid under such other
provisions. The Company may terminate or reduce benefits under any
benefit plans and programs to the extent such reductions apply uniformly to all
of the Company’s executive personnel entitled to participate therein, and
Executive’s benefits will be reduced or terminated accordingly. The
Company will not pay Executive the cash equivalent of any benefit it offers to
Executive which Executive declines for any reason to
accept. Specifically, without limitation, Executive will receive the
following benefits:
(a) Reimbursement
of Business Expenses. Whether Executive is deemed and employee
or consultant, the Company will, in accordance with standard Company policies,
pay or reimburse Executive for all reasonable travel and other expenses incurred
by Executive in performing his obligations in an amount not to exceed $2,000.00
per month. Executive will submit an expense report on the last day of
each month, starting on October 31, 2010.
(b) Vacations,
Sick and Personal Time (PST). If and when Executive becomes an
employee of the Company, Executive will be entitled to 18 business days
excluding Company holidays, of paid vacation and personal and sick time (PST)
during each 12-month period of full-time engagement with the
Company. PST accruals may not exceed 30 business days. In other
words, once Executive has accrued 30 days’ accrued PST, Executive will accrue no
additional PST time until Executive has taken vacation and his accrued vacation
time has dropped below the 30 day maximum.
ARTICLE
III
TERMINATION
OF ENGAGEMENT
3.1 Death,
Retirement or Disability of Executive. Executive’s engagement under this
Agreement will automatically terminate upon the death or retirement of
Executive, and the date of death or disability will be deemed to be the
Termination Date. Company may also terminate Executive’s engagement
if Executive suffers a disability that renders Executive unable, as determined
in good faith by the Board, to perform the essential functions of the position,
even with reasonable accommodation, for four months in any twelve month
period. In such a case, the Termination Date will be that specified
in the notice from the Company to Executive. If Executive’s
engagement is terminated due to Executive’s disability, then, provided Executive
is an employee of the Company at the time of such disability, at Executive’s
election and the Company’s cost, to the extent permitted by Company’ insurance
policies and benefit plans, for six months after Executive’s Termination Date,
except as required by law (e.g., COBRA health
insurance continuation election) the Company will continue to provide health
insurance.
3.2 By
Executive.
Executive
will be allowed to resign for cause only. If he resigns without cause prior to
October 31, 2012, then he will give up a pro rata share of the acquisition price
of SEC Compliance, Inc.
3.3 By
Company.
(a) This
Agreement may only be terminated by the Company for Cause except as provided
otherwise in this section..
(b) If,
and only if, the Company attempts to terminate this Agreement prior to the end
of the initial two-year Term of this Agreement (expiring October 13, 2012),
without Cause (as defined herein), the Company will pay Executive a separation
payment equal to the greater of $50,000 or $10,000
multiplied by the number of months and partial months remaining under the Term
(the “Separation Payment”), subject to customary and usual withholdings if
applicable, on Executive’s last day of engagement with the
Company. If after the termination of Executive’s engagement without
Cause, Executive materially breaches any of his obligations under the
Non-Competition, Non-Solicitation and Confidentiality Agreement attached hereto
as Exhibit “A”, Executive must immediately repay any previously paid portion of
the Separation Payment upon the Company’s demand.
(c) If,
and only if, the Company breaches any part of this agreement, and such breach is
not cured within 60 days, or does not pay Executive pursuant to the purchase
price payment set forth in the Asset Purchase Schedule and or this Compensation
Agreement, the Company will transfer a pro rata amount of all shares/assets back
to the Executive based on the amount paid compared with the total compensation
due. In the event of breach, the Company will be responsible for all
expenses including legal expenses for transference of shares/assets
back to Executive.
3.4 Compensation
upon Termination of Engagement. If Executive’s engagement
hereunder is terminated without Cause, except for any other rights or benefits
specifically provided for herein following his period of engagement, the Company
will be obligated to provide compensation and benefits to Executive only as
follows:
(a) Pay
Executive (or his estate or beneficiaries) any Base Compensation that has
accrued but not been paid as of the Termination Date, less standard withholdings
(if applicable) for tax and Social Security purposes;
(b) If
applicable, pay Executive (or his estate or beneficiaries) for unused vacation
days accrued as of the Termination Date in an amount equal to his
Base Compensation multiplied by a fraction the numerator of which is the number
of accrued unused vacation days and the denominator of which is
360;
-20-
(c) Reimburse
Executive (or his estate or beneficiaries) for expenses incurred by him prior to
the Termination Date that are subject to reimbursement pursuant to this
Agreement;
(d) Provide
to Executive (or his estate or beneficiaries) any accrued and vested benefit
required to be provided by the terms of any Company-sponsored benefit plans or
programs, together with any benefits required to be paid or provided in the
event of Executive’s death or total disability under applicable
law;
(e) Pay
Executive (or his estate or beneficiaries) as required under Sections 2.2, 2.3,
3.3(b) and Section 3.4 of this Agreement, if and as applicable.
Other
than the payments provided in subsections (a)-(e) above, Company will have no
obligation to make any other payment, including severance or other compensation,
of any kind (including, without limitation, any bonus or portion of a bonus that
may otherwise have become due and payable to Executive with respect to the year
in which the Termination Date occurs, except as expressly set forth in this
Agreement). All other benefits provided by Company to Executive under
this Agreement or otherwise will cease on the Termination Date.
ARTICLE
IV
RESTRICTIVE
COVENANTS
4.1 Confidential
Information and Invention Assignment Agreement. Concurrently
herewith, Executive agrees to execute the Non-Competition, Non-Solicitation and
Confidentiality Agreement attached as Exhibit “A” to this
Agreement. Executive agrees to comply with all of the terms and
conditions of said agreement.
ARTICLE
V
MISCELLANEOUS
5.1 Integration;
Modification; Waiver. This Agreement, including all exhibits
(all of which are incorporated into the Agreement), constitutes and contains the
entire agreement and understanding concerning the subject matter between the
parties, sets forth all inducements made by any party to any other party with
respect to any of the subject matter, and supersedes and replaces all prior and
contemporaneous negotiations, proposed agreements or agreements, whether written
or oral. Each of the parties acknowledges to each of the other
parties that no other party nor any agent or attorney of any other party has
made any promise, representation or warranty whatsoever, express or implied,
written or oral, not contained herein concerning the subject matter hereof to
induce him to execute this Agreement, and each of the parties acknowledges that
he has not executed this Agreement in reliance on any promise, representation or
warranty not contained herein. No supplement, modification, or
amendment of this Agreement will be binding unless executed in writing by all
the parties. No action or failure to act will constitute a waiver of
any right or duty under this Agreement, nor will any action or failure to act
constitute an approval of, or acquiescence in, any breach. No waiver
of any of the provisions of this Agreement will be deemed, or will constitute, a
waiver of any other provision, whether or not similar, nor will any waiver
constitute a continuing waiver. No waiver will be binding unless
executed in writing by the party making the waiver.
5.2 Successors;
Binding Agreement. This Agreement will be binding upon any
successors or assigns of the Company and will inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, beneficiaries,
designees, executors, administrators, heirs, distributees, devisees and
legatees.
(a) In
the event the Company will merge or consolidate with any other corporation,
partnership or business entity, or all or substantially all of the Company’s
business or assets will be transferred in any manner to any other corporation,
partnership or business entity, then such successor to the Company will
thereupon succeed to, and be subject to, all rights, interests, duties and
obligations of, and will thereafter be deemed for all purposes hereof to be, the
“Company” under this Agreement.
(b) This
Agreement is personal in nature and the Executive will not, without the written
consent of the Company, assign or transfer this Agreement or any rights or
obligations hereunder.
-21-
(c) Except
as set forth in subsection (a) above, nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give to any person,
other than the parties to this Agreement, any right, remedy or claim under or by
reason of this Agreement or of any term, covenant or condition of this
Agreement.
5.3 Severability. It
is the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Agreement
will be adjudicated by a court of competent jurisdiction to be invalid, illegal,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, will be ineffective, without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, illegal,
prohibited or unenforceable in such jurisdiction, it will, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
5.4 Notices. All
the notices and other communications required or permitted hereunder will be in
writing and will be delivered personally or sent by registered or certified
mail, return receipt requested, to the parties hereto at the following
addresses, or at such other address as the party may otherwise
indicate:
To the
Company: E. Xxxxx
Xxxxxxx
000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx
Xxxxx XX 00000
To
Executive: Xxxxx
XxXxxxx
00000 Xxxxxxxx Xxxx., #000
Xxx Xxxxxxx, XX 00000
5.5 Headings. The
subject headings of the sections and subsections of this Agreement are included
for convenience of reference only, do not form a part of this Agreement and will
not in any way affect the meaning or interpretation of this Agreement or any of
its provisions.
5.6 Authority. The
undersigned individuals execute this Agreement on behalf of the respective
parties, and represent that they are authorized to enter into and execute this
Agreement on behalf of such parties.
5.7 Further
Assurances. The parties agree to execute all instruments and
documents of further assurance and will do any and all such acts as may be
reasonably required to carry out their obligations and to consummate the
transactions contemplated herein.
5.8 Executive’s
Representations. Executive represents and warrants that
neither the execution nor delivery of this Agreement nor the performance of his
duties hereunder violates the provisions of any other agreement to which he is a
party or by which he is bound including, without limitation, any
non-competition, engagement or confidentiality agreements.
5.9 Cumulative
Rights and Remedies. The rights and remedies in this Agreement
will be cumulative, and in addition to, any duties, obligations, rights and
remedies otherwise provided by law.
5.11 Counterparts/Facsimile
Signatures. This Agreement may be executed in any number of
counterparts, using facsimile signatures, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.
5.12 Governing
Law and Venue. This Agreement will be construed in accordance
with and governed for all purposes by the laws of the State of California
applicable to contracts executed and wholly performed within such state. The
parties agree that any civil action to enforce or interpret this Agreement will
be brought exclusively in the state or federal courts serving San Diego County,
California.
5.13 Advice of
Counsel. Each party acknowledges and agrees that it has given
mature and careful thought to this Agreement and that it has been given the
opportunity to independently review this Agreement with his or its own
independent legal counsel.
-22-
IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the day and year first
above written.
COMPANY
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|||
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||
A Delaware corporation |
Dated: October 1,
2010
|
By:
|
/s/ E. Xxxxx Xxxxxxx | |
E. Xxxxx Xxxxxxx, | |||
Chief Executive Officer | |||
EXECUTIVE | |||
Xxxxx XxXxxxx |
Dated: October 1,
2010
|
By:
|
/s/ Xxxxx XxXxxxx | |
Xxxxx XxXxxxx |
-23-
NON-COMPETITION,
NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT
EXHIBIT
“A”
(TO
ENGAGEMENT AGREEMENT)
I, Xxxxx
XxXxxxx, acknowledge that in consideration and as a condition of my Business
Relationship (as defined below) or continued Business Relationship with SEC
Compliance, Inc., a California corporation (the “Company”), I have been asked
to review and execute this Agreement. After having been afforded reasonable time
to do so, I agree with the Company as follows:
1.
|
I
understand that, for purposes of this Agreement, any term that is
capitalized in this Agreement but is not otherwise defined in this
Agreement has the meaning set forth in Article
I.
|
2.
|
I
will use any Confidential Information that may come into my possession
only in the ordinary course of performing duties as a consultant of the
Company. I shall not at any time, whether during or after the termination
of my Business Relationship, reveal any Confidential Information, except
to employees of the Company who need to know such Confidential Information
for the purposes of their employment, or except as otherwise authorized by
the Company in writing. I shall not use or attempt to use any Confidential
Information in any manner that may injure or cause loss or may be
calculated to injure or cause loss, directly or indirectly, to the
Company.
|
3.
|
I
agree that during my Business Relationship with the Company, I shall not
use or permit to be used any Company Documentation other than for the
benefit of the Company. I further agree that I shall not, after the
termination of my Business Relationship, use or permit others to use any
such Company Documentation. I acknowledge that all Company Documentation
is the sole and exclusive property of the Company. Immediately upon the
termination of my Business Relationship, I shall deliver all Company
Documentation (including any copies) in my possession to the Company’ main
office.
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4.
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During
the term of my Business Relationship with the Company, and also for a
period of three (3) years after the termination of my Business
Relationship with the Company (the “Restricted Period”),
unless the termination is without cause or for reason of breach by the
Company, I will not, either directly or indirectly, on behalf of myself,
or as an agent, partner, contractor, employer or employee of any other
third party, sell or lease, or attempt to sell or lease, to any customer
of the Company, or to any prospective customer of the Company from which
the Company has solicited business during the twelve months prior to my
termination, any products or services that the Company sells or leases,
including equipment lease financing services. Furthermore, I agree that
during the Restricted Period, I shall not, directly or
indirectly:
|
|
(A)
Induce or attempt to induce any employee or consultant to the Company to
end such relationship,
|
|
(B)
Interfere with the relationship between the Company and any employee or
consultant to the Company,
|
|
(C)
Employ, or otherwise engage as an employee, consultant, or otherwise, any
person who was an employee of, or consultant to the Company at any time
during the Restricted Period, or
|
|
(D)
Induce or attempt to induce any customer, supplier or other business
relation of the Company to cease doing business with the
Company,
|
|
(E)
In any way interfere with the relationship between the Company and any
customer, supplier, or business relation of the Company,
or
|
|
(F)
Disparage the Company or any of its
affiliates.
|
I further
agree that I shall not, during the Restricted Period, invest in or otherwise
acquire the securities of any entity which is engaging or has engaged in any of
the foregoing; provided, however, that I may purchase or otherwise acquire up to
(but not more than) one percent (1%) of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934.
-24-
5.
|
If
at any time or times during my Business Relationship (including, if I
provided services to the Company before signing this Agreement, the period
of my Business Relationship with the Company prior to my signing this
Agreement), I shall make, conceive, or create any Development that relates
to the business of the Company or any of the products or services being
developed or sold by the Company, or if I make, conceive, or create any
Development that results from my use of the premises or personal property
of the Company, then all such Developments and the benefits thereof shall
be considered the sole property of the Company, as works made for hire or
otherwise. I agree to disclose any such Development which I may make,
conceive or create to the Company, and I assign all rights I may have or
may acquire in the Developments, and all benefits and/or rights resulting
from the Developments, to the
Company.
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6.
|
I
agree that any breach of this Agreement by me will cause irreparable
damage to the Company and that, in the event of such breach, the Company
shall have, in addition to all remedies at law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of my obligations
hereunder.
|
7.
|
I
acknowledge and represent that my performance of all the terms of this
Agreement and my Business Relationship with the Company does not and will
not breach any agreement to keep in confidence proprietary information
acquired by me in confidence or in trust prior to my Business Relationship
with the Company.
|
8.
|
Any
waiver by the Company of a breach of any provision of this Agreement by me
shall not be construed as a waiver of any subsequent breach of any
provision of this Agreement.
|
9.
|
I
agree that each provision of this Agreement shall be treated as a separate
and independent clause, and the unenforceability of any one clause shall
not impair the enforceability of any of the other clauses. Moreover, if
any provision contained in this Agreement shall be held to be excessively
broad so as to be unenforceable at law, it is our intention that those
provisions be construed by the appropriate judicial body, by limiting or
reducing it or them so as to be enforceable to the maximum extent
compatible with applicable law.
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10.
|
I
understand that any amendment to or modification of this Agreement, or any
waiver of any provision hereof, must be in writing and signed by the
Company and by me.
|
11.
|
My
obligations under this Agreement shall survive the termination of my
Business Relationship, regardless of the manner of such termination and
shall be binding upon my heirs, executors, administrators and legal
representatives.
|
12.
|
The
Company shall have the right to assign this Agreement to its successors
and assigns only with my prior written consent which will not be
unreasonably withheld.
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13.
|
This
Agreement shall be governed by and construed in accordance with the laws
of the State of California and shall be interpreted, enforced and governed
under its internal laws, without giving effect to the principles of
conflicts of laws of such state. Any claims or legal actions by one party
against the other arising out of my Business Relationship with the Company
(whether or not arising under this Agreement) shall be governed by the
laws of the State of California and shall be commenced and maintained in
any state or federal court located in San Diego, California, and I hereby
submit to the jurisdiction and venue of any such
court.
|
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
date first above written.
|
Signature:
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/s/ Xxxxx XxXxxxx | |
Name: | Xxxxx XxXxxxx | ||
Date: | October 1, 2010 |
- -
-25-
ARTICLE
I
DEFINITIONS
“Business Relationship” shall
mean my providing services to the Company or any related affiliate or subsidiary
of the Company in the capacity of an employee, officer, director, advisor or
consultant.
“Company Documentation” means
notes, memoranda, reports, lists, records, contact lists, drawings, sketches,
specifications, software programs, data, documentation or other materials of any
nature and in any form, whether written, printed, or in digital format or
otherwise, relating to any matter within the scope of the business of the
Company or concerning any of its dealings or affairs.
“Confidential Information”
means any information concerning the organization, business or finances of the
Company or of any third party that the Company considers to be and maintains as
confidential. Confidential Information includes, but is not limited to, trade
secrets or confidential information respecting customer lists, pricing
methodology, residual positions, residual charts, projects, plans and proposals;
provided, however, that “Confidential Information” shall not include any
information which:
(I) is
publicly available at the time of disclosure (through no act of
mine);
(ii) Is
disclosed to me by a third party who did not disclose it to me in violation of a
duty of confidentiality;
(iii) I
knew or was in my possession before such information was provided to me
(provided that I can clearly establish receipt and possession of that
information before it was provided to me); or
(iv) Is
required to be made available by me under legal process by subpoena or other
court order (provided that I agree to make reasonable efforts to provide copies
of such information to, or inform, the Company before disclosure).
“Developments” shall mean any
invention, modification, discovery, design, development, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
show-how, trade secret or intellectual property right whatsoever or any interest
therein (whether or not patentable or registrable under copyright, trademark or
similar statutes or subject to analogous protection).
-26-
EXHIBIT
“B”
(TO
ENGAGEMENT AGREEMENT)
NOTICE
OF GRANT OF STOCK OPTION
Non-Plan
Option
XXXXXXXX
(the “Optionee”) has been
granted an option (the “Option”)
to purchase certain shares of Stock of Surge Global Energy, Inc., a Delaware
corporation, pursuant to the Stock
Option Agreement attached hereto (the “Agreement”), as follows:
Date
of Option Grant:
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Number
of Option Shares:
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Exercise
Price:
|
|
Initial
Exercise Date:
|
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Initial
Vesting Date:
|
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Option
Expiration Date:
|
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Tax
Status of Option:
|
Non
statutory Stock Option
|
Vesting
Period:
|
The
Option vests in equal monthly installments over XX months with the first
such installment vesting on XXXXXX and the last installment vesting on
XXXXXX.
|
Vested
Shares:
|
Except
as provided in the Stock Option Agreement, the number of vested Shares
(disregarding any resulting fractional share) as of any date is determined
by dividing the Number of Option Shares by the Number of Vested Option
Installments.
|
Exceptions
to Provisions of Stock Option Agreement:
|
None.
|
By their
signatures below, the Company and the Optionee agree that the Option is governed
by this Notice and by the provisions of the Stock Option Agreement (except as
otherwise set forth opposite Exceptions to Provisions of Stock Option
Agreement), which is attached to and made a part of this
document. The Optionee acknowledges receipt of a copy of the Stock
Option Agreement, represents that the Optionee has read and is familiar with its
provisions, and hereby accepts the Option subject to all of its terms and
conditions.
By:
_________________________________________
Print
Name: _________________________________
ATTACHMENTS: Stock
Option Agreement
|
OPTIONEE: XXXXXXXXXXx
____________________________________________
Signature
____________________________________________
Date
____________________________________________
Address
____________________________________________
|
-27-
THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933.
SURGE
GLOBAL ENERGY, INC.
STOCK
OPTION AGREEMENT
Non-Plan
Option
Surge
Global Energy, Inc., a Delaware corporation, has granted to the individual (the
“Optionee”)
named in the Notice of Grant
of Stock Option (the “Notice”)
to which this Stock Option Agreement (the “Option
Agreement”) is attached an option (the “Option”)
to purchase certain shares of Stock upon the terms and conditions set forth in
the Notice and this Option Agreement. By signing the Notice, the
Optionee: (a) represents that the Optionee has read and is familiar with
the terms and conditions of the Notice and this Option Agreement, including the
Effect of Termination of Service set forth in Section 7, (b) accepts
the Option subject to all of the terms and conditions of the Notice and this
Option Agreement, (c) agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board upon any questions arising under the
Notice or this Option Agreement, and (d) acknowledges receipt of a copy of
the Notice and this Option Agreement.
1. Definitions
and Construction.
1.1 Definitions. Whenever
used herein, the following terms shall have their respective meanings set forth
below:
(a) “Board”
means the Board of Directors of the Company, or a committee of the Board duly
appointed to administer this Option and having such powers as shall be specified
by the Board.
(b) “Code”
means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated there under.
(c) “Company”
means Surge Global Energy, Inc., a Delaware corporation, or any successor
corporation thereto.
(d) “Consultant”
means a person engaged to provide consulting or advisory services (other than as
an Employee or a Director) to a Participating Company, provided that the
identity of such person, the nature of such services or the entity to which such
services are provided would not preclude the Company from offering or selling
securities to such person pursuant to this Agreement in reliance on either the
exemption from registration provided by Rule 701 under the Securities Act or, if
the Company is required to file reports pursuant to Section 13 or
15(d) of the Exchange Act, registration on a Form S-8 Registration
Statement under the Securities Act.
-28-
(e) “Director”
means a member of the Board or of the board of directors of any other
Participating Company.
(f) “Disability”
means the inability of the Optionee, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of the Optionee’s
position with the Participating Company Group because of the sickness or injury
of the Optionee.
(g) “Employee”
means any person treated as an employee (including an officer or a Director who
is also treated as an employee) in the records of a Participating Company;
provided, however, that neither service as a Director nor payment of a
director’s fee shall be sufficient to constitute employment for purposes of this
Agreement. The Company shall determine in good faith and in the
exercise of its discretion whether an individual has become or has ceased to be
an Employee and the effective date of such individual’s employment or
termination of employment, as the case may be.
(h) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
(i) “Fair Market
Value” means, as of any date, the value of a share of Stock or other
property as determined by the Board, in its discretion, or by the Company, in
its discretion, if such determination is expressly allocated to the Company
herein, subject to the following:
(i) If, on
such date, the Stock is listed on a national or regional securities exchange or
market system, the Fair Market Value of a share of Stock shall be the closing
price of a share of Stock (or the mean of the closing bid and asked prices of a
share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq
National Market, The Nasdaq SmallCap Market or such other national or regional
securities exchange or market system constituting the primary market for the
Stock, as reported in The Wall Street
Journal or such other source as the Company deems reliable. If
the relevant date does not fall on a day on which the Stock has traded on such
securities exchange or market system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded
prior to the relevant date, or such other appropriate day as shall be determined
by the Board, in its discretion.
(ii) If on
such date, the Stock is not listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be as
determined by the Board in good faith without regard to any restriction other
than a restriction which, by its terms, will never lapse.
(j) “Incentive Stock
Option” means an Option intended to be (as set forth in the Option
Agreement) and which qualifies as an incentive stock option within the meaning
of Section 422(b) of the Code.
(k) “Insider”
means an officer or a Director of the Company or any other person whose
transactions in Stock are subject to Section 16 of the Exchange
Act.
(l) “Nonstatutory
Stock Option” means an Option not intended to be (as set forth in the
Option Agreement) or which does not qualify as an Incentive Stock
Option.
(m) “Parent
Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.
(n) “Participating
Company” means the Company or any Parent Corporation or Subsidiary
Corporation.
(o) “Participating
Company Group” means, at any point in time, all corporations collectively
which are then Participating Companies
-29-
(p) “Securities
Act” means the Securities Act of 1933, as amended.
(q) “Service”
means the Optionee’s employment or service with the Participating Company Group,
whether in the capacity of an Employee, a Director or a
Consultant. The Optionee’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided that
there is no interruption or termination of the Optionee’s
Service. Furthermore, the Optionee’s Service with the Participating
Company Group shall not be deemed to have terminated if the Optionee takes any
military leave, sick leave, or other bona fide leave of absence approved by the
Company; provided, however, that if any such leave exceeds ninety (90) days, on
the ninety-first (91st) day of such leave the Optionee’s Service shall be deemed
to have terminated unless the Optionee’s right to return to Service with the
Participating Company Group is guaranteed by statute or
contract. Notwithstanding the foregoing, unless otherwise designated
by the Company or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under this Option
Agreement. The Optionee’s Service shall be deemed to have terminated
either upon an actual termination of Service or upon the corporation for which
the Optionee performs Service ceasing to be a Participating
Company. Subject to the foregoing, the Company, in its discretion,
shall determine whether the Optionee’s Service has terminated and the effective
date of such termination.
(r) “Stock”
means the common stock of the Company, as adjusted from time to time in
accordance with Section 9.
(s) “Subsidiary
Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.
1.2 Construction. Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of’ this Option
Agreement. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the
singular. Use of the term “or” is not intended to be exclusive,
unless the context clearly requires otherwise.
2. Tax
Status of Option. This Option is intended to be a Nonstatutory
Stock Option and shall not be treated as an Incentive Stock Option within the
meaning of Section 422(b) of the Code.
3. Administration.
All
questions of interpretation concerning this Option Agreement shall be determined
by the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. Any
officer of a Participating Company shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, or election which is
the responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
4. Exercise
of the Option.
4.1 Right to
Exercise. Except as otherwise provided herein, the Option
shall be exercisable on and after the Initial Exercise Date and prior to the
termination of the Option (as provided in Section 6) in an amount not to
exceed the Number of Vested Shares (determined in accordance with the Notice)
less the number of shares previously acquired upon exercise of the
Option.
4.2 Method of
Exercise. Exercise of the Option shall be by written notice to
the Company in the form of Exhibit 1 hereto (the “Exercise
Notice”) which must state the election to exercise the Option, the number
of whole shares of Stock for which the Option is being exercised and such other
representations and agreements as to the Optionee’s investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee
and must be delivered in person, by certified or registered mail, return receipt
requested, by confirmed facsimile transmission, or by such other means as the
Company may permit, to the Chief Financial Officer of the Company, or other
authorized representative of the Participating Company Group, prior to the
termination of the Option as set forth in Section 6, accompanied by full
payment of the aggregate Exercise Price for the number of shares of Stock being
purchased. The Option shall be deemed to be exercised upon receipt by
the Company of such written notice, the aggregate Exercise Price, and, if
required by the Company, such executed agreement.
-30-
4.3 Payment of Exercise
Price. Except as otherwise provided below, payment of the
aggregate Exercise Price for the number of shares of Stock for which the Option
is being exercised shall be made (i) in cash, by check, or cash equivalent,
(ii) by means of a Cashless Exercise, as defined below, or (iii) by
any combination of the foregoing. Optionee shall be responsible for
filing any reports of remittance or other foreign exchange filings required in
order to pay the exercise price. A “Cashless
Exercise” means the delivery of a properly executed notice together with
irrevocable instructions to a broker in a form acceptable to the Company
providing for the assignment to the Company of the proceeds of a sale or loan
with respect to some or all of the shares of Stock acquired upon the exercise of
the Option pursuant to a program or procedure approved by the Company
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System). The Company reserves, at
any and all times, the right, in the Company’s sole and absolute discretion, to
decline to approve or terminate any such program or procedure.
4.4 Tax Withholding. At
the time the Option is exercised, in whole or in part, or at any time thereafter
as requested by the Company, the Optionee hereby authorizes withholding from
payroll and any other amounts payable to the Optionee, and otherwise agrees to
make adequate provision for (including by means of a Cashless Exercise to the
extent permitted by the Company), any sums required to satisfy the federal,
state, local and foreign tax withholding obligations of the Participating
Company Group, if any, which arise in connection with the Option, including,
without limitation, obligations arising upon (i) the exercise, in whole or
in part, of the Option, (ii) the transfer, in whole or in part, of any
shares acquired upon exercise of the Option, or (iii) the operation of any
law or regulation providing for the imputation of interest. The
Option is not exercisable unless the tax withholding obligations of the
Participating Company Group are satisfied. Accordingly, the Company
shall have no obligation to deliver shares of Stock until the tax withholding
obligations of the Participating Company Group have been satisfied by the
Optionee.
4.5 Certificate
Registration. Except in the event the Exercise Price is paid
by means of a Cashless Exercise, the certificate for the shares as to which the
Option is exercised shall be registered in the name of the Optionee, or, if
applicable, in the names of the heirs of the Optionee.
4.6 Restrictions on Grant of the Option
and Issuance of Shares. The grant of the Option and the
issuance of shares of Stock upon exercise of the Option shall be subject to
compliance with all applicable requirements of federal, state or foreign law
with respect to such securities. The Option may not be exercised if
the issuance of shares of Stock upon exercise would constitute a violation of
any applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any stock exchange or market system upon
which the Stock may then be listed. In addition, the Option may not
be exercised unless (i) a registration statement under the Securities Act
shall at the time of exercise of the Option be in effect with respect to the
shares issuable upon exercise of the Option or (ii) in the opinion of legal
counsel to the Company, the shares issuable upon exercise of the Option may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE
THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Company’s legal counsel to be necessary to
the lawful issuance and sale of any shares subject to the Option shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been
obtained. As a condition to the exercise of the Option, the Company
may require the Optionee to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or regulation and to
make any representation or warranty with respect thereto as may be requested by
the Company. Any shares which are issued will be “restricted
securities” as that term is defined in Rule 144 under the Securities Act, as
further described in Section 7 of the Exercise Notice, unless they are
registered under the Securities Act. The Company is under no
obligation to register the shares of Stock issuable upon exercise of this
Option.
-31-
4.7 Fractional
Shares. The Company shall not be required to issue fractional
shares upon the exercise of the Option.
5. Nontransferability
of the Option.
The
Option may be exercised during the lifetime of the Optionee only by the Optionee
or the Optionee’s guardian or legal representative and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the
extent provided in Section 7, may be exercised by the Optionee’s legal
representative or by any person empowered to do so under the deceased Optionee’s
will or under the then applicable laws of descent and distribution.
6.
Termination
of the Option.
The
Option shall terminate and may no longer be exercised on the first to occur of
(a) the Option Expiration Date, (b) the last date for exercising the
Option following termination of the Optionee’s Service as described in
Section 7, or (c) a Change in Control to the extent provided in
Section 8.
7.
Effect of
Termination of Service.
7.1 Option
Exercisability.
(a) Disability. If
the Optionee’s Service with the Participating Company Group terminates because
of the Disability of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised by the Optionee (or the Optionee’s guardian or legal representative)
at any time prior to the expiration of six (6) months after the date on
which the Optionee’s Service terminated, but in any event no later than the
Option Expiration Date.
(b) Death. If
the Optionee’s Service with the Participating Company Group terminates because
of the death of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised by the Optionee’s legal representative or other person who acquired
the right to exercise the Option by reason of the Optionee’s death at any time
prior to the expiration of six (6) months after the date on which the
Optionee’s Service terminated, but in any event no later than the Option
Expiration Date. The Optionee’s Service shall be deemed to have
terminated on account of death if the Optionee dies within three (3) months
after the Optionee’s termination of Service.
(c) Other Termination
of Service. If the Optionee’s Service with the Participating
Company Group terminates for any reason, except Disability or death, the Option,
to the extent unexercised and exercisable by the Optionee on the date on which
the Optionee’s Service terminated, may be exercised by the Optionee at any time
prior to the expiration of six (6) months (or such other longer period of
time as determined by the Board, in its discretion) after the date on which the
Optionee’s Service terminated, but in any event no later than the Option
Expiration Date.
7.2 Extension if Exercise Prevented by
Law. Notwithstanding the foregoing, if the exercise of the
Option within the applicable time periods set forth in Section 7.1 is
prevented by the provisions of Section 4.6, the Option shall remain
exercisable until three (3) months after the date the Optionee is notified
by the Company that the Option is exercisable, but in any event no later than
the Option Expiration Date.
7.3 Extension if Optionee Subject to
Section 16(b). Notwithstanding the foregoing, if a sale
within the applicable time periods set forth in Section 7.1 of shares
acquired upon the exercise of the Option would subject the Optionee to suit
tinder Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th)
day after the Optionee’s termination of Service, or (iii) the Option
Expiration Date.
-32-
8. Change in
Control.
8.1 Definitions.
(a) An “Ownership Change
Event” shall be deemed to have occurred if any of the following occurs
with respect to the Company: (i) the direct or indirect sale or exchange in
a single or series of related transactions by the stockholders of the Company of
more than fifty percent (50%) of the voting stock of the Company: (ii) a
merger or consolidation in which the Company is a party; (iii) the sale,
exchange, or transfer of all or substantially all of the assets of the Company;
or (iv) a liquidation or dissolution of the Company.
(b) A “Change in
Control” shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, a “Transaction”)
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company’s voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of tile Company were transferred (the “Transferee
Corporation(s)”), as the case may be. For purposes of the
preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting stock of one or
more corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through one or
more subsidiary corporations.
8.2 Effect of Change in Control on
Option. In the event of a Change in Control, the surviving,
continuing, successor, or purchasing corporation or parent corporation thereof
as the case may be (the “Acquiring
Corporation”), may either assume the Company’s rights and obligations
under the Option or substitute for the Option a substantially equivalent option
for the Acquiring Corporation’s stock. In the event the Acquiring
Corporation elects not to assume the Company’s rights and obligations under the
Option or substitute for the Option in connection with the Change in Control,
and provided that the Optionee’s Service has not terminated prior to such date,
the Vested Ratio shall be deemed to be 1/1 as of the date ten (10) days prior to
the date of the Change in Control. Any vesting of the Option that was
permissible solely by reason of this Section 8.2 shall be conditioned upon
the consummation of the Change in Control. The Option shall terminate
and cease to be outstanding effective as of the date of the Change in Control to
the extent that the Option is neither assumed or substituted for by the
Acquiring Corporation in connection with the Change in Control nor exercised as
of the date of the Change in Control. Notwithstanding the foregoing,
shares acquired upon exercise of the Option prior to the Change in Control and
any consideration received pursuant to the Change in Control with respect to
such shares shall continue to be subject to all applicable provisions of this
Option Agreement except as otherwise provided herein. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is subject
to the Option immediately prior to an Ownership Change Event described in
Section 8.1 (a)(i) constituting a Change in Control is the surviving
or continuing corporation and immediately after such Ownership Change Event less
than fifty percent (50%) of the total combined voting power of its voting stock
is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code
without regard to the provisions of Section 1504(b) of the Code, the
Option shall not terminate.
9. Adjustments
for Changes in Capital Structure.
In the
event of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification, or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number, Exercise Price and
class of shares of stock subject to the Option. If a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change Event) shares of another corporation (the “New
Shares”), the Board may unilaterally amend the Option to provide that the
Option is exercisable for New Shares. In the event of any such
amendment, the Number of Option Shares and the Exercise Price shall be adjusted
in a fair and equitable manner, as determined by the Board, in its
discretion. Notwithstanding the foregoing, any fractional share
resulting from all adjustment pursuant to this Section 9 shall be rounded
down to the nearest whole number, and in no event may the Exercise Price be
decreased to an amount less than the par value, if any, of the stock subject to
the Option. The adjustments determined by the Board pursuant to this
Section 9 shall be final, binding and conclusive.
-33-
10. Rights as
a Stockholder, Employee or Consultant.
The
Optionee shall have no rights as a stockholder with respect to any shares
covered by the Option until the date of the issuance of a certificate for the
shares for which the Option has been exercised (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or
other rights for which the record date is prior to the date such certificate is
issued, except as provided in Section 9. If the Optionee is an
Employee, the Optionee understands and acknowledges that, except as otherwise
provided in a separate, written employment agreement between a Participating
Company and the Optionee, the Optionee’s employment is “at will” and is for no
specified term. Nothing in this Option Agreement shall confer upon
the Optionee any right to continue in the Service of a Participating Company or
interfere in any way with any right of the Participating Company Group to
terminate the Optionee’s Service as an Employee or Consultant, as the case may
be, at any time.
11. Lock-Up
Agreement.
The
Optionee hereby agrees that in the event of any underwritten public offering of
stock, including but not limited to an initial public offering of stock, made by
the Company pursuant to an effective registration statement filed under the
Securities Act, the Optionee shall not offer, sell, contract to sell, pledge,
hypothecate, grant any option to purchase or make any short sale of, or
otherwise dispose of any shares of stock of the Company or any rights to acquire
stock of the Company for such period of time from and after the effective date
of such registration statement as may be established by the underwriter for such
public offering; provided, however, that such period of time shall not exceed
one hundred eighty (180) days from the effective date of the registration
statement to be filed in connection with such public offering. The
foregoing limitation shall not apply to shares registered in the public offering
under the Securities Act.
12. Legends.
The
Company may at any time place legends referencing and any applicable federal,
state or foreign securities law restrictions on all certificates representing
shares of stock subject to the provisions of this Option
Agreement. The Optionee shall, at the request of the Company,
promptly present to the Company any and all certificates representing shares
acquired pursuant to the Option in the possession of the Optionee in order to
carry out the provisions of this Section. Unless otherwise specified
by the Company, legends placed on such certificates may include, but shall not
be limited to, the following:
“THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER
THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACT.”
13. Restrictions
on Transfer of Shares.
No shares
acquired upon exercise of the Option may be sold, exchanged, transferred
(including, without limitation, any transfer to a nominee or agent of the
Optionee), assigned, pledged, hypothecated or otherwise disposed of, including
by operation of law, in any manner which violates any of the provisions of this
Option Agreement and any such attempted disposition shall be
void. The Company shall not be required (a) to transfer on its
books any shares which will have been transferred in violation of any of the
provisions set forth in this Option Agreement or (b) to treat as owner of
such shares or to accord the right to vote as such owner or to pay dividends to
any transferee to whom such shares will have been so transferred.
-34-
14. Miscellaneous
Provisions.
14.1 Binding
Effect. Subject to the restrictions on transfer set forth
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
14.2 Termination or
Amendment. The Board may terminate or amend the Option at any
time; provided, however, that except as provided in Section 8.2 in
connection with a Change in Control, no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment
or addition to this Option Agreement shall be effective unless in
writing.
14.3 Notices. Any notice
required or permitted hereunder shall be given in writing and shall be deemed
effectively given (except to the extent that this Option Agreement provides for
effectiveness only upon actual receipt of such notice) upon personal delivery or
upon deposit in the United States Post Office, by registered or certified mail,
with postage and fees prepaid, addressed to the other party at the address shown
below that party’s signature or at such other address as such party may
designate in writing from time to time to the other party.
14.4 Integrated
Agreement. The Notice and this Option Agreement constitute the
entire understanding and agreement of the Optionee and the Participating Company
Group with respect to the subject matter contained herein or therein and
supersedes any prior agreements, understandings, restrictions, representations,
or warranties among the Optionee and the Participating Company Group with
respect to such subject matter other than those as set forth or provided for
herein or therein. To the extent contemplated herein or therein, the
provisions of the Notice and the Option Agreement shall survive any exercise of
the Option and shall remain in full force and effect.
14.5 Applicable
Law. This Option Agreement shall be governed by the laws of
the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
14.6 Counterparts. The
Notice may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
[end]
-35-
EXHIBIT
“1”
(TO
ENGAGEMENT AGREEMENT)
Optionee: XXXXXXXXX
Date:
XXXXX
STOCK
OPTION EXERCISE NOTICE
Non-Plan
Option
Surge
Global Energy, Inc.
Attention: Chief
Financial Officer
000
Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx
Xxxxx, XX 00000
Ladies
and Gentlemen:
1. Option. I
was granted an option (the “Option”)
to purchase shares of the common stock (the “Shares”)
of Surge Global Energy, Inc., a Delaware corporation (the “Company”),
pursuant to my Notice of Grant of Stock Option and Stock Option Agreement (the
“Option
Agreement”) as follows:
Date
of Option Grant:
|
|
Number
of Option Shares:
|
|
Exercise
Price:
|
|
Initial
Exercise Date:
|
|
Initial
Vesting Date:
|
|
Option
Expiration Date:
|
2. Exercise
of Option. I hereby elect to exercise the Option to purchase
the following number of Shares:
Total
Shares Purchased:
|
__________
|
Total
Exercise Price (Total Shares X Price per Share)
|
$_________
|
3. Payments. I
enclose payment in fill of the total exercise price for the Shares in the
following form(s), as authorized by my Option Agreement:
q Cash:
|
__________
|
q Check:
|
$_________
|
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4. Tax
Withholding. I enclose payment in full of my withholding
taxes, if any, as follows:
(Contact
Chief Financial Officer for amount of tax due.)
q Cash:
|
$_________
|
q Check:
|
$_________
|
5. Optionee
Information.
My
address is:
|
|
My
Social Security Number is:
|
6. Binding
Effect. I agree that the Shares are being acquired in
accordance with and subject to the terms, provisions and conditions of the
Option Agreement, to all of which I hereby expressly assent. This
Agreement shall inure to the benefit of and be binding upon my heirs, executors,
administrators, successors and assigns.
7. Transfer. I
understand and acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the “Securities
Act”), and that consequently the Shares must be held indefinitely unless
they are subsequently registered under the Securities Act, an exemption from
such registration is available, or they are sold in accordance with Rule 144
under the Securities Act, I further understand and acknowledge that the Company
is under no obligation to register the Shares. I understand that the
certificate or certificates evidencing the Shares will be imprinted with legends
which prohibit the transfer of the Shares unless they are registered or such
registration is not required in the opinion of legal counsel satisfactory to the
Company.
I am
aware that Rule 144 under the Securities Act, which permits limited public
resale of securities acquired in a nonpublic offering, is not currently
available with respect to the Shares and, in any event, is available only if
certain conditions are satisfied. I understand that any sale of the
Shares that might be made in reliance upon Rule 144 may only be made in limited
amounts in accordance with the terms and conditions of such rule and that a copy
of Rule 144 will be delivered to me upon request.
I
understand that I am purchasing the Shares pursuant to the terms of the Notice
and my Option Agreement, copies of which I have received and carefully read and
understand.
Very
truly yours,
_______________________________________
(Signature)
|
|
Receipt
of the above is hereby acknowledged.
Surge
Global Energy, Inc.
By: ____________________________________________
Title: __________________________________________
Dated: ________________________________________
|
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