SUBSCRIPTION AGREEMENT IN BLAST ENERGY SERVICES, INC.
EXHIBIT 10.4
IN
1. SUBSCRIPTION. This
Agreement has been executed by McAfee Capital LLC, a limited liability company
having a principal place of business in Cupertino, California (“Purchaser” or
“Shareholder”) in
connection with the offering of units consisting of Four (4) shares of
Convertible Series A Preferred Stock and One (1) Warrant with an
exercise price of $0.10 per share (collectively referred to hereinafter as the
"Units") of Blast Energy Services, Inc., a corporation organized under the laws
of the State of California (hereinafter referred to as the
"Company"). Purchaser hereby subscribes to purchase 1,000,000 Units
at $2.00 per Unit for a total amount of $ 2,000,000.
2. REPRESENTATIONS
BY THE UNDERSIGNED. The undersigned
represents and warrants as follows (please select only one from (i) through
(iii) below [selecting more than one from (i) though (iii) below will invalidate
this subscription]):
(i) __X__ I
am an Accredited Investor because I meet one of the following
items:
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is
a natural person who has an individual net worth, or joint net worth
with that person's spouse of more than $1,000,000;
or
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is
a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
or
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is
a bank as defined in Section 3(a)(2) of the 1933 Act or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of
the 1933 Act whether acting in its individual or fiduciary capacity;
or
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any
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; or
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is
an insurance company as defined in Section 2(13) of the 1933 Act;
or
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is
an investment company registered under the Investment Company Act of 1940;
or
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a
business development company as defined in Section 2(a)(48) of the
Investment Company Act of 1940; or
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is
a Small Business Investment Company licensed by the U. S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; or
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is
an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, if the investment decision is
made by a "plan fiduciary" (as defined in Section 3(21) of such act) which
is either a bank, insurance company, or registered investment advisor, or
if the employee benefit plan has total assets in excess of $5,000,000, or,
if a self-directive plan, its investment decisions are made solely by
persons that are accredited investors;
or
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is
a "private business development company" as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940;
or
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is
an organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
or
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any
trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Units, whose purchase is directed by a
sophisticated person as defined in the rules and regulations of the 1933
Act; or
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is
an entity in which all of the equity owners fall within one of the
categories set forth above; or
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is
otherwise an Accredited Investor as defined in Section 501 of Regulation D
as adopted by the Securities and Exchange
Commission.
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(ii)
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I am not an Accredited
Investor. In the event the Investor is
not an Accredited Investor, such Investor will not be able to purchase any
shares in the Company’s offering, and this Subscription and the Investor’s
funds (if any) shall be returned to Investor and this Subscription and all
rights associated therewith shall be cancelled by the
Company.
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(iii)_____
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I
reside outside of the United States and am not a “U.S.
person” as such term is defined under Regulation S as promulgated by the
Securities and Exchange Commission (“SEC”) under authority of the
Securities Act of 1933, as amended (the “1933
Act”).
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(1)
A “U.S. person” is defined by Regulation S
as:
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Any
natural person resident in the United
States;
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Any
partnership or corporation organized or incorporated under the laws of the
United States;
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Any
estate of which any executor or administrator is a U.S.
person;
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Any
trust of which any trustee is a U.S.
person;
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Any
agency or branch of a foreign entity located in the United
States;
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Any
non-discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a
U.S. person;
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Any
discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States;
and
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Any
partnership or corporation if organized or incorporated under the laws of
any foreign jurisdiction; and formed by a U.S. person principally for the
purpose of investing in securities not registered under the Act, unless it
is organized or incorporated, and owned, by accredited investors (as
defined in Rule 501(a)) who are not natural persons, estates or
trusts.
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(2)
At the time the buy order for the Units was originated, Purchaser was
outside the United States;
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(3)
Purchaser is purchasing the Shares for his, her or its own account and not
on behalf of any U.S. person, and the sale has not been pre-arranged with
a purchaser in the United States;
and
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(4)
All offering documents received by the Purchaser include statements to the
affect that the securities have not been registered under the 1933 Act and
may not be offered or sold in the United States or to U.S. persons unless
the securities are registered under the 1933 Act or an exemption from the
registration requirement is
available.
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The undersigned further
represents and warrants as follows:
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(a)
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Subscriber
represents and warrants that it is in receipt of and that it has carefully
read and reviewed the following
items:
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(i)
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The
Company’s Form 10-KSB for the period ended December 31, 2006 (the “Form
10-K”); which discloses that the Company is currently under Chapter 11
protection of the U.S. Bankruptcy Code;
and
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(ii)
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All
other documents filed by the Company with the SEC subsequent to the
Company’s Form 10-K and prior to the date of this Agreement, including
without limitation, the “Risk Factors” in the Form 10-K (collectively the
“SEC Filings”). The Form 10-K and Risk Factors are accessible
on the XXXXX website on
xxx.XXX.xxx;
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(iii)
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The
Company’s Series A Convertible Preferred Stock Designation (the
“Designation”); and
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(iii)
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A
draft of the Company’s Disclosure Statement and Plan of Reorganization
(the “Plan”). The Plan, the 10-K the Designation and the SEC Filings shall
be referred to herein as the “Disclosure
Documents.”
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(b)
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Subscriber
has been furnished with and has carefully read the Disclosure Documents
including the Risk Factors listed therein and is familiar with the terms
of the Offering. With respect to individual or partnership tax
and other economic considerations involved in this investment, Subscriber
is not relying on the Company (or any agent or
representative). Subscriber has carefully considered and has,
to the extent Subscriber believes such discussion necessary, discussed
with Subscriber’s legal, tax, accounting and financial advisers the
suitability of an investment in the Shares for Subscriber’s particular tax
and financial situation.
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(c)
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Subscriber
has had an opportunity to inspect relevant documents relating to the
organization and operations of the Company. Subscriber
acknowledges that all documents, records and books pertaining to this
investment which Subscriber has requested have been made available for
inspection by Subscriber and Subscriber’s attorney, accountant or other
adviser(s).
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(d)
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Subscriber
and/or Subscriber’s advisor(s) has/have had a reasonable opportunity to
ask questions of and receive answers and to request additional relevant
information from a person or persons acting on behalf of the Company
concerning the Offering.
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(e)
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Subscriber
is not subscribing for the Securities as a result of any offering
circular, or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any form
of general solicitation.
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(f)
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The
undersigned recognizes that the Units have not been registered under the
Securities Act of 1933, as amended (“Act”), nor under the securities laws
of any state and, therefore, cannot be resold unless resale of is
registered under the Act or unless an exemption from registration is
available; no public agency has passed upon the fairness of the terms of
the offering; the undersigned may not sell the Units without registering
them under the Act and any applicable state securities laws unless
exemptions from such registration requirements are available with respect
to any such sale;
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(g)
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The
undersigned is acquiring the Units for his, her or its own account for
long-term investment and not with a view toward resale, fractionalization
or division, or distribution thereof, and he, she or it does not presently
have any reason to anticipate any change in his, her or its circumstances,
financial or otherwise, or particular occasion or event which would
necessitate or require his, hers or its sale or distribution of the
Units. No one other than the undersigned has any beneficial
interest in said securities;
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(h)
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The
undersigned recognizes that the investment herein is a speculative venture
and that the total amount of funds tendered to purchase Units is placed at
the risk of the business and may be completely lost. The
purchase of Units as an investment involves special
risks;
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(i)
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The
undersigned realizes that the Shares cannot readily be sold as they will
be restricted securities and therefore the Units must not be purchased
unless the undersigned has liquid assets sufficient to assure that such
purchase will cause no undue financial difficulties and the undersigned
can provide for current needs and possible personal
contingencies;
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(j)
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The
undersigned confirms and represents that he, she or it is able (i) to bear
the economic risk of his, her or its investment, (ii) to hold the Units
for an indefinite period of time, and (iii) to afford a complete loss of
his, her or its investment. The undersigned also represents
that he, she or it has (i) adequate means of providing for his, her or its
current needs and possible personal contingencies, and (ii) has no need
for liquidity in this particular
investment;
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(k)
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The
undersigned understands that the ability to transfer the Units will be
restricted which includes restrictions against transfers unless the
transfer is effected in compliance with the 1933 Act and applicable state
securities laws (including investment suitability standards); that the
Company will consent to a transfer of the Units only if the transferee
represents that such transferee meets the suitability standards required
of an initial subscriber and that the Company has the right, in its sole
discretion, to refuse to consent to the transfer of the
Units;
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(l)
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All
information which the undersigned has provided to the Company concerning
the undersigned's financial position and knowledge of financial and
business matters is correct and complete as of the date hereof, and if
there should be any material change in such information prior to
acceptance of this Agreement by the Company, the undersigned will
immediately provide the Company with such
information;
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(m)
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The
undersigned has carefully considered and has, to the extent he, she or it
believes such discussion necessary, discussed with his, her or its
professional, legal, tax and financial advisors, the suitability of an
investment in the Units for his, her or its particular tax and financial
situation and that the undersigned and his, her or its advisers, if such
advisors were deemed necessary, have determined that the Units are a
suitable investment for him, her or
it;
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(n)
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The
undersigned has not become aware of this offering and has not been offered
Units by any form of general solicitation or advertising, including, but
not limited to, advertisements, articles, notices or other communications
published in any newspaper, magazine, or other similar media or television
or radio broadcast or any seminar or meeting where, to the undersigned's
knowledge, those individuals that have attended have been invited by any
such or similar means of general solicitation or advertising;
and
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(o)
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The
undersigned is a bona fide resident or operates its principal place of
business as set forth in this Subscription Agreement and Acknowledgment of
Investment.
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(p)
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The
Purchaser acknowledges that he, she or it will receive Warrants to
purchase shares of Common Stock in the form of Exhibit A
attached to this Subscription
Agreement.
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(q)
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Investor
acknowledges that he, she, or it is receiving “piggy-back” registration
rights in connection with the shares of common stock which the Series A
Preferred Stock is convertible into and the shares of common stock which
the Warrants are exercisable for, which “piggy-back” registration rights
are evidenced by the Registration Rights Agreement attached hereto as
Exhibit
B.
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3. THE UNDERSIGNED FURTHER
CERTIFIES THAT HE, SHE OR IT UNDERSTANDS THAT:
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(a)
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THIS
SUBSCRIPTION IS SUBJECT TO THE APPROVAL OF THE COMPANY’S PLAN OF
REORGANIZATION, AND THE ISSUANCE, BY THE BANKRUPTCY COURT OF A
CONFIRMATION ORDER, AS WELL AS THE COMPANY’S SUCCESSFUL DESIGNATION OF THE
SERIES A PREFERRED STOCK (THE
“APPROVAL”).
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(b)
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THE
COMPANY SHALL BE ABLE TO CANCEL THIS SUBSCRIPTION AND RETURN THE
SUBSCRIBER’S FUNDS PAID IN CONNECTION WITH SUCH SUBSCRIPTION IN THE
COMPANY’S SOLE DISCRETION IF ANY TIME WITHIN THE PERIOD OF THIRTY (30)
DAYS FOLLOWING THE APPROVAL, (THE
“DEADLINE”).
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(c)
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THIS
SUBSCRIPTION SHALL AUTOMATICALLY BE REJECTED BY THE COMPANY AND ALL
SUBSCRIPTION FUNDS RETURNED TO THE SUBSCRIBER IN THE EVENT THE APPROVAL
DOES NOT OCCUR PRIOR TO DECEMBER 31,
2007.
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(d)
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THIS
SUBSCRIPTION SHALL BE AUTOMATICALLY ACCEPTED AS OF THE DATE OF THE
DEADLINE, IN THE EVENT THE APPROVAL HAS OCCURRED PRIOR TO DECEMBER 31,
2007, AND THIS SUBSCRIPTION HAS NOT OTHERWISE BEEN CANCELLED BY THE
COMPANY PURSUANT TO SECTION (B) ABOVE. IN THE EVENT THIS
SUBSCRIPTION IS NOT REJECTED AND/OR CANCELLED PRIOR TO THE DEADLINE, THE
EFFECTIVE DATE OF THIS SUBSCRIPTION AND ANY WARRANTS GRANTED IN CONNECTION
HEREWITH SHALL BE SUCH DEADLINE
DATE.
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(e)
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The
Subscription hereunder is irrevocable by Investor, that, except as
required by law, Investor is not entitled to cancel, terminate or revoke
this Agreement or any agreements of Investor hereunder and that this
Subscription Agreement and such other agreements shall survive the death
or disability of Investor and shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors, legal representatives and permitted
assigns. If Investor is more than one person, the obligations
of Investor hereunder shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and his or her
heirs, executors, administrators, successors, legal representatives and
permitted assigns.
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(f)
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No
federal or state agency has made any findings or determination as to the
fairness of the terms of this Offering for investment purposes; or any
recommendations or endorsements of the Units, Shares or
Warrants.
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(g)
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The
Offering is intended to be exempt from registration under the Securities
Act by virtue of Section 4(2) of the Securities Act and the provisions of
Rule 506 of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the Investor
herein.
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(h)
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It
is understood that in order not to jeopardize the Offering’s exempt status
under Section 4(2) of the Securities Act and Regulation D, any transferee
may, at a minimum, be required to fulfill the investor suitability
requirements thereunder.
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(i)
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No
person or entity acting on behalf, or under the authority, of Investor is
or will be entitled to any broker’s, finder’s or similar fee or commission
in connection with this
Subscription.
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(j)
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Investor
acknowledges that the information furnished in this Agreement by the
Company to Investor or its advisers in connection with the Offering, is
confidential and nonpublic and agrees that all such written information
which is material and not yet publicly disseminated by the Company shall
be kept in confidence by Investor and neither used by Investor for
Investor’s personal benefit (other than in connection with this
Subscription), nor disclosed to any third party, except Investor’s legal
and other advisers who shall be advised of the confidential nature of such
information, for any reason; provided, however, that this obligation shall
not apply to any such information that (i) is part of the public knowledge
or literature and readily accessible at the date hereof, (ii) becomes a
part of the public knowledge or literature and readily accessible by
publication (except as a result of a breach of this provision) or (iii) is
received from third parties (except third parties who disclose such
information in violation of any confidentiality agreements or obligations,
including, without limitation, any subscription agreement entered into
with the Company). The representations, warranties and
agreements of Investor and the Company contained herein and in any other
writing delivered in connection with the Offering shall be true and
correct in all material respects on and as of the date of such
Subscription as if made on and as of the date the Company executes this
Agreement and shall survive the execution and delivery of this
Agreement.
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(k)
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IN
MAKING AN INVESTMENT DECISION, INVESTOR MUST RELY ON ITS OWN EXAMINATION
OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND
RISKS INVOLVED. THE COMMON SHARES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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4. Indemnification. It
is acknowledged that the meaning and legal consequences of the representations
and warranties contained in this Agreement are understood and the undersigned
hereby agrees to indemnify and hold harmless the Company and each purchaser of
Units from and against any and all loss, damage, and liability due to or arising
out of a breach of any of the representations and warranties made in this
Agreement. The representations and warranties contained herein are
intended to and shall survive delivery of the Agreement.
5. Restrictions
on Transferability of Units. The undersigned hereby agrees
that the Shares and Warrants being purchased by him, her or it and any agreement
or certificate evidencing such securities shall be stamped or otherwise
imprinted with a conspicuous legend in substantially the following
form:
"The securities represented by this
certificate have not been registered under the Securities Act of 1933 or any
state securities act. The securities have been acquired for
investment and may not be sold, transferred, pledged or hypothecated unless (i)
they shall have been registered under the Securities Act of 1933 and any
applicable state securities act, or (ii) the corporation shall have been
furnished with an opinion of counsel, satisfactory to counsel for the
corporation, that registration is not required under any such
acts."
6. Purchase
Payment. The
purchase price shall be paid to the Company in cash, check or via wire transfer
simultaneously with the undersigned entry into this Agreement.
7. Effect of
Facsimile and Photocopied Signatures. This Agreement may be executed in
several counterparts, each of which is an original. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts. A copy of this
Agreement signed by one party and faxed to another party shall be deemed to have
been executed and delivered by the signing party as though an
original. A photocopy of this Agreement shall be effective as an
original for all purposes.
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follows.]
8. Number of
Units Purchased. The undersigned
hereby subscribes to purchase
1,000,000
Units (each consisting of four (4) shares of the Company’s Series A Preferred
Stock and one (1) warrant to purchase one share of the Company’s common stock at
an exercise price of $0.10 per share) for an aggregate purchase price of
$2,000,000 ($2.00 per Unit).
This
Agreement is executed this the 30th day of
January, 2008, at Cupertino, CA.
“PURCHASER”
Name
(please print): McAfee Capital LLC
If entity
named above, By: Xxxx XxXxxx
Its: President
Number of
Preferred Shares: 4,000,000 Wire transfer in the amount of
$2,000,000
Subscribed
For: 1,000,000 Units
Social
Security or Taxpayer I.D. Number [required]: XXX-XX-XXXX
Business
Address (including zip code): XXXXXXXXXXXXXXXX
Business
Phone: (XXX) XXX-XXXX
Residence
Address (including zip code)
Residence
Phone: ( )
All
communications to be sent to:
X Business
or
Residence
Address
Please
indicate on the following page the form in which you will hold title to your
interest in the Shares and Warrants. PLEASE CONSIDER
CAREFULLY. ONCE YOUR SUBSCRIPTION IS ACCEPTED, A CHANGE IN THE FORM
OF TITLE CONSTITUTES A TRANSFER OF THE INTEREST IN THE SHARES AND/OR
WARRANTS AND MAY THEREFORE BE RESTRICTED BY THE TERMS OF THIS SUBSCRIPTION, THE
SHARES AND/OR WARRANTS AND MAY RESULT IN ADDITIONAL COSTS TO
YOU. Subscribers should seek the advice of their attorneys in
deciding in which of the forms they should take ownership of the interest in the
Shares, because different forms of ownership can have varying gift tax, estate
tax, income tax, and other consequences, depending on the state of the
investor's domicile and his or her particular personal
circumstances.
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Please
select one of the following forms of
ownership:
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INDIVIDUAL
OWNERSHIP (one signature required)
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JOINT
TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON (both or
all parties must sign)
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COMMUNITY
PROPERTY (one signature required if interest held in one name, i.e.,
managing spouse; two signatures required if interest held in both
names)
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TENANTS
IN COMMON (both or all parties must
sign)
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GENERAL
PARTNERSHIP (fill out all documents in the name of the PARTNERSHIP, by a
PARTNER authorized to sign, and include a copy of the Partnership
Agreement)
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LIMITED
PARTNERSHIP (fill out all documents in the name of the LIMITED
PARTNERSHIP, by a GENERAL PARTNER authorized to sign, and include a
copy of the Limited Partnership Agreement and any other document showing
that the investment is authorized)
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X
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LIMITED
LIABILITY COMPANY (fill out all documents in the name of the LIMITED
LIABILITY COMPANY, by a member authorized to sign, and include a copy of
the LIMITED LIABILITY COMPANY’s Operating Agreement and any other
documents necessary to show the investment is
authorized.)
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CORPORATION
(fill out all documents in the name of the CORPORATION, by the President
or other officer authorized to sign, and include a copy of the
Corporation's Articles and certified Corporate Resolution authorizing the
signature)
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TRUST
(fill out all documents in the name of the TRUST, by the Trustee, and
include a copy of the instrument creating the trust and any other
documents necessary to show the investment by the Trustee is
authorized. The date of the trust must appear on the Notarial
where indicated.)
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Subject to acceptance by the Company,
the undersigned has completed this Subscription Agreement to evidence his/her
subscription for participation in the Shares of the Company, this
30th
day of January, 2008, Cupertino, CA.
_McAfee Capital
LLC_____________________
Subscriber
___by: Xxxx
McAfee________________________
Printed name
If an entity, on behalf
of:
____/s/Xxxx
McAfee_____________________________
Subscriber’s position with
entity:
_____President_______________________________
The
Company has accepted this subscription this 30th day of
January 2008, subject to Section 3(a), (b) and (c).
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Blast
Energy Services, Inc., a California
Corporation
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By__/s/Xxxx
O’Keefe_________________
Its:
_CEO____________________________
Printed Name: __John
O’Keefe___________
Exhibit
A
WARRANT
AGREEMENT
Date:
January 30, 2008
To Whom
It May Concern:
BLAST
ENERGY SERVICES, INC. (the “Company”), for value received, hereby agrees to
issue common stock purchase warrants entitling Xxxxx Xxxx (“Holder”) and
his/her/its assigns to purchase an aggregate of 1,000,000 shares of the
Company’s common stock (“Common Stock”). Such warrant is evidenced by
a warrant certificate in the form attached hereto as Schedule 1 (such instrument
being hereinafter referred to as a “Warrant,” and such Warrant and all
instruments hereafter issued in replacement, substitution, combination or
subdivision thereof being hereinafter collectively referred to as the
“Warrant”). The Warrant is issued to Holder in connection with Holder’s
subscription for Units in the Company in connection with the Subscription
Agreement in Blast Energy Services, Inc. which this Warrant is attached to as
Exhibit
A. The number of shares of Common Stock purchasable upon
exercise of the Warrant is subject to adjustment as provided in Section 5
below. The Warrant will be exercisable by the Warrant Holder (as
defined below) as to all or any lesser number of shares of Common Stock covered
thereby, at an initial purchase price of US $0.10 per share (the “Purchase
Price”), subject to adjustment as provided in Section 5 below, for the exercise
period defined in Section 3(a) below. The term “Warrant Holder”
refers to the person whose name appears on the signature page of this agreement
and any transferee or transferees of any of them permitted by Section 2(a)
below. The Subscription for this Warrant was accepted by the Company
on January 31, 2008, which gives this Warrant an effective date of January 31,
2008.
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1.
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Representations
and Warranties.
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The
Company represents and warrants to you as follows:
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(a)
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Corporate
and Other Action. The Company has all requisite power
and authority (corporate and other), and has taken all necessary corporate
action, to authorize, execute, deliver and perform this Warrant Agreement,
to execute, issue, sell and deliver the Warrant and a certificate or
certificates evidencing the Warrant, to authorize and reserve for issue
and, upon payment from time to time of the Purchase Price, to issue, sell
and deliver, the shares of the Common Stock issuable upon exercise of the
Warrant (“Shares”), and to perform all of its obligations under this
Warrant Agreement and the Warrant. The Shares, when issued in
accordance with this Warrant Agreement, will be duly authorized and
validly issued and outstanding, fully paid and nonassessable and free of
all liens, claims, encumbrances and preemptive rights. This Warrant
Agreement and, when issued, each Warrant issued pursuant hereto, has been
or will be duly executed and delivered by the Company and is or will be a
legal, valid and binding agreement of the Company, enforceable in
accordance with its terms. No authorization, approval, consent
or other order of any governmental entity, regulatory authority or other
third party is required for such authorization, execution, delivery,
performance, issue or sale.
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(b)
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No
Violation. The execution and delivery of this Warrant
Agreement, the consummation of the transactions herein contemplated and
the compliance with the terms and provisions of this Warrant Agreement and
of the Warrant will not conflict with, or result in a breach of, or
constitute a default or an event permitting acceleration under, any
statute, the Articles of Incorporation or Bylaws of the Company or any
indenture, mortgage, deed of trust, note, bank loan, credit agreement,
franchise, license, lease, permit, or any other agreement, understanding,
instrument, judgment, decree, order, statute, rule or regulation to which
the Company is a party or by which it is
bound.
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2.
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Transfer.
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(a)
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Transferability
of Warrant. You agree that the Warrant is being acquired
as an investment and not with a view to distribution thereof and that the
Warrant may not be transferred, sold, assigned or hypothecated except as
provided herein. You further acknowledge that the Warrant may
not be transferred, sold, assigned or hypothecated unless pursuant to a
registration statement that has become effective under the Securities Act
of 1933, as amended (the “Act”), setting forth the terms of such offering
and other pertinent data with respect thereto, or unless you have provided
the Company with an acceptable opinion from acceptable counsel that such
registration is not required. Certificates representing the Warrant shall
bear an appropriate legend. Notwithstanding the foregoing, any
request to transfer the Warrant must be accompanied by the Form of
Assignment and Transfer attached hereto as Schedule 2 executed by the
Warrant Holder.
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(b)
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Registration
of Shares. You agree not to make any sale or other
disposition of the Shares except pursuant to a registration statement
which has become effective under the Act, setting forth the terms of such
offering, the underwriting discount and commissions and any other
pertinent data with respect thereto, unless you have provided the Company
with an acceptable opinion of counsel acceptable to the Company that such
registration is not required. Certificates representing the
Shares, which are not registered as provided in this Section 2, shall bear
an appropriate legend and be subject to a “stop-transfer”
order.
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3.
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Exercise of Warrant,
Partial Exercise.
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(a)
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Exercise
Period. This Warrant shall expire and all rights
hereunder shall be extinguished three years (3) years from the date first
written above.
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(b)
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Exercise
in Full. Subject to Section 3(a), a Warrant may be
exercised in full by the Warrant Holder by surrender of the Warrant, with
the Form of Subscription attached hereto as Schedule 3 executed by such
Warrant Holder, to the Company, accompanied by payment as determined by
3(d) below, in the amount obtained by multiplying the number of Shares
represented by the respective Warrant by the Purchase Price per share
(after giving effect to any adjustments as provided in Section 5
below).
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(c)
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Partial
Exercise. Subject to Section 3(a), each Warrant may be
exercised in part by the Warrant Holder by surrender of the Warrant, with
the Form of Subscription attached hereto as Schedule 3 at the end thereof
duly executed by such Warrant Holder, in the manner and at the place
provided in Section 3(b) above, accompanied by payment as determined by
3(d) below, in amount obtained by multiplying the number of Shares
designated by the Warrant Holder in the Form of Subscription attached
hereto as Schedule 3 to the Warrant by the Purchase Price per share (after
giving effect to any adjustments as provided in Section 5
below). Upon any such partial exercise, the Company at its
expense will forthwith issue and deliver to or upon the order of the
Warrant Holder a new Warrant of like tenor, in the name of the Warrant
Holder subject to Section 2(a), calling in the aggregate for the purchase
of the number of Shares equal to the number of such Shares called for on
the face of the respective Warrant (after giving effect to any adjustment
herein as provided in Section 5 below) minus the number of such Shares
designated by the Warrant Holder in the aforementioned form of
subscription.
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(d)
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Payment
of Purchase Price. The Purchase Price may be made by any
of the following or a combination thereof, at the election of the Warrant
Holder:
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(i)
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in
cash;
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(ii)
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by
wire transfer; or
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(iii)
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by
certified or cashier’s check, or money
order.
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4.
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Delivery
of Stock Certificates on
Exercise.
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Any
exercise of the Warrant pursuant to Section 3 shall be deemed to have been
effected immediately prior to the close of business on the date on which the
Warrant together with the Form of Subscription and the payment for the aggregate
Purchase Price shall have been received by the Company. At such time,
the person or persons in whose name or names any certificate or certificates
representing the Shares or Other Securities (as defined below) shall be issuable
upon such exercise shall be deemed to have become the holder or holders of
record of the Shares or Other Securities so purchased. As soon as
practicable after the exercise of any Warrant in full or in part, and in any
event within Ten (10) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of, and delivered to the purchasing Warrant Holder, a
certificate or certificates representing the number of fully paid and
nonassessable shares of Common Stock or Other Securities to which such Warrant
Holder shall be entitled upon such exercise, plus in lieu of any fractional
share to which such Warrant Holder would otherwise be entitled, cash in an
amount determined pursuant to Section 6(e). The term “Other
Securities” refers to any stock (other than Common Stock), other securities or
assets (including cash) of the Company or any other person (corporate or
otherwise) which the Warrant Holder at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrant, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 5 below or otherwise.
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5.
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Adjustment
of Purchase Price and Number of Shares
Purchasable.
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The
Purchase Price and the number of Shares are subject to adjustment from time to
time as set forth in this Section 5.
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(a)
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In
case the Company shall at any time after the date of this Warrant
Agreement (i) declare a dividend on the Common Stock in shares of its
capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine
the outstanding Common Stock into a smaller number of Common Stock, or
(iv) issue any shares of its capital stock by reclassification of the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation), then in each case the Purchase Price, and the number and
kind of Shares receivable upon exercise, in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be proportionately
adjusted so that the holder of any Warrant exercised after such time shall
be entitled to receive the aggregate number and kind of Shares which, if
such Warrant had been exercised immediately prior to such record date, he
would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination, or
reclassification. Such adjustment shall be made successively
whenever any event listed above shall
occur.
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(b)
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No
adjustment in the Purchase Price shall be required if such adjustment is
less than US $0.01; provided, however, that
any adjustments which by reason of this subsection (b) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 5 shall be made
to the nearest cent or to the nearest one-thousandth of a share, as the
case may be.
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(c)
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Upon
each adjustment of the Purchase Price as a result of the calculations made
in subsection (a) of this Section 5, the Warrant outstanding prior to the
making of the adjustment in the Purchase Price shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of
Shares (calculated to the nearest thousandth) obtained by (i) multiplying
the number of Shares purchasable upon exercise of the Warrant immediately
prior to adjustment of the number of Shares by the Purchase Price in
effect prior to adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
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6.
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Further
Covenants of the Company.
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(a)
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Dilution
or Impairments. The Company will not, by amendment of
its certificate of incorporation or through any reorganization, transfer
of assets, consolidation, merger or dissolution, avoid or seek to avoid
the observance or performance of any of the terms of the Warrant or of
this Warrant Agreement, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Warrant
Holder against dilution or other impairment. Without limiting
the generality of the foregoing, the
Company:
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(i)
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shall
at all times reserve and keep available, solely for issuance and delivery
upon the exercise of the Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable upon the exercise of the Warrant
and shall take all necessary actions to ensure that the par value per
share, if any, of the Common Stock (or Other Securities) is at all times
equal to or less than the then effective Purchase Price per share;
and
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(ii)
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will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares
of Common Stock or Other Securities upon the exercise of the Warrant from
time to time outstanding.
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(b)
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Title
to Stock. All Shares delivered upon the exercise of the
Warrant shall be validly issued, fully paid and nonassessable; each
Warrant Holder shall, upon such delivery, receive good and marketable
title to the Shares, free and clear of all voting and other trust
arrangements, liens, encumbrances, equities and claims whatsoever; and the
Company shall have paid all taxes, if any, in respect of the issuance
thereof.
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(c)
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Exchange
of Warrant. Subject to Section 2(a) hereof, upon
surrender for exchange of any Warrant to the Company, the Company at its
expense will promptly issue and deliver to or upon the order of the holder
thereof a new Warrant or like tenor, in the name of such holder or as such
holder (upon payment by such Warrant holder of any applicable transfer
taxes) may direct, calling in the aggregate for the purchase of the number
of Shares called for on the face of the Warrant
surrendered. The Warrant and all rights thereunder are
transferable in whole or in part upon the books of the Company by the
registered holder thereof, subject to the provisions of Section 2(a), in
person or by duly authorized attorney, upon surrender of the Warrant, duly
endorsed, at the principal office of the
Company.
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(d)
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Replacement
of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation
of any Warrant and, in the case of any such loss, theft or destruction,
upon delivery of an indemnity agreement reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company, at the expense of
the Warrant Holder, will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
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(e)
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Fractional
Shares. No fractional Shares are to be issued upon the
exercise of any Warrant, but the Company shall round any fraction of a
share to the nearest whole Share.
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7.
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Other Warrant Holders:
Holders of Shares.
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The
Warrant is issued upon the following terms, to all of which each Warrant Holder
by the taking thereof consents and agrees: (a) any person who shall become a
transferee, within the limitations on transfer imposed by Section 2(a) hereof,
of a Warrant properly endorsed shall take such Warrant subject to the provisions
of Section 2(a) hereof and thereupon shall be authorized to represent himself,
herself or itself as absolute owner thereof and, subject to the restrictions
contained in this Warrant Agreement, shall be empowered to transfer absolute
title by endorsement and delivery thereof to a permitted bona fide purchaser for
value; (b) any person who shall become a holder or owner of Shares shall take
such shares subject to the provisions of Section 2(b) hereof; (c) each prior
taker or owner waives and renounces all of his equities or rights in such
Warrant in favor of each such permitted bona fide purchaser, and each
such permitted bona fide
purchaser shall acquire absolute title thereto and to all rights
presented thereby; and (d) until such time as the respective Warrant is
transferred on the books of the Company, the Company may treat the registered
holder thereof as the absolute owner thereof for all purposes, notwithstanding
any notice to the contrary.
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8.
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Miscellaneous.
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All
notices, certificates and other communications from or at the request of the
Company to any Warrant Holder shall be mailed by first class, registered or
certified mail, postage prepaid, to such address as may have been furnished to
the Company in writing by such Warrant Holder, or, until an address is so
furnished, to the address of the last holder of such Warrant who has so
furnished an address to the Company, except as otherwise provided
herein. This Warrant Agreement and any of the terms hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
Texas. The headings in this Warrant Agreement are for purposes of
reference only and shall not limit or otherwise affect any of the terms
hereof. This Warrant Agreement, together with the forms of
instruments annexed hereto as schedules, constitutes the full and complete
agreement of the parties hereto with respect to the subject matter
hereof. For purposes of this Warrant Agreement, a faxed signature
shall constitute an original signature.
IN
WITNESS WHEREOF, the Company has caused this Warrant Agreement to be executed on
this 30st day of
January, 2008, in Houston, TX, by its proper corporate officers, thereunto duly
authorized.
By_/s/Xxxx
O’Keefe_______________
Its:
_CEO________________________
Printed Name: Xxxx
O’Keefe_________
Exhibit
A
SCHEDULE 1
WARRANT
THIS
WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN
RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4 OF
SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES
LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THIS WARRANT
MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER
THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS
WARRANT MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANT NOR THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE PROVISIONS OF REGULATION S AND OTHER LAWS OR PURSUANT TO
REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM
REGISTRATION. HEDGING TRANSACTIONS INVOLVING THIS WARRANT OR THE
SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE ACT.
To
Purchase 1,000,000 Shares
of Common
Stock
This
certifies that, for value received, the hereafter named registered owner is
entitled, subject to the terms and conditions of this Warrant, until the
expiration date, to purchase the number of shares (the “Shares”) set forth above
of the common stock (“Common Stock”), of BLAST ENERGY SERVICES, INC. (the
“Company”) from the Company at the purchase price per share hereafter set forth
below, on delivery of this Warrant to the Company with the exercise form duly
executed and payment of the purchase price (in cash or by certified or bank
cashier’s check payable to the order of the Company) for each Share
purchased. This Warrant is subject to the terms of the Warrant
Agreement between the parties thereto dated as of January 30,2008, the terms of
which are hereby incorporated herein. Reference is hereby made to
such Warrant Agreement for a further statement of the rights of the holder of
this Warrant.
Registered
Owner: McAfee Capital
LLC Date:
January 30, 2008
Purchase
Price
Per
Share: US
$0.10
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Expiration
Date:
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Subject
to Section 3(a) of the Warrant Agreement, 5:00 p.m. Central Standard
Time.
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WITNESS
the signature of the Company’s authorized officer:
By___/s/ Xxxx
OKeefe_________________
Its:
__CEO___________________________
Printed Name: __John
O’Keefe___________
Exhibit
A
SCHEDULE 2
FORM OF ASSIGNMENT AND
TRANSFER
For value
received, the undersigned hereby sells, assigns and transfers unto
__________________________________ the right represented by the enclosed Warrant
to purchase _________________ shares of Common Stock of
BLAST
ENERGY SERVICES, INC. to which the enclosed Warrant relates, and appoints
Attorney to transfer such right on the books of BLAST ENERGY SERVICES, INC. with
full power of substitution in the premises.
The
undersigned represents and warrants that the transfer of the enclosed Warrant is
permitted by the terms of the Warrant Agreement pursuant to which the enclosed
Warrant has been issued, and the transferee hereof, by his, her or its
acceptance of this Agreement, represents and warrants that he, she or it is
familiar with the terms of said Warrant Agreement and agrees to be bound by the
terms thereof with the same force and effect as if a signatory
thereto.
Dated:______________
____________________________________________
(Signature
must conform in all respects to name of holder
as
specified on the face of the enclosed Warrant)
____________________________________________
(Address)
Signed in
the presence of:
____________________________________
Exhibit
A
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SCHEDULE
3
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FORM OF
SUBSCRIPTION
b
(To be signed only upon exercise of
Warrant)
To BLAST
ENERGY SERVICES, INC.:
The
undersigned, the holder of the enclosed Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder,* shares of Common Stock of BLAST ENERGY SERVICES, INC. and herewith
makes payment of US $_______________ therefore, and requests that the
certificate or certificates for such shares be issued in the name of and
delivered to the undersigned.
The
undersigned hereby certifies that the undersigned is not a U.S. person and the
warrant is not being exercised on behalf of a U.S. person, or, if applicable,
the undersigned has attached an opinion of counsel to the effect that the
warrant and the securities to be delivered upon exercise thereof have been
registered under the Securities Act of 1933, as amended or are exempt from
registration thereunder.
Dated:______________
____________________________________________
(Signature
must conform in all respects to name of holder
as
specified on the face of the enclosed Warrant)
____________________________________________
(Address)
___________________________
(*) Insert
here the number of shares called for on the face of the Warrant or, in the case
of a partial exercise, the portion thereof as to which the Warrant is being
exercised, in either case without making any adjustment for additional Common
Stock or any other stock or other securities or property which, pursuant to the
adjustment provisions of the Warrant Agreement pursuant to which the Warrant was
granted, may be delivered upon exercise.
