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NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ( THE "ACT"),
AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION
SHALL BE APPLICABLE, THE REGISTERED HOLDER SHALL HAVE DELIVERED AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
SERIES C REDEEMABLE COMMON STOCK PURCHASE WARRANT
OF
U.S. ENERGY SYSTEMS, INC.
This is to certify that, FOR VALUE RECEIVED, [ ] or permitted assigns, is
entitled to purchase, subject to the provisions of this Series C Redeemable
Common Stock Purchase Warrant (the "Warrant"), from U.S. ENERGY SYSTEMS, INC., a
Delaware corporation (the "Company"), at an exercise price of Six Dollars
($6.00) per share, [ ] ( ) shares of Common Stock, par value $.01 per share, of
the Company (the "Common Stock") at any time during the period (the "Exercise
Period") commencing as of [the Effective Date], and ending at 5:00 p.m. New York
City time, [five years after the Effective Date]. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for a share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares," and the exercise price for the purchase of a share of Common Stock
pursuant to this Warrant in effect at any time and as adjusted from time to time
is hereby referred to as the "Exercise Price". This Warrant is one of the Series
C Redeemable Common Stock Warrants issued pursuant to an Agreement and Plan of
Merger dated as of November 28, 2000 by and among the Company, USE Zapco
Aquisition Corporation and ▇▇▇▇▇▇ Alternative Power Corporation.
1. EXERCISE OF WARRANT. Except as otherwise provided herein,
this Warrant may be exercised in whole at any time, or in part from time to
time, during the Exercise Period by presentation and surrender hereof to the
Company at its principal office, or at the office of its stock transfer agent,
if any, with the Purchase Form annexed hereto as Exhibit A duly executed and by
paying in full, in lawful money of the United States, in cash, certified check
or bank draft payable to the order of the Company, the Exercise Price for each
full share of Common Stock as to which the Warrant is exercised and any and all
applicable taxes due in connection with the exercise of the Warrant, the
exchange of the Warrant for the Common Stock, and the issuance of the Common
Stock. If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Registered Holder (as defined) hereof to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price therefor at its office, or by the stock
transfer agent of the Company at its office, in proper form for exercise, the
Registered Holder shall, except as otherwise provided by Section 9(b) herein, be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise provided, that if the date of such surrender and payment is a date
when the stock transfer books of the Company are closed, such person shall be
deemed to have become the Registered Holder of such shares at the close of
business on the next succeeding date on which the stock transfer books are open.
2. VALID ISSUANCE. All shares of Common Stock issued upon the
proper exercise of this Warrant in conformity with the terms hereof shall be
validly issued, fully paid and non-assessable.
3. RESERVATION OF COMMON STOCK; LISTING OF SHARES. The Company
hereby agrees that: (a) at all times there shall be reserved for issuance and/or
delivery upon exercise of this Warrant such number of shares of its Common Stock
as shall be required for issuance and delivery upon exercise of this Warrant;
and (b) in the event the shares of the Company's Common Stock are included on an
Exchange (as defined), it shall cause the Warrant Shares to be so listed.
4. FRACTIONAL SHARES.
(a) The Company shall not be required to issue
fractional shares upon exercise of this Warrant. If upon exercise of this
Warrant the Company would be required to issue a fractional number of shares,
the Company shall, in lieu thereof, pay to the Holder an amount in cash equal
to such fraction multiplied by the current Market Price Per Share (as defined),
as of the last business day prior to the date of exercise of this Warrant.
(b) As used herein, the term "Market Price Per Share"
on any date shall mean the closing price per share of the Common Stock for the
trading day immediately preceding such date. The closing price for each such
day shall be the last sale price or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, in either case on the
principal securities exchange (including any automated system of quotation) (an
"Exchange") on which the Common Stock is listed or admitted for trading, or, if
not so listed on an Exchange, the average of the closing bid and asked prices as
furnished by two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose. If such bid and
asked prices are not available, then "Market Price Per Share" shall be the fair
market value of the Company's Common Stock as determined in good faith by the
Board of Directors of the Company.
5. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This
Warrant is exchangeable, without expense, at the option of the Registered
Holder, upon presentation and surrender hereof to the Company or at the office
of its stock transfer agent, if any, for other warrants of different
denominations entitling the Registered Holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder.
Subject to the provisions of Section 9 of this Warrant, upon surrender of this
Warrant to the Company or at the office of its stock transfer agent, if any,
with the Assignment Form annexed hereto as Exhibit A duly executed and funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be canceled. This Warrant may be
divided or combined with other Warrants which carry the same rights upon
presentation hereof at the office of the Company or at the office of its stock
transfer agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the
Registered Holder hereof. The term "Warrant" as used herein includes any
Warrants into which this Warrant may be divided or exchanged. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and deliver
a new Warrant of like tenor and date.
6. RIGHTS OF THE HOLDER. The holder of this Warrant shall not,
by virtue of this Warrant, be entitled to any rights of a stockholder in the
Company, either at law or equity, and the rights of the holder are limited to
those expressed in the Warrant and are not enforceable against the Company
except to the extent set forth herein.
7. ANTIDILUTION ADJUSTMENT OF NUMBER OF WARRANT SHARES AND
EXERCISE PRICE; OTHER RECLASSIFICATIONS, REORGANIZATIONS OR MERGERS.
(a)In case the Company shall (i) pay a dividend or
make a distribution on its shares of Common Stock in shares of Common Stock,
(ii) split, subdivide or reclassify its outstanding Common Stock into a greater
number of shares or (iii) combine or reclassify its outstanding Common Stock
into a smaller number of shares, then the number of Warrant Shares issuable
upon exercise of this Warrant, and the Exercise Price per share in effect at the
time of the record date for such dividend or distribution or at the effective
date of such split, subdivision, combination or reclassification, shall be
proportionately adjusted so that if this Warrant is exercised after such date,
the Registered Holder shall be entitled to receive for the same aggregate
purchase price, the aggregate number and kind of shares which, if this Warrant
had been exercised immediately prior to such time, such Registered Holder would
have owned after giving effect to such dividend or distribution, split,
subdivision, combination or reclassification. Such adjustments shall be made
successively whenever any event listed in this Section 7 shall occur. All price
calculations under this Section 7 shall be made to the nearest whole cent and
share adjustments to the nearest share.
(b) If after the date hereof any capital
reorganization or reclassification of the Common Stock of the Company, or
consolidation or merger of the Company with or into another corporation, or the
sale of all or substantially all of its assets to another corporation or other
similar event (collectively referred to as a "Transaction") shall be effected,
then, as a condition of such Transaction, lawful and fair provision shall be
made whereby the Registered Holder of this Warrant shall thereafter have the
right thereafter by exercising this Warrant, to purchase (in lieu of purchasing
the shares of Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of this Warrant), the kind and amount of shares
of stock, securities, or assets receivable upon such Transaction by a holder of
the number of shares of Common Stock which might have been purchased upon
exercise of this Warrant immediately prior to such Transaction. In such event,
appropriate provision shall be made with respect to the rights and interests
of the Registered Holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise
Price and of the number of shares purchasable upon the exercise of this Warrant)
shall thereafter be applicable, as nearly as may be, to any share of stock,
securities, or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such Transaction unless prior to the consummation
thereof the successor corporation (if other than the Company) resulting from
such Transaction, or the corporation purchasing such assets, shall assume the
obligations to deliver to the Registered Holder of this Warrant such shares
of stock, securities, or assets which, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
8. NOTICES OF CHANGE IN WARRANT. Upon every adjustment of the
Exercise Price or the number of shares issuable on exercise of this Warrant, the
Company shall give written notice thereof to the Registered Holder of this
Warrant, which notice shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of a Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the occurrence of any event specified in Section 7,
then, in any such event, the Company shall give written notice to the Registered
Holder of this Warrant of the record date for such dividend, distribution,
split, reclassification or recombination, or the effective date of Transaction.
Such notice shall also specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution, split,
reclassification or recombination, or shall be entitled to exchange their Common
Stock for stock, securities, or other assets deliverable upon a Transaction.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such event.
9. COMPLIANCE WITH THE SECURITIES ACT OF 1933.
(a) This Warrant or the Warrant Shares or any
other security issued or issuable upon exercise of this Warrant may not be sold
or otherwise disposed of except as follows:
(i) to a person who, in the opinion of
counsel reasonably acceptable the Company, is a person to whom this Warrant or
Warrant Shares may legally be transferred without registration and without
the delivery of a current prospectus under the Act with respect thereto,
and against receipt of an agreement of such person to comply with the
obligations of the holder of this Warrant which agreement shall be reasonably
satisfactory in form and substance to the Company; or
(ii) to any person upon delivery of a
prospectus then meeting the requirements of the Act relating to such securities
and the offering thereof for such sale or disposition.
(b) Notwithstanding anything to the contrary herein,
the Company shall not be obligated to deliver any securities issuable on
exercise of this Warrant unless the issuance of such securities has been
registered under the Act or, in the opinion of counsel to the Company, the
issuance is exempt from the registration requirements of the Act and applicable
state securities laws. This Warrant may not be exercised by, nor may any
securities be issued to, any Registered Holder or any other person in any state
in which such exercise would be unlawful.
10. REDEMPTION
(a) After the first anniversary date of the Effective
Date, this Warrant may be redeemed, at the option of the Company, if all the
other outstanding Series C Redeemable Common Stock Purchase Warrants are also
contemporaneously redeemed, at any time, at the office of the Company or its
stock transfer agent, upon the notice referred to in Section 10(b), at the
price of $.001 per Warrant Share (the "Redemption Price"), provided that the
average of the last reported sales prices of the Common Stock for a period of
twenty (20) consecutive trading days ending on the third trading day prior to
the date on which notice of redemption is given is at least one hundred twenty-
five (125%) percent of the then effective Exercise Price of the Warrant.
(b) In the event the Company shall elect to redeem
all of the outstanding Series C Redeemable Common Stock Purchase Warrants, the
Company shall fix a date for the redemption. Notice of redemption shall be
mailed by first class mail, postage prepaid, by the Company or the Company's
agent at its direction not less that fifteen (15) business days prior to the
date fixed for redemption to the Registered Holder of this Warrant to be
redeemed at the Registered Holder's last address as it shall appear on the
Warrant Register (as defined). Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly give whether or not
the Registered Holder of this Warrant shall have received such notice.
(c) This Warrant may be exercised in accordance with
Section 1 hereof at any time after notice of redemption shall have been given
by the Company pursuant to Section 10(b) and prior to the close of business
on the date fixed for redemption. After the redemption date, the Registered
Holder of this Warrant shall have no further rights except to receive, upon
surrender of this Warrant, the Redemption Price.
11. MISCELLANEOUS.
(a) All communications provided for herein shall
be sent, except as may be otherwise specifically provided, by registered or
certified mail: if to the Registered Holder of this Warrant, to the address
shown on the books of the Company; and if to the Company, to U.S. Energy Systems
, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President, or to such other address as the Company may advise the
Registered Holder of this Warrant in writing. Notices shall be deemed given
when mailed.
(b) The provisions of this Warrant shall in all
respects be constructed according to, and the rights and liabilities of the
parties hereto shall in all respects be governed by, the laws of the State of
Delaware, without regard to such state's choice of law rules.
(c) The Company shall maintain books ("Warrant
Register") for the registration of original issuance and the registration of
transfer of the Warrants. Upon the initial issuance of the Warrants, the Company
shall issue and register the Warrants in the names of the holders thereof.
(d) Prior to due presentment for registration of
transfer of this Warrant, the Company may deem and treat the person in whose
name this Warrant shall be registered upon the Warrant Register ("Registered
Holder"), as the absolute owner of such Warrant and of each Warrant represented
thereby (notwithstanding any notation of ownership or other writing on the
Warrant certificate made by anyone other than the Company, for the purpose of
any exercise thereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary).
Dated: [Effective Date]
U.S. ENERGY SYSTEMS, INC.
By:__________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Exhibit A
PURCHASE FORM
Dated_______ , 20__
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing shares of Common Stock and hereby makes
payment of _________ in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name___________________________________
(Please typewrite or print in block letters)
Signature________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED,
hereby sells, assigns and transfer unto
Name___________________________________
(Please typewrite or print in block letters)
Address_________________________________
Social Security or Employer Identification No.__________
the right to purchase Common Stock represented by this Warrant to the extent of
_____shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint ________________ Attorney, to transfer the same on the
books of the Company with full power of substitution in the premises.
Dated:___________, 20__
Signature_____________
Signature Guaranteed
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