Warrant to Purchase
WB-** ***
Shares of Common Stock
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 HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 P.M. New York City time on July 30, 2005. Subject to Early
Termination as provided in Section 10(e) of this Warrant.
SERIES B WARRANT TO PURCHASE COMMON STOCK
OF
U.S. ENERGY SYSTEMS, INC.
This is to certify that, FOR VALUE RECEIVED, Energy Systems Investors, L.L.C. or
assigns, is entitled to purchase, subject to the provisions of this Series B
Warrant to Purchase Common Stock (the "Warrant" or "Series B Warrant"), from
U.S. ENERGY SYSTEMS, INC., a Delaware corporation (the "Company"), at an
exercise price of Four Dollars ($4.00) 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 July 31, 2000, and ending at 5:00 p.m. New York City
time, on July 30, 2005, subject to earlier termination pursuant to Section 10(e)
of this Warrant. Notwithstanding anything to the contrary herein, this Warrant
may not be exercised (a) unless and until the Effective Date (as such term is
defined in the Plan of Recapitalization (as defined)) has occurred and (b)
unless the promissory note made by Energy Systems Investors, L.L.C. in favor of
the Company (the "Note") in stated principal amount of $7,741,378.90 and all
accrued interest and fees have been paid in full, or if the Note has not been
paid in full, this Warrant may only be exercised to acquire the number of shares
of Common Stock equal to the quotient obtained by dividing the principal amount
of the Note that is paid from time to time (less prior payments of the Note for
which portions of this Warrant have previously become exercisable) by
$5.160919269 and provided further that all interest and fees allocable to the
portion of the Note that has been paid and for which Warrants may be exercised
has also been paid. 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 B Warrants issued pursuant to the Plan of Recapitalization
pursuant to which an aggregate of up to 1,500,000 shares (subject to adjustment
as provided herein) of Common Stock may be issued. References to all of the
Warrants shall include all outstanding Series B Warrants to Purchase Common
stock of the Company originally issued pursuant to the Plan of Recapitalization,
including Warrants held by transferees. Except as provided in the Plan of
Recapitalization or herein, the Company shall not issue any more Series B
Warrants. The term "Plan of Recapitalization" has the meaning ascribed to such
term in the letter dated as of July 31, 2000 by and between the Company,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and Energy Systems Investors, L.L.C.
1. EXERCISE OF WARRANT. Except as otherwise provided in the
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 Holder 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 (as
defined) shall 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
The Nasdaq Stock Market or a national securities exchange, 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 Registered 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 of this Warrant
are limited to those expressed in this 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 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 whole 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 in any state in which such
exercise would be unlawful.
10. 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 Series B 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).
(e) This Warrant shall terminate and be of no
further force or effect as and when the Plan of Recapitalization terminates, in
the manner more fully set forth in Section 3 of the Plan of Recapitalization.
Dated: July 31, 2000
U.S. ENERGY SYSTEMS, INC.
By:
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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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