EXHIBIT 10.2

 

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS. THIS SECURITY MAY NOT BE
SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

 

Warrant No.: A-[__]

Issuance Date: March [_], 2005

UNITED ENERGY CORP.

MARCH 2005 SERIES A

PURCHASE WARRANT

WARRANT (“WARRANT”) TO PURCHASE SHARES OF

COMMON STOCK, $0.01 PAR VALUE PER SHARE

This is to certify that, FOR VALUE RECEIVED, [_____________________]
(“Warrantholder”), is entitled to purchase, subject to the provisions of this
Warrant, from United Energy Corp., a corporation organized under the laws of
Nevada (“Company”), at any time and from time to time commencing from the
Issuance Date (“Exercise Date”), but not later than 5:00 P.M., Eastern time, on
the fifth (5th) anniversary of the Issuance Date (“Expiration Date”), a total of
[_________________________] shares (“Warrant Shares”) of Common Stock, $0.01 par
value (“Common Stock”) of the Company, at an initial exercise price per share of
[One Dollar ($1.00)] [subject to adjustment as provided in Section 4.2(a)(ii) of
the Securities Purchase Agreement]. The exercise price in effect from time to
time is hereafter called the “Warrant Price”. The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be subject
to adjustment from time to time as described herein.

This Warrant has been issued pursuant to the terms of the Securities Purchase
Agreement (“Purchase Agreement”) dated March 18, 2005 between the Company and
the Warrantholder. Capitalized terms used herein and not defined shall have the
meaning specified in the Purchase Agreement.

Section 1.   Registration. The Company shall maintain books for the transfer and
registration of the Warrant. Upon the initial issuance of the Warrant, the
Company shall issue and register the Warrant in the name of the Warrantholder.

Section 2.                Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act or an exemption from

 

 

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registration thereunder. Subject to such restrictions, the Company shall
transfer this Warrant from time to time, upon the books to be maintained by the
Company for that purpose, upon surrender hereof for transfer properly endorsed
or accompanied by appropriate instructions for transfer upon any such transfer,
and a new Warrant shall be issued to the transferee and the surrendered Warrant
shall be canceled by the Company.

Section 3.                (a) Exercise of Warrant. Subject to the provisions
hereof, the Warrantholder may exercise this Warrant in whole or in part at any
time and from time to time on and after the Exercise Date and ending on the
Expiration Date, upon surrender of the original of this Warrant, together with
delivery of the duly executed Warrant exercise form attached hereto (the
“Exercise Agreement”) (which may be by fax), to the Company during normal
business hours on any business day at the Company’s principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the holder hereof), and upon payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company of the
Warrant Price for the Warrant Shares specified in the Exercise Agreement. The
Warrant Shares so purchased shall be deemed to be issued to the holder hereof or
such holder’s designee, as the record owner of such shares, as of the close of
business on the date on which the completed Exercise Agreement and original of
this Warrant shall have been delivered to the Company (or such later date as may
be specified in the Exercise Agreement). Certificates for the Warrant Shares so
purchased, representing the aggregate number of shares specified in the Exercise
Agreement, shall be delivered to the holder hereof within a reasonable time, not
exceeding two (2) Business Days, after this Warrant shall have been so
exercised. The certificates so delivered shall be in such denominations as may
be requested by the holder hereof and shall be registered in the name of such
holder or such other name as shall be designated by such holder. If this Warrant
shall have been exercised only in part, then, unless this Warrant has expired,
the Company shall (subject to Section 3(b) below), at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised. In lieu of delivering physical certificates
representing the shares of Common Stock issuable upon exercise of this Warrant,
provided the Company's transfer agent is participating in the Depository Trust
Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program and such
certificates can be issued without restrictive legends in accordance with
applicable securities laws, upon request of the Warrantholder, the Company shall
use commercially reasonable efforts to cause its transfer agent to
electronically transmit such shares issuable upon exercise to the Warrantholder
(or its designee), by crediting the account of the Warrantholder’s (or such
designee’s) prime broker with DTC through its Deposit Withdrawal Agent
Commission system (provided that the same time periods herein as for stock
certificates shall apply).

(b) If the Company shall fail for any reason or for no reason (other than by
reason of a failure, breach or omission on the part of the Warrantholder) to
issue to the Warrantholder within three (3) Business Days after the warrant has
been exercised, a certificate for the number of shares of Common Stock to which
the Warrantholder is entitled or to credit such holder’s designee's balance
account with DTC, in accordance with Section 3(a) hereof, for such number of
shares of Common Stock to which the holder is entitled upon the Warrantholder's
exercise of this Warrant, the Company shall, in addition to any other remedies
under this Warrant or otherwise available to such holder, pay as additional
damages in cash to

 

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such holder on each day such exercise is not timely effected an amount equal to
5.0% multiplied by the product of (I) the sum of the number of shares of Common
Stock not issued to such holder and to which such holder is entitled and (II)
the excess of the Closing Sale Price of the Common Stock as of the exercise date
over the Warrant Exercise Price then in effect.

(c) the holder of this Warrant may, at its election exercised in its sole
discretion, exercise this Warrant and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment
of the Warrant Price for the Warrant Shares specified in the Exercise Agreement,
elect instead to receive upon such exercise the “Net Number” of shares of Common
Stock determined according to the following formula (a "Cashless Exercise"):

Net Number = (A x B) - (A x C)   B

For purposes of the foregoing formula:

A= the total number of shares with respect to which this Warrant is then being
exercised.

B= the Closing Sale Price of the Common Stock on the trading day immediately
preceding the date of the Exercise Agreement.

C= the Warrant Price then in effect at the time of such exercise.

Section 4.                Compliance with the Securities Act of 1933. Neither
this Warrant nor the Common Stock issued upon exercise hereof nor any other
security issued or issuable upon exercise of this Warrant may be offered or sold
except as provided in this Warrant and in conformity with the Securities Act, as
amended, and then only against receipt of an agreement of such person to whom
such offer of sale is made to comply with the provisions of this Section 4 with
respect to any resale or other disposition of such security. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant until the Warrant Shares have been registered for resale under
the Registration Rights Agreement or until Rule 144 is available, unless counsel
for the Company is of the opinion as to any such security that such legend is
unnecessary.

Section 5.                Payment of Taxes. The Company will pay any documentary
stamp taxes attributable to the initial issuance of Warrant Shares issuable upon
the exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued. The holder shall be responsible for income taxes
due under federal or state law, if any such tax is due.

 

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Section 6.                Mutilated or Missing Warrants. In case this Warrant
shall be mutilated, lost, stolen, or destroyed, the Company shall issue in
exchange and substitution of and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
reasonably requested by the Company.

Section 7.                Reservation of Common Stock. The Company hereby
represents and warrants that there have been reserved, and the Company shall at
all applicable times keep reserved, out of the authorized and unissued Common
Stock, a number of shares sufficient to provide for the exercise of the rights
of purchase represented by the Warrant in full (without regard to any
restrictions on beneficial ownership contained herein), and the transfer agent
for the Common Stock, including every subsequent transfer agent for the Common
Stock or other shares of the Company’s capital stock issuable upon the exercise
of any of the right of purchase aforesaid (“Transfer Agent”), shall be
irrevocably authorized and directed at all times to reserve such number of
authorized and unissued shares of Common Stock as shall be requisite for such
purpose. The Company agrees that all Warrant Shares issued upon exercise of the
Warrant in accordance with its terms shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company. The Company will
keep a conformed copy of this Warrant on file with its Transfer Agent. The
Company will supply from time to time the Transfer Agent with duly executed
stock certificates required to honor the outstanding Warrant.

Section 8.                Warrant Price. The Warrant Price, subject to
adjustment as provided in Section 9, shall, if payment is made in cash or by
certified check, be payable in lawful money of the United States of America.

Section 9.        Adjustment of Warrant Exercise Price and Number Of Shares. The
Warrant Price and the number of shares of Common Stock issuable upon exercise of
this Warrant shall be adjusted from time to time as follows:

a.                 Adjustment of Warrant Price. If and whenever on or after the
Issuance Date, the Company issues or sells, or is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of shares of Common
Stock owned or held by or for the account of the Company, but with the exception
of Excluded Issuances) for a consideration per share less than a price (the
“Applicable Price”) equal to the Warrant Price in effect immediately prior to
such issuance or sale, then concurrent with such issue or sale, the Warrant
Price then in effect shall be reduced to a price equal to such consideration per
share. Upon each such adjustment of the Warrant Price hereunder, the number of
shares of Common Stock acquirable upon exercise of this Warrant shall be
adjusted to the number of shares determined by multiplying the Warrant Price in
effect immediately prior to such adjustment by the number of shares of Common
Stock acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Warrant Price resulting from
such adjustment.

 

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b.                 Effect on Warrant Exercise Price. For purposes of determining
the adjusted Warrant Price under Section 9(a) above, the following shall be
applicable:

(i)                Issuance of Options. If the Company in any manner grants any
Options (other than Excluded Issuances) and the lowest price per share for which
one share of Common Stock is issuable upon the exercise of any such Option or
upon conversion, exchange or exercise of any Convertible Securities issuable
upon exercise of any such Option is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting or sale of such Option for
such price per share. For purposes of this Section 9(b)(i), the “lowest price
per share for which one share of Common Stock is issuable upon exercise of any
such Option or upon conversion, exchange or exercise of any Convertible
Securities issuable upon exercise of any such Option” shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the granting or sale
of the Option, upon exercise of the Option and upon conversion, exchange or
exercise of any Convertible Security issuable upon exercise of such Option. No
further adjustment of the Warrant Price shall be made upon the actual issuance
of such Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Stock upon conversion,
exchange or exercise of such Convertible Securities.

(ii)               Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities (other than Excluded
Issuances) and the lowest price per share for which one share of Common Stock is
issuable upon such conversion, exchange or exercise thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issuance or sale of such Convertible Securities for such price per share. For
the purposes of this Section 9(b)(ii), the “lowest price per share for which one
share of Common Stock is issuable upon such conversion, exchange or exercise”
shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to one share of Common Stock
upon the issuance or sale of the Convertible Security and upon conversion,
exchange or exercise of such Convertible Security. No further adjustment of the
Warrant Price shall be made upon the actual issuance of such Common Stock upon
conversion, exchange or exercise of such Convertible Securities, and if any such
issue or sale of such Convertible Securities is made upon exercise of any
Options for which adjustment of the Warrant Price had been or are to be made
pursuant to other provisions of this Section 9(b), no further adjustment of the
Warrant Price shall be made by reason of such issue or sale.

(iii)              Change in Option Price or Rate of Conversion. If the purchase
or exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exchange or exercise of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable or exercisable for Common Stock changes at any time (other than
Excluded Issuances, in each case), the Warrant Price in effect at the time of
such change shall be adjusted to the Warrant Price which would have been in
effect at such time had such Options or Convertible Securities provided for such
changed purchase price,

 

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additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of shares of Common Stock
acquirable hereunder shall be correspondingly readjusted. For purposes of this
Section 9(b)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the date of issuance of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon conversion, exchange or
exercise thereof shall be deemed to have been issued as of the date of such
change.

(iv)           Calculation of Consideration Received. In case any Option is
issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $0.01. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed
to be the net amount received by the Company therefor. If any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company will be the fair value of such consideration, except where such
consideration consists of marketable securities, in which case the amount of
consideration received by the Company will be equal to the arithmetic average of
the Closing Sale Prices of such marketable securities for the ten (10)
consecutive trading days immediately preceding the date of receipt. If any
Common Stock, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or securities will be determined jointly by the Company and the holders of
a majority of the Preferred Shares then outstanding. If such parties are unable
to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Business Days after the tenth
(10th) day following the Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the holders of a majority of the Preferred
Shares then outstanding. The determination of such appraiser shall be deemed
binding upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne equally by the Company and the holders of the Preferred
Shares.

 

(v)            No adjustment pursuant to this Section 9(b) shall be made if such
adjustment would result in an increase of the Warrant Price then in effect.

 

c.

Certain Events.

 

(i)             If the Company or any of its subsidiaries shall at any time or
from time to time while the Warrant is outstanding, pay a dividend or make a
distribution on its capital stock in shares of Common Stock, subdivide its
outstanding shares of Common Stock into a greater number of shares or combine
its outstanding shares into a smaller number of shares or issue by
reclassification of its outstanding shares of Common Stock any shares of its
capital stock

 

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(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then the number of
Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in
effect immediately prior to the date upon which such change shall become
effective, shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event. Such
adjustment shall be made successively whenever any event listed above shall
occur.

(ii)               If any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
another corporation, or sale, transfer or other disposition of all or
substantially all of the Company’s assets to another corporation shall be
effected, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
herein specified and in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or
assets as would have been issuable or payable with respect to or in exchange for
a number of Warrant Shares equal to the number of Warrant Shares immediately
theretofore issuable upon exercise of the Warrant, had such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition not
taken place, and in any such case appropriate provision shall be made with
respect to the rights and interests of each Warrantholder to the end that the
provisions hereof (including, without limitations, provision for adjustment of
the Warrant Price) shall thereafter be applicable, as nearly equivalent as may
be practicable in relation to any shares of stock, securities or properties
thereafter deliverable upon the exercise hereof. The Company shall not effect
any such consolidation, merger, sale, transfer or other disposition unless prior
to or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger, or the
corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume, by written instrument executed and delivered
to the Company, the obligation to deliver to the holder of the Warrant such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase and the other obligations
under this Warrant. The provisions of this paragraph (ii) shall similarly apply
to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers or other dispositions.

(iii)              In case the Company shall fix a record date for the making of
a distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets or subscription
rights or warrants, the Warrant Price to be in effect after such record date
shall be determined by multiplying the Warrant Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the total
number of shares of Common Stock outstanding multiplied by the Closing Sale
Price of Common Stock on such record date, less the fair market value (on a per
share basis) (as determined by the Company’s Board of Directors in good faith)
of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such Closing Sale
Price of Common Stock

 

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on such record date. Such adjustment shall be made successively whenever such a
record date is fixed.

(iv)              In the event that, as a result of an adjustment made pursuant
to Section 9(c), the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.

(v)               In the event of any adjustment pursuant to this Section 9(c)
in the number of Warrant Shares issuable hereunder upon exercise, the Warrant
Price shall be inversely proportionately increased or decreased, as the case may
be, such that the aggregate purchase price for Warrant Shares upon full exercise
of this Warrant shall remain the same. Similarly, in the event of any adjustment
in the Warrant Price, the number of Warrant Shares issuable hereunder upon
exercise shall be inversely proportionately increased or decreased, as the case
may be, such that the aggregate purchase price for Warrant Shares upon full
exercise of this Warrant shall remain the same.

 

Section 10.         Fractional Interest. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of the Warrant. If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable upon the exercise of the Warrant (or specified portions thereof), the
Company shall round such calculation to the nearest whole number and disregard
the fraction.

Section 11.         Benefits. Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Company and the Warrantholder)
any legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the
Warrantholder.

Section 12.              Notices to Warrantholder. Upon the happening of any
event requiring an adjustment of the Warrant Price, the Company shall forthwith
give written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. In the event of a dispute with respect to any such
calculation, the certificate of the Company’s independent certified public
accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error. Failure to give such notice to the Warrantholder or
any defect therein shall not affect the legality or validity of the subject
adjustment. At the Warrantholder’s request, the Company shall deliver to the
Warrantholder as of a requested date a notice specifying the Warrant Price and
the number of Warrant Shares into which this Warrant is exercisable as of such
date.

Section 13.              Identity of Transfer Agent. The Transfer Agent for the
Common Stock is Interstate Transfer Company. Forthwith upon the appointment of
any subsequent

 

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transfer agent for the Common Stock or other shares of the Company’s capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrant, the Company will fax to the Warrantholder a statement setting forth the
name and address of such transfer agent.

Section 14.              Notices. Any notice pursuant hereto to be given or made
by the Warrantholder to or on the Company shall be sufficiently given or made if
delivered personally or by facsimile or if sent by an internationally recognized
courier, addressed as follows:

If to the Company:

 

United Energy Corporation

600 Meadowlands Parkway

No. 20

Secaucus, New Jersey 07094

Att: Brian F. King, Chief Executive Officer

 

With a copy to:

 

Greenbaum, Rowe, Smith & Davis, LLP

99 Wood Avenue South

P.O. Box 5600

Woodbridge, New Jersey 07095

Att: W Raymond Felton, Esq.

 

If to the Purchasers, to the addresses set forth on the

signature pages hereto.

 

With a copy to:

 

Silverman Sclar Shin & Byrne PLLC

381 Park Avenue South, Suite 1601

New York, New York 10016

Attn: Peter R. Silverman, Esq.

 

or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.

Any notice pursuant hereto to be given or made by the Company to or on the
Warrantholder shall be sufficiently given or made if personally delivered or if
sent by an internationally recognized courier service by overnight or two-day
service, to the address set forth on the books of the Company or, as to each of
the Company and the Warrantholder, at such other address as shall be designated
by such party by written notice to the other party complying as to delivery with
the terms of this Section 14.

 

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All such notices, requests, demands, directions and other communications shall,
when sent by courier, be effective two (2) days after delivery to such courier
as provided and addressed as aforesaid. All faxes shall be effective upon
receipt.

Section 15.              Registration Rights. The initial holder of this Warrant
is entitled to the benefit of certain registration rights in respect of the
Warrant Shares as provided in the Registration Rights Agreement.

Section 16.              Successors. All the covenants and provisions hereof by
or for the benefit of the Warrantholder shall bind and inure to the benefit of
its respective successors and assigns hereunder.

Section 17.              Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York, without giving effect to
its conflict of law principles, and for all purposes shall be construed in
accordance with the laws of said State.

Section 18.              Exercise Limitations. Notwithstanding anything to the
contrary contained herein, in no event shall the Warrantholder be entitled to
exercise this Warrant for a number of Warrant Shares in excess of the number of
Warrant Shares, which upon giving effect to such exercise, would cause the
aggregate number of shares of Common Stock beneficially owned by such holder and
its affiliates to exceed 9.99% of the outstanding shares of Common Stock
following such exercise. For purposes of the foregoing sentence, the number of
shares of Common Stock beneficially owned by a holder and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of the
Warrant with respect to which the determination of such sentence is being made,
but shall exclude the number of shares of Common Stock which would be issuable
(i) upon exercise of the remaining unexercised Warrant beneficially owned by
such holder and its affiliates and (ii) upon conversion or exercise of the
unconverted or unexercised portion of any other securities of the Company
beneficially owned by such holder and its affiliates subject to a limitation on
conversion or exercise analogous to the limitation contained in this paragraph.
Except as set forth in the preceding sentence, for purposes of this paragraph
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended. For purposes of this paragraph, in
determining the number of outstanding shares of Common Stock, a holder may rely
on the number of outstanding shares of Common Stock as reflected in (1) the
Company's most recent Form 10-Q or Form 10-K, as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the Company
or its transfer agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral request of any
holder, the Company shall within one (1) Business Day confirm orally and in
writing to any such holder the number of shares Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of
the Company, including the Warrant, by such holder or its affiliates since the
date as of which such number of outstanding shares of Common Stock was reported.

Section 19.              Replacement Warrants. The Company agrees that within
five (5) Business Days after any request from time to time of the Warrantholder,
it shall deliver to such holder a new Warrant in substitution of this Warrant
which is identical in all respects except that

 

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the then Warrant Price shall be appropriately specified in the Warrant, and the
Warrant shall specify the fixed number of Warrant Shares into which this Warrant
is then exercisable. Such changes are intended not as amendments to the Warrant
but only as clarification of the foregoing numbers for convenience purposes, and
such changes shall not affect any provisions concerning adjustments to the
Warrant Price or number of Warrant Shares contained herein.

Section 20.              Absolute Obligation to Issue Warrant Shares. The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the holder hereof to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the holder hereof
or any other Person of any obligation to the Company or any violation or alleged
violation of law by the holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of the Company to
the holder hereof in connection with the issuance of Warrant Shares. The Company
will at no time close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.

Section 21.              Assignment. This Warrant and the rights granted
hereunder shall be assignable by the Warrantholder without the consent of the
Company.

Section 22.          Judicial Proceedings. Any legal action, suit or proceeding
brought against the Company with respect to this Warrant may be brought in any
federal court of the Southern District of New York or any state court located in
New York County, State of New York, and by execution and delivery of this
Warrant, the Company hereby irrevocably and unconditionally waives any claim (by
way of motion, as a defense or otherwise) of improper venue, that it is not
subject personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Warrant or the subject matter may not be
enforced in or by such court. The Company hereby irrevocably and unconditionally
consents to the service of process of any of the aforementioned courts in any
such action, suit or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, at its address set forth or provided for in
Section 14, such service to become effective 10 days after such mailing. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this
Section. The Company irrevocably submits to the exclusive jurisdiction of the
aforementioned courts in such action, suit or proceeding.

 

Section 23. DEFINITIONS: The following words and terms as used in this Warrant
shall have the following meanings:

(i)                “Approved Stock Plan” means any employee benefit plan, stock
incentive plan or other similar plan or arrangement which has been approved by
the Board of Directors of the Company or a duly authorized committee thereof,
pursuant to which the Company's securities may be issued to any employee,
consultant, officer or director for services provided to the Company.

 

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(ii)               “Business Day” means any day other than Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law to remain closed.

 

(iii)            “Closing Sale Price” means, for any security, the closing sale
price per such security as reported by the Principal Market on the trading day
immediately preceding the date on which such value is being determined.

 

(iv)              “Convertible Securities” means any stock or securities (other
than Options) directly or indirectly convertible into or exchangeable or
exercisable for Common Stock.

(v)               “Excluded Issuances” means (A) provided such security is
issued at a price which is greater than or equal to the greater of (a) 90% of
the Applicable Price or (b) the arithmetic average of the Closing Sale Prices of
the Common Stock for the ten (10) consecutive trading days immediately preceding
the date of issuance, any of the following (i) any issuance by the Company of
securities in connection with a strategic partnership or a joint venture (the
primary purpose of which is not to raise equity capital) and (ii) any issuance
by the Company of securities as consideration for a merger or consolidation or
the acquisition of a business, product, license, or other assets of another
person or entity, (B) any warrants or options outstanding as of the Issuance
Date which have not been modified or amended since the Issuance Date and (C)
options to purchase shares of Common Stock, provided (I) such options are issued
after the Issuance Date to employees of the Company within 30 days of such
employee starting their employment with the Company, (II) an aggregate of no
more than 150,000 options are issued in reliance on this exclusion and (III) the
exercise price of such options is not less than 75% of the market price of the
Common Stock on the date of issuance of such options.

(vi)        “Issuance Date” means the date on which this Warrant is issued to
the Warrantholder as is set forth on the first page of the Warrant.

(vii)             “Option” means any rights, warrants or options to subscribe
for or purchase or otherwise acquire Common Stock or Convertible Securities.

(viii)            “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

(ix)              “Principal Market” means, with respect to any security, the
principal securities exchange or trading market on which such security is
traded.

(x)

“Securities Act” means the Securities Act of 1933, as amended.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
of the date first written above.

 

UNITED ENERGY CORP.

 

 

By:___________________________

Name:

Title:

 

 

Attest:

 

Sign:______________________________

Print Name:

 

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SUBSCRIPTION FORM

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

UNITED ENERGY CORP.

The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Warrant Shares”) of United Enerty Corp., a
Nevada corporation (the “Company”), evidenced by the attached March 2005 Series
A Warrant (the “Warrant”). Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.

 

1. Form of Warrant Exercise Price. The Warrantholder intends that payment of the
Warrant Price shall be made as:

 

____________

a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 

____________

a “Cashless Exercise” with respect to _______________ Warrant Shares (to the
extent permitted by the terms of the Warrant).

 

2. Payment of Warrant Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the sum of $___________________ to the Company in
accordance with the terms of the Warrant.

 

3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

 

Date: _______________ __, ______

 

 

Name of Registered Holder

 

 

By:

Name:

Title: