ex1002.htm


     

    EXHIBIT
      10.2

     

    SURGE
      GLOBAL ENERGY, INC.

    NOTICE
      OF GRANT OF STOCK OPTION

    Non-Plan
      Option

     

    William
      Greene (the
“Optionee”) has been granted an option (the
“Option”) to purchase certain
      shares of Stock of Surge
      Global Energy, Inc., a Delaware corporation, pursuant to the Stock
      Option Agreement attached hereto (the
“Agreement”), as follows:

     

    
      	
               

            	
              Date
                of Option Grant:

            	
              July
                17, 2007

            


    

     

    
      	
            	
              Number
                of Option Shares:

            	
              200,000

            


    

     

    
      	
               

            	
              Exercise
                Price:

            	
              $0.34

            


    

     

    
      	
               

            	
              Initial
                Exercise Date:

            	
              Date
                of Option Grant

            


    

     

    
      	
               

            	
              Initial
                Vesting Date:

            	
              Date
                of Option Grant

            


    

     

    
      	
            	
              Option
                Expiration Date:

            	
              The
                date ten (10) years after the Date of Option
                Grant.

            


    

     

    
      	
               

            	
              Tax
                Status of Option:

            	
              Nonstatutory
                Stock Option.  (Enter “Incentive” or
                “Nonstatutory.”  If blank, this Option will be a Nonstatutory
                Stock Option.)

            


    

     

    
      	
            	
              Vested
                Shares:

            	
              Except
                as provided  in the Stock Option Agreement, the
                number  ofvested Shares (disregarding any resulting fractional
                share) as of anydate as determined by multiplying the Number of Option
                Shares by the “Vested Ratio” determined as of
                such date as follows:

            


    

     

    
      	 	 	
              Vested
                Ratio

            	 
	 	
              On
                Initial Vesting Date

            	
              200,000

            	 


    

     

    
      	
            	
              Other
                Vesting Provisions:

            	
              None.

            


    

     

    
      	
            	
              Exceptions
                to Provisions of 

              Stock
                Option Agreement:

            	
              None.

            


    

     

    By
      their
      signatures below, the Company and the Optionee agree that the Option is governed
      by this Notice and by the provisions of the Stock Option Agreement (except
      as
      otherwise set forth opposite Exceptions to Provisions of Stock Option
      Agreement), which is attached to and made a part of this
      document.  The Optionee acknowledges receipt of a copy of the Stock
      Option Agreement, represents that the Optionee has read and is familiar with
      its
      provisions, and hereby accepts the Option subject to all of its terms and
      conditions.

     

    
      	
              SURGE
                GLOBAL ENERGY, INC.

            	
              OPTIONEE:
                William Greene

            
	 	 
	 	 
	 	 
	
              By:

            	
              Signature

            
	 	 
	
              Print
                Name:

            	 
	 	 
	 	
              Date

            
	 	 
	
              ATTACHMENTS:  Stock
                Option Agreement

            	 
	 	
              Address

            
	 	 


    

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    THE
      SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN QUALIFIED
      WITH
      THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE
      OF
      SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
      THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
      IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE
      CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS
      AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
      UNLESS THE SALE IS SO EXEMPT.

     

    THE
      SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE BEEN ACQUIRED FOR
      INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
      DISTRIBUTION THEREOF.  NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
      WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
      COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
      UNDER
      THE SECURITIES ACT OF 1933

     

    SURGE
      GLOBAL ENERGY, INC.

    STOCK
      OPTION AGREEMENT

     

    Non-Plan
      Option

     

    Surge
      Global Energy, Inc., a Delaware corporation, has granted to the individual
      (the
      "Optionee") named in the Notice of Grant of Stock
      Option (the "Notice") to which this Stock Option
      Agreement (the "Option Agreement") is attached an
      option (the "Option") to purchase certain shares of
      Stock upon the terms and conditions set forth in the Notice and this Option
      Agreement.  By signing the Notice, the Optionee: (a) represents
      that the Optionee has read and is familiar with the terms and conditions of
      the
      Notice and this Option Agreement, including the Effect of Termination of Service
      set forth in Section 7, (b) accepts the Option subject to all of the
      terms and conditions of the Notice and this Option Agreement, (c) agrees to
      accept as binding, conclusive and final all decisions or interpretations of
      the
      Board upon any questions arising under the Notice or this Option Agreement,
      and
      (d) acknowledges receipt of a copy of the Notice and this Option
      Agreement.

     

    1.           Definitions
      and Construction.

     

    1.1           Definitions.  Whenever
      used herein, the following terms shall have their respective meanings set forth
      below:

     

    (a)           "Board"
      means the Board of Directors of the Company, or a committee of the Board duly
      appointed to administer this Option and having such powers as shall be specified
      by the Board.

     

    (b)           "Code"
      means the Internal Revenue Code of 1986, as amended, and any applicable
      regulations promulgated thereunder.

     

    (c)           "Company"
      means Surge Global Energy, Inc., a Delaware corporation, or any successor
      corporation thereto.

     

    (d)           "Consultant"
      means a person engaged to provide consulting or advisory services (other than
      as
      an Employee or a Director) to a Participating Company, provided that the
      identity of such person, the nature of such services or the entity to which
      such
      services are provided would not preclude the Company from offering or selling
      securities to such person pursuant to this Agreement in reliance on either
      the
      exemption from registration provided by Rule 701 under the Securities Act or,
      if
      the Company is required to file reports pursuant to Section 13 or 15(d) of
      the Exchange Act, registration on a Form S-8 Registration Statement under the
      Securities Act.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (e)           "Director"
      means a member of the Board or of the board of directors of any other
      Participating Company.

     

    (f)           "Disability"
      means the inability of the Optionee, in the opinion of a qualified physician
      acceptable to the Company, to perform the major duties of the Optionee's
      position with the Participating Company Group because of the sickness or injury
      of the Optionee.

     

    (g)           "Employee"
      means any person treated as an employee (including an officer or a Director
      who
      is also treated as an employee) in the records of a Participating Company;
      provided, however, that neither service as a Director nor payment of a
      director's fee shall be sufficient to constitute employment for purposes of
      this
      Agreement.  The Company shall determine in good faith and in the
      exercise of its discretion whether an individual has become or has ceased to
      be
      an Employee and the effective date of such individual's employment or
      termination of employment, as the case may be.

     

    (h)           "Exchange
      Act" means the Securities Exchange Act of 1934, as
      amended.

     

    (i)           "Fair
      Market Value" means, as of any date, the value of a share of Stock
      or other property as determined by the Board, in its discretion, or by the
      Company, in its discretion, if such determination is expressly allocated to
      the
      Company herein, subject to the following:

     

    (i)           If,
      on such date, the Stock is listed on a national or regional securities exchange
      or market system, the Fair Market Value of a share of Stock shall be the closing
      price of a share of Stock (or the mean of the closing bid and asked prices
      of a
      share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq
      National Market, The Nasdaq SmallCap Market or such other national or regional
      securities exchange or market system constituting the primary market for the
      Stock, as reported in The Wall Street Journal or such other source as the
      Company deems reliable.  If the relevant date does not fall on a day
      on which the Stock has traded on such securities exchange or market system,
      the
      date on which the Fair Market Value shall be established shall be the last
      day
      on which the Stock was so traded prior to the relevant date, or such other
      appropriate day as shall be determined by the Board, in its
      discretion.

     

    (ii)           If,
      on such date, the Stock is not listed on a national or regional securities
      exchange or market system, the Fair Market Value of a share of Stock shall
      be as
      determined by the Board in good faith without regard to any restriction other
      than a restriction which, by its terms, will never lapse.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    (j)           "Incentive
      Stock Option" means an Option intended to be (as set forth in the
      Option Agreement) and which qualifies as an incentive stock option within the
      meaning of Section 422(b) of the Code.

     

    (k)           "Insider"
      means an officer or a Director of the Company or any other person whose
      transactions in Stock are subject to Section 16 of the Exchange
      Act.

     

    (l)           "Nonstatutory
      Stock Option" means an Option not intended to be (as set forth in
      the Option Agreement) or which does not qualify as an Incentive Stock
      Option.

     

    (m)           "Parent
      Corporation" means any present or future "parent corporation" of
      the Company, as defined in Section 424(e) of the Code.

     

    (n)           "Participating
      Company" means the Company or any Parent Corporation or Subsidiary
      Corporation.

     

    (o)           "Participating
      Company Group" means, at any point in time, all corporations
      collectively which are then Participating Companies.

     

    (p)           "Securities
      Act" means the Securities Act of 1933, as amended.

     

    (q)           "Service"
      means the Optionee's employment or service with the Participating Company Group,
      whether in the capacity of an Employee, a Director or a
      Consultant.  The Optionee's Service shall not be deemed to have
      terminated merely because of a change in the capacity in which the Optionee
      renders Service to the Participating Company Group or a change in the
      Participating Company for which the Optionee renders such Service, provided
      that
      there is no interruption or termination of the Optionee's
      Service.  Furthermore, the Optionee's Service with the Participating
      Company Group shall not be deemed to have terminated if the Optionee takes
      any
      military leave, sick leave, or other bona fide leave of absence approved by
      the
      Company; provided, however, that if any such leave exceeds ninety (90) days,
      on
      the ninety-first (91st) day of such leave the Optionee's Service shall be deemed
      to have terminated unless the Optionee's right to return to Service with the
      Participating Company Group is guaranteed by statute or
      contract.  Notwithstanding the foregoing, unless otherwise designated
      by the Company or required by law, a leave of absence shall not be treated
      as
      Service for purposes of determining vesting under this Option
      Agreement.  The Optionee's Service shall be deemed to have terminated
      either upon an actual termination of Service or upon the corporation for which
      the Optionee performs Service ceasing to be a Participating
      Company.  Subject to the foregoing, the Company, in its discretion,
      shall determine whether the Optionee's Service has terminated and the effective
      date of such termination.

     

    (r)           "Stock"
      means the common stock of the Company, as adjusted from time to time in
      accordance with Section 9.

     

    (s)           "Subsidiary
      Corporation" means any present or future "subsidiary corporation"
      of the Company, as defined in Section 424(f) of the Code.

     

    1.2           Construction.  Captions
      and titles contained herein are for convenience only and shall not affect the
      meaning or interpretation of any provision of this Option
      Agreement.  Except when otherwise indicated by the context, the
      singular shall include the plural and the plural shall include the
      singular.  Use of the term "or" is not intended to be exclusive,
      unless the context clearly requires otherwise.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    2.           Tax
      Status of Option.  This Option is intended to be a
      Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option
      within the meaning of Section 422(b) of the Code.

     

    3.           Administration.

     

    All
      questions of interpretation concerning this Option Agreement shall be determined
      by the Board.  All determinations by the Board shall be final and
      binding upon all persons having an interest in the Option.  Any
      officer of a Participating Company shall have the authority to act on behalf
      of
      the Company with respect to any matter, right, obligation, or election which
      is
      the responsibility of or which is allocated to the Company herein, provided
      the
      officer has apparent authority with respect to such matter, right, obligation,
      or election.

     

    4.           Exercise
      of the Option.

     

    4.1           Right
      to Exercise.  Except as otherwise provided herein, the Option
      shall be exercisable on and after the Initial Exercise Date and prior to the
      termination of the Option (as provided in Section 6) in an amount not to
      exceed the Number of Vested Shares (determined in accordance with the Notice)
      less the number of shares previously acquired upon exercise of the
      Option.

     

    4.2           Method
      of Exercise.  Exercise of the Option shall be by written
      notice to the Company in the form of Exhibit A hereto (the "Exercise
      Notice") which must state the election to exercise the Option, the
      number of whole shares of Stock for which the Option is being exercised and
      such
      other representations and agreements as to the Optionee's investment intent
      with
      respect to such shares as may be required pursuant to the provisions of this
      Option Agreement.  The written notice must be signed by the Optionee
      and must be delivered in person, by certified or registered mail, return receipt
      requested, by confirmed facsimile transmission, or by such other means as the
      Company may permit, to the Chief Financial Officer of the Company, or other
      authorized representative of the Participating Company Group, prior to the
      termination of the Option as set forth in Section 6, accompanied by full
      payment of the aggregate Exercise Price for the number of shares of Stock being
      purchased.  The Option shall be deemed to be exercised upon receipt by
      the Company of such written notice, the aggregate Exercise Price, and, if
      required by the Company, such executed agreement.

     

    4.3           Payment
      of Exercise Price.  Except as otherwise provided below,
      payment of the aggregate Exercise Price for the number of shares of Stock for
      which the Option is being exercised shall be made (i) in cash, by check, or
      cash equivalent, (ii) by means of a Cashless Exercise, as defined below, or
      (iii) by any combination of the foregoing.  Optionee shall be
      responsible for filing any reports of remittance or other foreign exchange
      filings required in order to pay the exercise price.  A
      "Cashless Exercise" means the delivery of a properly
      executed notice together with irrevocable instructions to a broker in a form
      acceptable to the Company providing for the assignment to the Company of the
      proceeds of a sale or loan with respect to some or all of the shares of Stock
      acquired upon the exercise of the Option pursuant to a program or procedure
      approved by the Company (including, without limitation, through an exercise
      complying with the provisions of Regulation T as promulgated from time to time
      by the Board of Governors of the Federal Reserve System).  The Company
      reserves, at any and all times, the right, in the Company's sole and absolute
      discretion, to decline to approve or terminate any such program or
      procedure.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    4.4           Tax
      Withholding.  At the time the Option is exercised, in whole
      or in part, or at any time thereafter as requested by the Company, the Optionee
      hereby authorizes withholding from payroll and any other amounts payable to
      the
      Optionee, and otherwise agrees to make adequate provision for (including by
      means of a Cashless Exercise to the extent permitted by the Company), any sums
      required to satisfy the federal, state, local and foreign tax withholding
      obligations of the Participating Company Group, if any, which arise in
      connection with the Option, including, without limitation, obligations arising
      upon (i) the exercise, in whole or in part, of the Option, (ii) the
      transfer, in whole or in part, of any shares acquired upon exercise of the
      Option, or (iii) the operation of any law or regulation providing for the
      imputation of interest.  The Option is not exercisable unless the tax
      withholding obligations of the Participating Company Group are
      satisfied.  Accordingly, the Company shall have no obligation to
      deliver shares of Stock until the tax withholding obligations of the
      Participating Company Group have been satisfied by the Optionee.

     

    4.5           Certificate
      Registration.  Except in the event the Exercise Price is paid
      by means of a Cashless Exercise, the certificate for the shares as to which
      the
      Option is exercised shall be registered in the name of the Optionee, or, if
      applicable, in the names of the heirs of the Optionee.

     

    4.6           Restrictions
      on Grant of the Option and Issuance of Shares.  The grant of
      the Option and the issuance of shares of Stock upon exercise of the Option
      shall
      be subject to compliance with all applicable requirements of federal, state
      or
      foreign law with respect to such securities.  The Option may not be
      exercised if the issuance of shares of Stock upon exercise would constitute
      a
      violation of any applicable federal, state or foreign securities laws or other
      law or regulations or the requirements of any stock exchange or market system
      upon which the Stock may then be listed.  In addition, the Option may
      not be exercised unless (i) a registration statement under the Securities
      Act shall at the time of exercise of the Option be in effect with respect to
      the
      shares issuable upon exercise of the Option or (ii) in the opinion of legal
      counsel to the Company, the shares issuable upon exercise of the Option may
      be
      issued in accordance with the terms of an applicable exemption from the
      registration requirements of the Securities Act.  THE OPTIONEE IS
      CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS
      ARE SATISFIED.  ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE
      THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.  The
      inability of the Company to obtain from any regulatory body having jurisdiction
      the authority, if any, deemed by the Company's legal counsel to be necessary
      to
      the lawful issuance and sale of any shares subject to the Option shall relieve
      the Company of any liability in respect of the failure to issue or sell such
      shares as to which such requisite authority shall not have been
      obtained.  As a condition to the exercise of the Option, the Company
      may require the Optionee to satisfy any qualifications that may be necessary
      or
      appropriate, to evidence compliance with any applicable law or regulation and
      to
      make any representation or warranty with respect thereto as may be requested
      by
      the Company.  Any shares which are issued will be "restricted
      securities" as that term is defined in Rule 144 under the Securities Act, as
      further described in Section 7 of the Exercise Notice, unless they are
      registered under the Securities Act.  The Company is under no
      obligation to register the shares of Stock issuable upon exercise of this
      Option.

     

    4.7           Fractional
      Shares.  The Company shall not be required to issue
      fractional shares upon the exercise of the Option.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    5.           Nontransferability
      of the Option.

     

    The
      Option may be exercised during the lifetime of the Optionee only by the Optionee
      or the Optionee's guardian or legal representative and may not be assigned
      or
      transferred in any manner except by will or by the laws of descent and
      distribution.  Following the death of the Optionee, the Option, to the
      extent provided in Section 7, may be exercised by the Optionee's legal
      representative or by any person empowered to do so under the deceased Optionee's
      will or under the then applicable laws of descent and distribution.

     

    6.           Termination
      of the Option.

     

    The
      Option shall terminate and may no longer be exercised on the first to occur
      of
      (a) the Option Expiration Date, (b) the last date for exercising the
      Option following termination of the Optionee's Service as described in
      Section 7, or (c) a Change in Control to the extent provided in
      Section 8.

     

    7.           Effect
      of Termination of Service.

     

    7.1           Option
      Exercisability.

     

    (a)           Disability.  If
      the Optionee's Service with the Participating Company Group terminates because
      of the Disability of the Optionee, the Option, to the extent unexercised and
      exercisable on the date on which the Optionee's Service terminated, may be
      exercised by the Optionee (or the Optionee's guardian or legal representative)
      at any time prior to the expiration of six (6) months after the date on which
      the Optionee's Service terminated, but in any event no later than the Option
      Expiration Date.

     

    (b)           Death.  If
      the Optionee's Service with the Participating Company Group terminates because
      of the death of the Optionee, the Option, to the extent unexercised and
      exercisable on the date on which the Optionee's Service terminated, may be
      exercised by the Optionee's legal representative or other person who acquired
      the right to exercise the Option by reason of the Optionee's death at any time
      prior to the expiration of six (6) months after the date on which the Optionee's
      Service terminated, but in any event no later than the Option Expiration
      Date.  The Optionee's Service shall be deemed to have terminated on
      account of death if the Optionee dies within three (3) months after the
      Optionee's termination of Service.

     

    (c)           Other
      Termination of Service.  If the Optionee's Service with
      the Participating Company Group terminates for any reason, except Disability
      or
      death, the Option, to the extent unexercised and exercisable by the Optionee
      on
      the date on which the Optionee's Service terminated, may be exercised by the
      Optionee at any time prior to the expiration of three (3) months (or such other
      longer period of time as determined by the Board, in its discretion) after
      the
      date on which the Optionee's Service terminated, but in any event no later
      than
      the Option Expiration Date.

     

    7.2           Extension
      if Exercise Prevented by Law.  Notwithstanding the foregoing,
      if the exercise of the Option within the applicable time periods set forth
      in
      Section 7.1 is prevented by the provisions of Section 4.6, the Option
      shall remain exercisable until three (3) months after the date the Optionee
      is
      notified by the Company that the Option is exercisable, but in any event no
      later than the Option Expiration Date.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    7.3           Extension
      if Optionee Subject to Section 16(b).  Notwithstanding
      the foregoing, if a sale within the applicable time periods set forth in
      Section 7.1 of shares acquired upon the exercise of the Option would
      subject the Optionee to suit under Section 16(b) of the Exchange Act,
      the Option shall remain exercisable until the earliest to occur of (i) the
      tenth (10th) day following the date on which a sale of such shares by the
      Optionee would no longer be subject to such suit, (ii) the one hundred and
      ninetieth (190th) day after the Optionee's termination of Service, or
      (iii) the Option Expiration Date.

     

    8.           Change
      In Control.

     

    8.1           Definitions.

     

    (a)           An
      "Ownership Change Event" shall be deemed to have
      occurred if any of the following occurs with respect to the Company:
      (i) the direct or indirect sale or exchange in a single or series of
      related transactions by the shareholders of the Company of more than fifty
      percent (50%) of the voting stock of the Company; (ii) a merger or
      consolidation in which the Company is a party; (iii) the sale, exchange, or
      transfer of all or substantially all of the assets of the Company; or
      (iv) a liquidation or dissolution of the Company.

     

    (b)           A
      "Change in Control" shall mean an Ownership Change
      Event or a series of related Ownership Change Events (collectively, a
      "Transaction") wherein the shareholders of the Company
      immediately before the Transaction do not retain immediately after the
      Transaction, in substantially the same proportions as their ownership of shares
      of the Company's voting stock immediately before the Transaction, direct or
      indirect beneficial ownership of more than fifty percent (50%) of the total
      combined voting power of the outstanding voting stock of the Company or the
      corporation or corporations to which the assets of the Company were transferred
      (the "Transferee Corporation(s)"), as the case may
      be.  For purposes of the preceding sentence, indirect beneficial
      ownership shall include, without limitation, an interest resulting from
      ownership of the voting stock of one or more corporations which, as a result
      of
      the Transaction, own the Company or the Transferee Corporation(s), as the case
      may be, either directly or through one or more subsidiary
      corporations.  The Board shall have the right to determine whether
      multiple sales or exchanges of the voting stock of the Company or multiple
      Ownership Change Events are related, and its determination shall be final,
      binding and conclusive.

     

    8.2           Effect
      of Change in Control on Option.  In the event of a Change in
      Control, the surviving, continuing, successor, or purchasing corporation or
      parent corporation thereof, as the case may be (the "Acquiring
      Corporation"), may either assume the Company's rights and
      obligations under the Option or substitute for the Option a substantially
      equivalent option for the Acquiring Corporation's stock.  In the event
      the Acquiring Corporation elects not to assume the Company's rights and
      obligations under the Option or substitute for the Option in connection with
      the
      Change in Control, and provided that the Optionee's Service has not terminated
      prior to such date, the Vested Ratio shall be deemed to be 1/1 as of the date
      ten (10) days prior to the date of the Change in Control.  Any vesting
      of the Option that was permissible solely by reason of this Section 8.2
      shall be conditioned upon the consummation of the Change in
      Control.  The Option shall terminate and cease to be outstanding
      effective as of the date of the Change in Control to the extent that the Option
      is neither assumed or substituted for by the Acquiring Corporation in connection
      with the Change in Control nor exercised as of the date of the Change in
      Control.  Notwithstanding the foregoing, shares acquired upon exercise
      of the Option prior to the Change in Control and any consideration received
      pursuant to the Change in Control with respect to such shares shall continue
      to
      be subject to all applicable provisions of this Option Agreement except as
      otherwise provided herein.  Furthermore, notwithstanding the
      foregoing, if the corporation the stock of which is subject to the Option
      immediately prior to an Ownership Change Event described in
      Section 8.1(a)(i) constituting a Change in Control is the surviving or
      continuing corporation and immediately after such Ownership Change Event less
      than fifty percent (50%) of the total combined voting power of its voting stock
      is held by another corporation or by other corporations that are members of
      an
      affiliated group within the meaning of Section 1504(a) of the Code
      without regard to the provisions of Section 1504(b) of the Code, the
      Option shall not terminate unless the Board otherwise provides in its
      discretion.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    9.           Adjustments
      For Changes In Capital Structure.

     

    In
      the
      event of any stock dividend, stock split, reverse stock split, recapitalization,
      combination, reclassification, or similar change in the capital structure of
      the
      Company, appropriate adjustments shall be made in the number, Exercise Price
      and
      class of shares of stock subject to the Option.  If a majority of the
      shares which are of the same class as the shares that are subject to the Option
      are exchanged for, converted into, or otherwise become (whether or not pursuant
      to an Ownership Change Event) shares of another corporation (the
      "New Shares"), the Board may unilaterally amend the
      Option to provide that the Option is exercisable for New Shares.  In
      the event of any such amendment, the Number of Option Shares and the Exercise
      Price shall be adjusted in a fair and equitable manner, as determined by the
      Board, in its discretion.  Notwithstanding the foregoing, any
      fractional share resulting from an adjustment pursuant to this Section 9
      shall be rounded down to the nearest whole number, and in no event may the
      Exercise Price be decreased to an amount less than the par value, if any, of
      the
      stock subject to the Option.  The adjustments determined by the Board
      pursuant to this Section 9 shall be final, binding and
      conclusive.

     

    10.           Rights
      as a Shareholder, Employee or Consultant.

     

    The
      Optionee shall have no rights as a shareholder with respect to any shares
      covered by the Option until the date of the issuance of a certificate for the
      shares for which the Option has been exercised (as evidenced by the appropriate
      entry on the books of the Company or of a duly authorized transfer agent of
      the
      Company).  No adjustment shall be made for dividends, distributions or
      other rights for which the record date is prior to the date such certificate
      is
      issued, except as provided in Section 9.  If the Optionee is an
      Employee, the Optionee understands and acknowledges that, except as otherwise
      provided in a separate, written employment agreement between a Participating
      Company and the Optionee, the Optionee's employment is "at will" and is for
      no
      specified term.  Nothing in this Option Agreement shall confer upon
      the Optionee any right to continue in the Service of a Participating Company
      or
      interfere in any way with any right of the Participating Company Group to
      terminate the Optionee's Service as an Employee or Consultant, as the case
      may
      be, at any time.

     

    11.           Lock-Up
      Agreement.

     

    The
      Optionee hereby agrees that in the event of any underwritten public offering
      of
      stock, including but not limited to an initial public offering of stock, made
      by
      the Company pursuant to an effective registration statement filed under the
      Securities Act, the Optionee shall not offer, sell, contract to sell, pledge,
      hypothecate, grant any option to purchase or make any short sale of, or
      otherwise dispose of any shares of stock of the Company or any rights to acquire
      stock of the Company for such period of time from and after the effective date
      of such registration statement as may be established by the underwriter for
      such
      public offering; provided, however, that such period of time shall not exceed
      one hundred eighty (180) days from the effective date of the registration
      statement to be filed in connection with such public offering.  The
      foregoing limitation shall not apply to shares registered in the public offering
      under the Securities Act.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    12.           Legends.

     

    The
      Company may at any time place legends referencing and any applicable federal,
      state or foreign securities law restrictions on all certificates representing
      shares of stock subject to the provisions of this Option
      Agreement.  The Optionee shall, at the request of the Company,
      promptly present to the Company any and all certificates representing shares
      acquired pursuant to the Option in the possession of the Optionee in order
      to
      carry out the provisions of this Section.  Unless otherwise specified
      by the Company, legends placed on such certificates may include, but shall
      not
      be limited to, the following:

     

    "THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
      OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
      ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144
      UNDER
      THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY
      TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
      IS
      EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
      ACT."

     

    13.           Restrictions
      on Transfer of Shares.

     

    No
      shares
      acquired upon exercise of the Option may be sold, exchanged, transferred
      (including, without limitation, any transfer to a nominee or agent of the
      Optionee), assigned, pledged, hypothecated or otherwise disposed of, including
      by operation of law, in any manner which violates any of the provisions of
      this
      Option Agreement and any such attempted disposition shall be
      void.  The Company shall not be required (a) to transfer on its
      books any shares which will have been transferred in violation of any of the
      provisions set forth in this Option Agreement or (b) to treat as owner of
      such shares or to accord the right to vote as such owner or to pay dividends
      to
      any transferee to whom such shares will have been so transferred.

     

    14.           Miscellaneous
      Provisions.

     

    14.1           Binding
      Effect.  Subject to the restrictions on transfer set forth
      herein, this Option Agreement shall inure to the benefit of and be binding
      upon
      the parties hereto and their respective heirs, executors, administrators,
      successors and assigns.

     

    14.2           Termination
      or Amendment.  The Board may terminate or amend the Option at
      any time; provided, however, that except as provided in Section 8.2 in
      connection with a Change in Control, no such termination or amendment may
      adversely affect the Option or any unexercised portion hereof without the
      consent of the Optionee unless such termination or amendment is necessary to
      comply with any applicable law or government regulation.  No amendment
      or addition to this Option Agreement shall be effective unless in
      writing.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    14.3           Notices.  Any
      notice required or permitted hereunder shall be given in writing and shall
      be
      deemed effectively given (except to the extent that this Option Agreement
      provides for effectiveness only upon actual receipt of such notice) upon
      personal delivery or upon deposit in the United States Post Office, by
      registered or certified mail, with postage and fees prepaid, addressed to the
      other party at the address shown below that party's signature or at such other
      address as such party may designate in writing from time to time to the other
      party.

     

    14.4           Integrated
      Agreement.  The Notice and this Option Agreement constitute
      the entire understanding and agreement of the Optionee and the Participating
      Company Group with respect to the subject matter contained herein or therein
      and
      supersedes any prior agreements, understandings, restrictions, representations,
      or warranties among the Optionee and the Participating Company Group with
      respect to such subject matter other than those as set forth or provided for
      herein or therein.  To the extent contemplated herein or therein, the
      provisions of the Notice and the Option Agreement shall survive any exercise
      of
      the Option and shall remain in full force and effect.

     

    14.5           Applicable
      Law.  This Option Agreement shall be governed by the laws of
      the State of California as such laws are applied to agreements between
      California residents entered into and to be performed entirely within the State
      of California.

     

    14.6           Counterparts.  The
      Notice may be executed in counterparts, each of which shall be deemed an
      original, but all of which together shall constitute one and the same
      instrument.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    
      	 	
              Optionee:
                William
                Greene

            


    

    
       

      Date:
        July 17, 2007

       

    

    STOCK
      OPTION EXERCISE NOTICE

    Non-Plan
      Option

     

    Surge
      Global Energy, Inc.

    Attention:
      Chief Financial Officer

    12220
      El
      Camino Real

    Suite
      410

    San
      Diego, CA 92103


     

    Ladies
      and Gentlemen:

     

    1.           Option.  I
      was granted an option (the "Option") to purchase
      shares of the common stock (the "Shares") of Surge
      Global Energy, Inc., a Delaware corporation (the
      "Company"), pursuant to my Notice of Grant of Stock
      Option (the "Notice") and my Stock Option Agreement
      (the "Option Agreement") as follows:

     

    
      	 	
              Grant
                Number:

            	 
	 	 	 
	 	
              Date
                of Option Grant:

            	
              July
                17, 2007

            
	 	 	 
	 	
              Number
                of Option Shares:

            	
              200,000

               

              Vest
                immediately

            
	 	 	 
	 	
              Exercise
                Price per Share:

            	
              $
                0.34

            


    

     

    2.           Exercise
      of Option.  I hereby elect to exercise the Option to
      purchase the following number of Shares:

     

    
      	 	
              Total
                Shares Purchased:

            	
              ____________

            
	 	 	 
	 	
              Total
                Exercise Price (Total Shares  X  Price per
                Share)

            	
              $
                __________

            


    

     

    3.           Payments.  I
      enclose payment in full of the total exercise price for the Shares in the
      following form(s), as authorized by my Option Agreement:

     

    
      	 	
              o  Cash:

            	
              $
                ____________

            
	 	 	 
	 	
              o  Check:

            	
              $
                ____________

            


    

    


     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    4.           Tax
      Withholding.  I enclose payment in full of my withholding
      taxes, if any, as follows:

     

    (Contact
      Chief Financial Officer for amount of tax due.)

     

    
      	 	
              o  Cash:

            	
              $
                ____________

            
	 	 	 
	 	
              o  Check:

            	
              $
                ____________

            


    

     

    5.           Optionee
      Information.

     

    
      	 	
              My
                address is:  

            	 
	 	 	 
	 	
              My
                Social Security Number is: 

            	
               

            


    

     

    6.           Binding
      Effect.  I agree that the Shares are being acquired in
      accordance with and subject to the terms, provisions and conditions of the
      Option Agreement, to all of which I hereby expressly assent.  This
      Agreement shall inure to the benefit of and be binding upon the my heirs,
      executors, administrators, successors and assigns.

     

    7.           Transfer.  I
      understand and acknowledge that the Shares have not been registered under the
      Securities Act of 1933, as amended (the "Securities
      Act"), and that consequently the Shares must be held indefinitely
      unless they are subsequently registered under the Securities Act, an exemption
      from such registration is available, or they are sold in accordance with
      Rule 144 under the Securities Act.  I further understand and
      acknowledge that the Company is under no obligation to register the
      Shares.  I understand that the certificate or certificates evidencing
      the Shares will be imprinted with legends which prohibit the transfer of the
      Shares unless they are registered or such registration is not required in the
      opinion of legal counsel satisfactory to the Company.

     

    I
      am
      aware that Rule 144 under the Securities Act, which permits limited public
      resale of securities acquired in a nonpublic offering, is not currently
      available with respect to the Shares and, in any event, is available only if
      certain conditions are satisfied.  I understand that any sale of the
      Shares that might be made in reliance upon Rule 144 may only be made in
      limited amounts in accordance with the terms and conditions of such rule and
      that a copy of Rule 144 will be delivered to me upon request.

     

    I
      understand that I am purchasing the Shares pursuant to the terms of the Notice
      and my Option Agreement, copies of which I have received and carefully read
      and
      understand.

     

    
      	 	
              Very
                truly yours,

               

              ___________________________________

              (Signature)

            
	 	 
	
              Receipt
                of the above is hereby acknowledged.

               

              Surge
                Global Energy, Inc.

               

            	 
	
              By: 
                       _______________________________

              Title:      _______________________________

              Dated:   _______________________________

            	 


    

    


     

    -2-