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Stiska letter

    
      Exhibit
        10.37

       

    

    

      __________,
        _____

      

      

      

      ________________

      ________________

      ________________  

      

      Dear
        ________:

      

      On
        behalf
        of the Board of Directors it is with great pleasure I am able to offer you
        a
        seat on the Board of Directors of Surge Global Energy, Inc. As a board member
        you will be required to attend at least eight meetings per year and travel
        to
        Calgary, Canada and attend the annual meeting in San Diego, CA at least one
        time
        per year with the remaining board meetings to be held at the corporate office.
        

      

      As
        a
        Board of Director the company will pay you $18,000 per year plus all expenses
        to
        attend the meetings along with the issuance of 400,000 common stock options
        with
        a vesting over 12 months at the rate of 1/12th per month with the exercise
        price
        at $.50 per share.

      

      We
        are
        very pleased to offer you a seat on our board and we are confident that you
        will
        make a superb addition to Surge Global Energy. If you have any questions,
        please
        call me at any time.

      

      

      

      
        	Sincerely, 	Accepted by: _____________________ 
	 	
                _____________________

              
	 	 
	 	 
	 	 
	David Perez,
                CEO& Chairman   	Dated:
                __________________________Stock Option Agreement

    Exhibit
      10.38

     

    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.

     

    
      
        
        

      

      
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    (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.

     

    (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.

     

    
      
        
        

      

      
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    (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.

     

    (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.

     

    
      
        
        

      

      
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    (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.

     

    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.

     

    
      
        
        

      

      
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    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.

     

    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.

     

    
      
        
        

      

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

     

    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.

     

    
      
        
        

      

      
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    (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.

     

    7.3 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.

     

    
      
        
        

      

      
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    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.

     

    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.

     

    
      
        
        

      

      
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    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.

     

    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."

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    

      Optionee:
        _________________

      

      Date:
        ________________________

      

      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:

            	
              _________

            	 
	 	 	 	 
	 	
              Number
                of Option Shares:

            	
              _________

            	 
	 	 	 	 
	 	
              Exercise
                Price per Share:

            	
              _________

            	 

    

     

    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:

     

    
      	 	
               ̈
                Cash:

               

            	
              $
                ____________

               

            	 
	 	
               ̈
                Check:

            	
              $
                ____________

            	 

    

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	
               ̈
                Cash:

               

            	
              $
                ____________

               

            	 
	 	
               ̈
                Check:

            	
              $
                ____________

            	 

    

     

    5. Optionee
      Information.

     

    

      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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    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: _______________________________

               

            	 

    

     

    13

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