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EXHIBIT 4.2
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933
OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR
OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL
SUCH
OTHER APPLICABLE LAWS OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
CONVERTIBLE PROMISSORY NOTE
Number: 2005-1 March 17, 2005
$1,575,000 New York, New York
FOR VALUE RECEIVED, the undersigned, Surge Global Energy, Inc.,
a
Delaware corporation (the "Company"), promises to pay to the
order of Mark C.
Fritz (or his assigns, the "Holder"), at the Holder's principal
office or such
other address as the Holder of this note (this "Note") shall
designate from time
to time in lawful money of the United States of America and in
immediately
available funds, the principal sum of One Million Five Hundred
Seventy Five
Thousand dollars ($1,575,000) on the Maturity Date, together
with interest
thereon at the rate of 6% per annum, unless this Note is sooner
converted as
provided herein.
1. DOCUMENTS . This Note is delivered in connection with that
certain
Note and Warrant Agreement dated as of March 17, 2005 (the
"Agreement"), by and
among the Company and the Holder. All capitalized terms not
otherwise defined
herein shall have the meanings set forth in the Agreement.
2. MATURITY
(a) Subject to Section 4 hereof, the unpaid principal amount
(the "Principal Amount"), shall be due the sooner of (i) 1 year;
or (ii) 30 days
after the Company completes a financing in excess of $5,000,000
(the "Maturity
Date"). The terms and conditions in this Note regarding
conversion of this Note
shall apply before, on and after the Maturity Date including,
but not limited
to, after an Event of Default (as defined in Section 4
below).
3. CONVERSION OF THE NOTE.
(a) OPTIONAL CONVERSION BY HOLDER. At any time, the
Principal
Amount on each Note outstanding on such date may be converted
into restricted
shares of Common Stock of the Company at a conversion price of
$2.25 per share
(the "Conversion Price"), as adjusted pursuant to Section 3(e)
below.
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(b) DELIVERY. Immediately following (and in no event more
than
ten (10) business days after) the conversion of the Note, the
Company shall
deliver, or shall cause to be delivered, to the Holder a
certificate or
certificates representing the number of shares of the Company's
capital stock
(the "Conversion Shares") issuable by reason of such conversion
in the name of
the Holder concurrently with the delivery of the Note by the
Holder to the
Company.
(c) NO CHARGE. The issuance of such stock certificates upon
conversion of the Note shall be made without charge to the
Holder of such Note
for any issuance tax in respect thereof or other cost incurred
by the Company in
connection with such conversion and the related issuance of
Conversion Shares.
Upon the conversion of the Note, the Company shall take all such
actions as are
necessary in order to insure that the Conversion Shares issuable
with respect to
such conversion shall be validly issued and fully paid and non
assessable and
free from all liens, claims, encumbrances and restrictions
created through any
person other than the Holder and free of preemptive rights and
restrictions on
transfer and issued in compliance with all applicable federal
and state
securities laws. The Company shall use its reasonable best
efforts to obtain all
authorizations, exemptions and consents from any public
regulating body having
jurisdiction thereof and from any other person or entity as may
be necessary to
enable the Company to perform its obligations.
(d) RESERVATION FOR ISSUANCE. All Conversion Shares which
are
so issuable shall, when issued, be duly authorized and validly
issued and fully
paid and non assessable and free from all liens, claims,
encumbrances and
restrictions created by or through the Company, free of
preemptive rights and
restrictions on transfer and issued in compliance with all
applicable federal
and state securities laws. The Company shall take all such
actions as may be
reasonably necessary to assure that all such Conversion Shares
may be issued
without violation of any applicable law or governmental
regulation or any
requirements of any securities exchange upon which any shares of
the capital
stock of the Company may be listed.
(e) ADJUSTMENT OF CONVERSION PRICE. In the event of changes
in the outstanding Common Stock of the Corporation by reason of
stock dividends,
split-ups, recapitalizations, reclassifications, combinations or
exchanges of
shares, separations, reorganizations, liquidations, or the like
prior to any
conversion of this Note, the Conversion Price shall be
correspondingly adjusted
to give the Holder the total number, class, and kind of shares
as the Holder
would have owned had the Conversion occurred immediately prior
to the event and
had the Holder cont
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