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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 contin
