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EXHIBIT 4.1
THE OFFERING OF SECURITIES HEREBY IS MADE
IN RELIANCE UPON THE EXEMPTION
PROVIDED BY SECTION 4(2) AND REGULATION D,
RULE 506 FOR TRANSACTIONS NOT
INVOLVING A PUBLIC OFFERING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND APPLICABLE STATE
SECURITIES LAWS.
PURCHASE OF THE SECURITIES BEING
OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
NOTE AND WARRANT PURCHASE AGREEMENT
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1. THE LOAN. Subject to the terms of this
Note and Warrant Purchase Agreement
(the "Agreement"), Mark C. Fritz (the
"Purchaser") hereby agrees to loan Surge
Global Energy, Inc. (the "Company") a
principal amount equal to One Million Five
Hundred Seventy Five Thousand Dollars
($1,575,000). The loan shall be evidenced
by a promissory note in substantially the
form attached hereto as EXHIBIT A (the
"Note").
The Purchaser acknowledges and agrees that the Note is one of a
number
of other promissory notes, which are
substantially the same as the Note, which
such notes are being issued in connection
with the offering of the Note. The
Company is seeking to raise and aggregate
amount of one million dollars pursuant
to the issuance of these promissory
notes.
PAYMENT. The Purchaser encloses herewith a check payable to, or
will
immediately make a wire transfer payment
to, " Surge Global Energy, Inc.," in
the full amount of the principal amount of
the Note. The wire transfer
instructions are as follows:
2. ISSUANCE OF WARRANT. The Company shall
issue the Purchaser a warrant (the
"Warrant") registered in the name of the
Purchaser to purchase up to a number of
shares of common stock of the Company equal
to 50% of such Purchaser's aggregate
principal amount of Note, with a term of 3
years and an exercise price equal to
$4.00. The Warrant shall be in
substantially the form attached hereto as EXHIBIT
B. There will be no warrants for fractional
shares. If fractional shares would
occur based upon the mathematical formula
used in this Section to calculate the
number of shares to be issued upon the
exercise of the Warrant, the amount of
shares will be rounded up to the next
highest share.
3. ACCEPTANCE OF SUBSCRIPTION. The
Purchaser understands and agrees that the
Company, in its sole discretion, reserves
the right to accept or reject this or
any other subscription for Notes, in whole
or in part, notwithstanding prior
receipt by the Purchaser of notice of
acceptance of this subscription. The
Company shall have no obligation hereunder
until the Company shall execute and
deliver to the Purchaser an executed copy
of this Agreement. If this
subscription is rejected in whole, all
funds received from the Purchaser will be
returned without interest, penalty, expense
or deduction, and this Agreement
shall thereafter be of no further force or
effect. If this subscription is
rejected in part, the funds for the
rejected portion of this subscription will
be returned without interest, penalty,
expense or deduction, and this Agreement
will continue in full force and effect to
the extent this subscription was
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accepted. Notwithstanding the foregoing, if
Purchaser's subscription is not
rejected by the Company, in whole or in
part, with five (5) business days after
receipt of this Agreement executed by the
Purchaser and accompanied by payment
in the principal amount of the Note, the
Company shall pay the Purchaser
interest on the amount of the Note at the
rate specified therein. The Purchaser
acknowledges and agrees that the Note is
one of a number of other promissory
notes, which are substantially the same as
the Note, which such notes are being
issued in connection with the offering of
the Note. The Company is seeking to
raise and aggregate amount of two million
dollars pursuant to the issuance of
these promissory notes.
4. REPRESENTATIONS AND WARRANTIES. The
Purchaser hereby acknowledges,
represents, warrants and agrees as
follows:
(a) None of the Notes or shares of common
stock underlying the Notes or the
Warrant are registered under the Securities
Act of 1933, as amended (the
"Securities Act"), or any state securities
laws. The Purchaser understands that
the offering and sale of the Notes and
Warrant is intended to be exempt from
registration under the Securities Act, by
virtue of Section 4(2) thereof and the
provisions of Regulation D promulgated
thereunder, based, in part, upon the
representations, warranties and agreements
of the Purchaser contained in this
Agreement;
(b) The Purchaser and the Purchaser's
attorney, accountant, purchaser
representative and/or tax advisor, if any
(collectively, the "Advisors"), have
received all documents requested by
Purchaser and its Advisors as they consider
necessary or appropriate to evaluate the
risks and merits of an investment in
the Notes and Warrants, including without
limitation, the Quarterly Reports on
Form 10-QSB; Current Reports on Form 8-K
and Annual Reports. Purchaser
acknowledges that the Company is subject to
the periodic reporting requirements
of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the
Purchaser has reviewed copies of all SEC
Documents deemed relevant by the
Purchaser and its Advisors (including,
without limitation, any Risk Factors
contained therein).
(c) Neither the Securities and Exchange
Commission nor any state securities
commission has approved the Notes, Warrant
or shares of common stock underlying
the Notes or Warrant or passed upon or
endorsed the merits of the offering or
confirmed the accuracy or determined the
adequacy of the offering documents. The
offering documents have not been reviewed
by any Federal, state, provincial or
other regulatory authority;
(d) All documents, records, and books
pertaining to the investment in the Notes
or the Warrant have been made available for
inspection by such Purchaser and the
Advisors, if any;
(e) The Purchaser and the Advisors, if any,
have had a reasonable opportunity to
ask questions of and receive answers from a
person or persons acting on behalf
of the Company concerning the offering of
the Notes and the Warrant and the
business, financial condition, results of
operations and prospects of the
Company, and all such questions have been
answered to the full satisfaction of
the Purchaser and the Advisors, if any;
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(f) In evaluating the suitability of an
investment in the Company, the Purchaser
has not relied upon any representation or
other information (oral or written)
other than as stated in the offering
documents or as contained in documents or
answers to questions so furnished to the
Purchaser or the Advisors by the
Company;
(g) The Purchaser is unaware of, is in no
way relying on, and did not become
aware of the offering of the Notes or the
Warrant through or as a result of, any
form of general solicitation or general
advertising including, without
limitation, any article, notice,
advertisement or other communication published
in any newspaper, magazine or similar media
or broadcast over television or
radio, in connection with the offering and
sale of the Notes and the Warrant and
is not subscribing for Notes or the Warrant
and did not become aware of the
offering of the Notes and Warrant through
or as a result of any seminar or
meeting to which the Purchaser was invited
by, or any solicitation of a
subscription by, a person not previously
known to the Purchaser in connection
with investments in securities
generally;
(h) The Purchaser has taken no action which
would give rise to any claim by any
person for brokerage commissions, finders'
fees or the like relating to this
Agreement or the transactions contemplated
hereby;
(i) The Purchaser or the purchaser's
representative, as the case may be,
together with the Advisors, have such
knowledge and experience in financial,
tax, and business matters, and, in
particular, investments in securities, so as
to enable them to utilize the information
made available to them in connection
with the offering of the Notes and the
Warrant to evaluate the merits and risks
of an investment in the Notes and the
Warrant and the Company and to make an
informed investment decision with respect
thereto;
(j) The Purchaser is not relying on the
Company, or any of its employees or
agents with respect to the legal, tax,
economic and related considerations of an
investment in the Notes or the Warrant, and
the Purchaser has relied on the
advice of, or has consulted with, only his
own Advisors;
(k) The Purchaser is acquiring the Notes
and the Warrant solely for such
Purchaser's own account for investment and
not with a view to resale or
distribution thereof, in whole or in part.
The Purchaser has no agreement or
arrangement, formal or informal, with any
person to sell or transfer all or any
part of the Notes or the Warrant, or the
shares of Common Stock issuable upon
repayment or conversion of the Notes or
exercise of the Warrant, and the
Purchaser has no plans to enter into any
such agreement or arrangement;
(l) The Purchaser must bear the substantial
economic risks of the investment in
the Notes and the Warrant indefinitely
because the securities may not be sold,
hypothecated or otherwise disposed of
unless subsequently registered under the
Securities Act and applicable state
securities laws or an exemption from such
registration is available. Legends shall be
placed on the Notes and the Warrant
to the effect that they have not been
registered under the Securities Act or
applicable state securities laws and
appropriate notations thereof will be made
in the Company's stock books. Stop transfer
instructions will be placed with the
transfer agent of the securities
constituting the Notes and the Warrant .
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(m) The Purchaser has adequate means of
providing for such Purchaser's current
financial needs and foreseeable
contingencies and has no need for liquidity of
the investment in the Notes or the Warrant
for an indefinite period of time;
(n) The Purchaser is aware that an
investment in the Notes and the Warrant
involves a number of very significant
risks, and, in particular, acknowledges
that the Company has had a limited
operating history and is engaged in a highly
competitive business;
(o) The Purchaser meets the requirements of
at least one of the suitability
standards for an "accredited investor" as
set forth on the Accredited Investor
Certification contained herein;
(p) The Purchaser (i) if a natural person,
represents that the Purchaser has
reached the age of 21 and has full power
and authority to execute and deliver
this Agreement and all other related
agreements or certificates and to carry out
the provisions hereof and thereof; (ii) if
a corporation, partnership, or
limited liability company or partnership,
or association, joint stock company,
trust, unincorporated organization or other
entity, represents that such entity
was not formed for the specific purpose of
acquiring the Notes or the Warrant,
such entity is duly organized, validly
existing and in good standing under the
laws of the state of its organization, the
consummation of the transactions
contemplated hereby is authorized by, and
will not result in a vio
