Filed by Automated Filing Services Inc. (604) 609-0244 - Terax Energy, Inc. - Exhibit4.1






Exhibit A

THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN
OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN
REGULATION S UNDER THE 1933 ACT) I’URSUANT TO REGULATION S UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). NONE OF THE
SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE I~1AY BE
OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS
(AS DEFINED HEREIN EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS. IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE
WITH THE 1933 ACT.

US $2,500,000.00

TERAX ENERGY, INC.

12.5% PROMISSORY NOTE

          FOR
VALUE RECEIVED, Terax Energy, Inc., a corporation organized and existing
under the laws of the State of Nevada (the “Company”), promises to pay to
Paul A. Turner, Trustee, the registered holder hereof (the “Holder”), the
principal sum of Two Million Five Hundred Thousand and 00/100 Dollars (US
$2,500,00Q.00) on the Maturity Date (as defined below) and to pay interest on
the principal sum outstanding from time to time in arrears at the rate of 12.5
% per annum (computed on the basis of the actual number of days elapsed
and a year of 365 days), accruing from the date of initial issuance of this Note
(the “Issue Date”), until payment in full of the principal sum has been
made or duly provided for (whether before or after the Maturity Date).

          This
Note is being issued pursuant to the terms of a Purchase Agreement, dated as of
the date hereof (the “Loan Agreement”), lo which the Company and the
Holder (or the Holder’s predecessor in interest) are parties. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Loan Agreement,

          This
Note is subject to the following additional provisions:




           1. The
  term “Maturity Date” means the date occurring at any time after
  December 31, 2006 upon which the Holder demands payment of this Note in writing.

          2.           (1)
  This Note may be prepaid in whole or in part at any time prior to the Maturity
  Date, without penalty. Any payment shall be applied as provided in Section 3.
  The Company further agrees that in the event that the Company does a subsequent
  debt or equity financing for Five million and 00/100 Dollars (US $5,000,000.00)
  or greater before the Maturity Date the Company will repay Note plus accrued
  interest from the proceeds of that financing.

             (ii) The Company
  shall be in default hereunder if any payment is not made in a timely maimer,
  or within five days thereafter.

           3.
  Any payment made on account of the Note shall be applied in the following order
  of priority: (i) first, to accrued interest through and including the date of
  payment, and (iii) then, to principal of this Note.

          4. All
  payments contemplated hereby to be made “in cash” shall be made in
  immediately available good funds of United States of America currency by wire
  transfer to an account designated in writing by the Holder to the Company (which
  account may be changed by notice similarly given). For purposes of this Note,
  the phrase “date of payment” means the date good funds are received
  in the account designated by the notice which is then currently effective.

          5.  Subject
  to the terms of the Loan Agreement, no provision of this Note shall alter or
  impair the obligation of the Company, which is absolute and unconditional, to
  pay the principal of, arid interest on, this Note at the time, place, and rate,
  and in the coin or currency, as herein prescribed. This Note is direct obligations
  of the Company.

          6. No
  recourse shall be had for the payment of the principal of, or the interest on,
  this Note, or for any claim based hereon, or otherwise in respect hereof, against
  any incorporator, shareholder, officer or director, as such, past, present or
  future, of the Company or any successor corporation, whether by virtue of any
  constitution, statute or rule of law, or by the enforcement of any assessment
  or penalty or otherwise, all such liability being, by the acceptance hereof
  and as part of the consideration for the issue hereof, expressly waived and
  released.

           8.
  The Holder of the Note, by acceptance hereof, agrees that this Note is being
  acquired for investment and that such Holder will not offer, sell or otherwise
  dispose of this Note except under circumstances which will not result in a violation
  of the Securities Act of 1933, as amended~ or any applicable state Blue Sky
  or foreign laws or similar laws relating to the sale of securities.

           9.
  Any notice given by any party to the other with respect to this Note shall be
  given in the manner contemplated by the Loan Agreement in the section entitled
  “Notices,”

          10.
  This Note shall be governed by and construed in accordance with the laws of
  the State of Nevada. Each of the parties consents to the exclusive jurisdiction
  of the federal courts whose districts encompass any part of Nevada or the state
  courts of the State of Nevada in connection with any dispute arising under this
  Agreement and hereby waives, to the maximum extent permitted by law, any objection,
  including any objection based on forum non coveniens, to the bringing
  of any such proceeding in such jurisdictions. To the extent determined by such
  court, the Company shall reimburse the Holder for any reasonable legal fees
  and disbursements incurred by the Holder in enforcement of or protection of
  any of its rights under any of this Note.

          11.
   Jury Trial Waiver. The Company and the Holder hereby waive a trial by
  jury in any 

2




action, proceeding or counterclaim brought by either of the Parties
  hereto against the other in respect of any matter arising out of or in connection
  with this Note.

          12.
  The following shall constitute an “Event of Default”:

			a. 	 The Company shall default in the payment of principal
        or interest on this Note or any other amount due; or

	 	 	 	 
			b. 	 Any of the representations or warranties made by the
        Company herein, in the Loan Agreement or any of the other Transaction
        Agreements shall be false or misleading in any material respect at the
        time made; or

	 	 	 	 
			c. 	 The Company shall (1) make an assignment for the benefit
        of creditors or commence proceedings for its dissolution; or (2) apply
        for or consent to the appointment of a trustee, liquidator or receiver
        for its or for a substantial part of its property or business; or

	 	 	 	 
			d. 	 A trustee, liquidator or receiver shall be appointed
        for the Company or for a substantial part of its property or business
        without its consent; or

	 	 	 	 
			e. 	 Any governmental agency or any court of competent jurisdiction
        at the instance of any governmental agency shall assume custody or control
        of the whole or any substantial portion of the properties or assets of
        the Company; or

	 	 	 	 
			f. 	 Bankruptcy, reorganization, insolvency or liquidation
        proceedings or other proceedings for relief under any bankruptcy law or
        any law for the relief of debtors shall be instituted by or against the
        Company.



If an Event of Default shall have occurred, then, or at any
time thereafter, and in each and every such case, unless such Event of Default
shall have been waived in writing by the Holder (which waiver shall not be
deemed to be a waiver of any subsequent default) at the option of the Holder and
in the Holder’s sole discretion, the Holder may consider this Note immediately
due and payable (and the Maturity Date shall be accelerated accordingly),
without presentment, demand, protest or notice of any kinds, all of which are
hereby expressly waived, anything herein or in any note or other instruments
contained to the contrary notwithstanding, and interest shall accrue on the
total amount due (the “Default Amount”) on the date of the Event of Default (the
“Default Date”) at the rate of 16% per annum or the maximum rate allowed by law,
whichever is lower, from the Default Date until the date payment is made, and
the Holder may immediately enforce any and all of the Holder’s rights and
remedies provided herein or any other rights or remedies afforded by law.

	 	13. Covenants of Company


          The
  Company covenant and agree that, so long as any principal of, or interest
  on, this Note shall remain unpaid, unless the Holder shall otherwise consent
  in writing, it will comply with the following terms:

                    (a)
  Reporting Requirements. The Company will furnish to the Holder or make publicly
  available:

                    (i)
  as soon as possible, and in any event within ten (10) days after obtaining knowledge
  of the occurrence of (A) an “Event of Default,” as hereinafter defined,
  (B) an event which, with the giving 

3




of notice or the lapse of time or both, would constitute an
Event of Default, or (C) a material adverse change in the condition or
operations, financial or otherwise, of the Company, taken as whole, the written
statement of the Chief Executive Officer or the Chief Financial Officer of the
Company, setting forth the details of such Event of Default, event or material
adverse change;

          (ii)
  promptly after the commencement thereof, notice of each action, suit or proceeding
  before any court or other governmental authority or other regulatory body or
  any arbitrator as to which there is a reasonable possibility of a determination
  that would (A) materially impact the ability of the Company to conduct its business,
  (B) materially and adversely affect the business, operations or financial condition
  of the Company, or (C) impair the validity or enforceability of the Note or
  the ability of the Company to perform their obligations under the Note.

          (b)
Compliance with Laws. The Company will comply, in all material respects with all
applicable laws, rules, regulations and orders, except to the extent that
noncompliance would not have a material adverse effect upon the business,
operations or financial condition of the Company taken as a whole.

          (c)
Preservation of Existence. The Company will maintain and preserve its
existence.

          (d)
Maintenance of Properties. The Company will maintain and preserve, all of its
properties which are necessary in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted, and comply, at all
times with the provisions of all leases to which it is a party as lessee or
under which it occupies property, so as to prevent any forfeiture or material
loss thereof or thereunder.

          (e)
Maintenance of Insurance. The Company will maintain, with responsible and
reputable insurers, insurance with respect to its properties and business, in
such amounts and covering such risks, as is carried generally in accordance with
sound business practice by companies in similar businesses in the same
localities in which the Company is situated.

          (f)
Keeping of Records and Books of Account. The Company will keep adequate records
and books of account, with complete entries made in accordance with generally
accepted accounting principles, reflecting all of its financial and other
business transactions.

          14.
  In the event for any reason, any payment by or act of the Company or the Holder
  shall result in payment of interest which would exceed the limit authorized
  by or be in violation of the law of the jurisdiction applicable to this Note,
  then ipso.facio the obligation of the Company to pay interest or perform
  such act or requirement shall be reduced to the limit authorized under such
  law, so that in no event shall the Company be obligated to pay any such interest,
  perform any such act or be bound by any requirement which would result in the
  payment of interest in excess of the limit so authorized. In the event any payment
  by or act of the Company shall result in the extraction of a rate of interest
  in excess of a sum which is lawfully collectible as interest, then such amount
  (to the extent of such excess not returned to the Company) shall, without further
  agreement or notice between or by the Company or the Holder, be deemed applied
  to the payment of principal, if any, hereunder immediately upon receipt of such
  excess funds by the Holder, with the same force and effect as though the Company
  had specifically designated such sums to be so applied to principal and the
  Holder had agreed to accept such sums as an interest-free prepayment of this
  Note. If any part of such excess remains after the principal has been paid in
  full, whether by the provisions of the preceding sentences of this Section or
  otherwise, such excess shall be deemed to be an interest-free loan from the
  Company to the Holder, which loan shall be payable immediately upon demand by
  the Company. The provisions of this Section shall control every other 

4




provision of this Note.

          IN
  WITNESS WHEREOF, the Company has caused this instrument to be duly executed
  by an officer thereunto duly authorized this 12th day of May, 2006.

	 	TERAX ENERGY, INC. 
	 	 	  
	 	 	  
	 	By :	          /s/
      Lawrence J. Finn                           
	 	Name:	Lawrence J. Finn 
	 	Title: 	President and Chief Executive Officer