August 17, 2007 Surge Global Energy Inc. 12220 El Camino Real Suite 410 San Diego, CA 92130 USA Fax: 858-704-5011 Attention: Mr. David Perez, Chief Executive Officer and Chairman of the Board and to Mr. David Perez 12220 El Camino Real Suite 410 San...
Exhibit
10.1
August
17, 2007
Surge
Global Energy Inc.
00000 Xx
Xxxxxx Xxxx
Xxxxx
000
Xxx
Xxxxx, XX 00000 XXX
Fax:
000-000-0000
Attention:
Xx. Xxxxx Xxxxx, Chief Executive Officer and Chairman of the Board
and
to
Xx. Xxxxx
Xxxxx
00000 Xx
Xxxxxx Xxxx
Xxxxx
000
Xxx
Xxxxx, XX 00000 XXX
Fax:
000-000-0000
Dear
Sirs:
For good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by both Surge Global Energy Inc. and Xxxxx Xxxxx (the
"Securityholders") and in consideration of the entering into by Signet Energy
Inc. ("Signet") of the arrangement agreement dated August , 2007 among Signet,
Pan Orient Energy Corp., Andora Energy Corporation ("Andora"), 1337686 Alberta
Ltd. and Valiant Trust Company (the "Arrangement Agreement") relating to the
combination of the businesses of Andora and Signet (the "Proposed Transaction"),
Signet, Andora and the Securityholders agree as follows:
Unless
otherwise defined herein capitalized terms shall have the meanings ascribed
thereto in the Arrangement Agreement.
1. Ownership
of Shares
Signet
and Andora understand that the Securityholders are the beneficial owner,
directly or indirectly or exercise voting control over, of at least the number
of common shares (the "Shares") of Signet, set forth on page 5
hereof.
In
addition to the foregoing, the term "Shares" will be deemed to also include any
stock dividend, stock split, recapitalization, reclassification, combination or
exchange of shares of capital stock of Signet on, of, or affecting the
Securityholder's Shares or after the date of this Agreement.
2. Revocation
of Previous Proxies
The
Securityholders hereby revoke any and all previous proxies with respect to the
Securityholders' Shares.
1
3. Covenants
of the Securityholders
The
Securityholders covenant and agree with Signet and Andora that, until the
Release Date, as defined below, to the extent the Proposed Transaction is
effected as set forth in the Arrangement Agreement and provided the board of
directors of Signet have received a written fairness opinion from their
financial advisors indicating that the transaction is fair from a financial
point of view to the shareholders of Signet, the Securityholders
shall:
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(a)
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attend
(either in person or by proxy) any meeting of the securityholders of
Signet convened for the purposes of considering the Proposed Transaction
(including any adjournments and postponements thereof), and at such
meeting, vote all of the Shares in favour of the Proposed Transaction and
all matters related thereto;
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(b)
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vote
against (i) any extraordinary corporate transaction, such as a merger,
rights offering, reorganization, recapitalization, or liquidation
involving Signet other than the Proposed Transaction and any transaction
related thereto, (ii) a sale or transfer of a material amount of assets of
Signet or the issuance of any securities of Signet (other than pursuant to
the Signet's incentive share option plan), or (iii) any action that is
reasonably likely to impede, interfere with, delay, postpone, or adversely
affect in any material respect the Proposed
Transaction;
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(c)
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not
sell, transfer, assign, pledge, or otherwise dispose of, or enter into any
agreement or understanding relating to the sale, transfer, assignment or
other disposition of the Shares or permit any affiliate of the
Securityholders to do any of the
foregoing;
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(d)
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not
exercise any rights of dissent or appraisal in respect of any resolution
approving the Proposed Transaction or any aspect thereof or matter related
thereto, and not to exercise any other securityholder or optionholder
rights or remedies available at common law or pursuant to the Business
Corporations Act (Alberta) or in any manner delay,
hinder, prevent, interfere with or challenge the Proposed
Transaction;
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(e)
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promptly
notify Signet upon any of undersigned's representations or warranties
contained in this Agreement becoming untrue or incorrect in any material
respect prior to the Release Date, and for the purposes of this provision,
each representation and warranty shall be deemed to be given at and as of
all times during such period (irrespective of any language which suggests
that it is only being given as at the date hereof);
and
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(f)
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deposit
such number of their Shares into escrow on such terms and only to the
extent as may be required by any stock exchange or other regulatory body
in respect to the Proposed
Transaction.
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Forthe
purposes of this letter agreement (this “Agreement”), "Release Date" means the
earlier of: (i) the time at which the Proposed Transaction becomes effective
(the "Effective Time") on the date on which the Proposed Transaction becomes
effective (the "Effective Date"), which is to be no later than September 15,
2007 unless extended by mutual agreement by the parties to this Agreement; or
(ii) the date of the termination of the Arrangement Agreement.
4. Representations
and Warranties of the Securityholders
Each of
the Securityholders hereby covenants, represents and warrants to Signet and
Andora that:
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(a)
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the
Securityholder is the legal and beneficial owner of, or exercises control
or direction over, the number of Shares set forth on page 5 hereof, set
forth opposite its name, free and clear of all claims, liens, charges,
encumbrances and security interests;
and
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2
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(b)
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the
Securityholder is duly authorized to execute and deliver this Agreement
and this letter is a valid and binding agreement, enforceable against the
Securityholder in accordance with its terms, and the consummation by the
Securityholder of the transaction contemplated hereby will not constitute
a material violation or breach of or default under, or conflict with, any
contract, commitment, agreement, understanding or arrangement of any kind
to which the Securityholder will be a party and by which the
Securityholder will be bound at the time of such
consummation.
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All of
the representations and warranties contained in this section 4 shall be valid
and true as if recited and repeated as at the Effective Time of the Proposed
Transaction.
5. Representations
and Warranties of Signet
Each of
Signet and Andora hereby represents and warrants to and covenants with the
Securityholders, as representations and warranties that will survive completion
of the transactions contemplated hereby, that it is duly authorized to execute
and deliver this Agreement, this Agreement has been duly executed and delivered
by it and, upon acceptance by the Securityholders, this Agreement will be a
valid and binding agreement, enforceable against it in accordance with its terms
and neither the execution of this Agreement nor the consummation by it of the
transactions contemplated hereby will constitute a violation or breach of or
default under, or conflict with, any restriction of any kind or any contract,
commitment, agreement, understanding or arrangement to which it is a party and
by which it is bound. Each of Signet and Andora covenants and agrees that it
shall comply, in all material respects, with the terms and conditions contained
in the Arrangement Agreement.
6. Termination
In the
event that the Arrangement Agreement is terminated in accordance with the
respective terms thereof, this Agreement shall immediately terminate. In
addition, in the event the terms of this Agreement and/or the obligations of the
Securityholders’ hereunder would reasonably be expected to expose any
Securityholder to a claim for a breach of a duty, fiduciary or otherwise, such
Securityholder may terminate this Agreement upon written notice to the other
parties hereto.
7. Amendment
Except as
expressly set forth herein, this Agreement constitutes the entire agreement
between the parties and may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by each
of the parties hereto.
8. Assignment
No party
to this Agreement may assign any of its rights or obligations under this
Agreement without the prior written consent of the other parties.
9. Disclosure
Prior to
first public disclosure of the existence and terms and conditions of this
Agreement, neither of the parties hereto shall disclose the existence of this
Agreement or any details hereof, or the possibility of the Proposed Transaction
or any terms or conditions or other information concerning the Proposed
Transaction to any person other than the Securityholder’s advisors, without the
prior written consent of the other party hereto, except to the extent required
by law. The existence and terms and conditions of this Agreement may be
disclosed by Signet and Andora in the press release issued in connection with
the execution of the Arrangement Agreement, and other public disclosure
documents in accordance with applicable securities legislation.
3
10. Further
Assurances
Subject
to the terms and conditions herein, the Securityholders and Signet agree to use
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations, to consummate the transactions contemplated by
this Agreement and the Arrangement Agreement.
11. Notice
Any
notice, document or other communication required or permitted to be given to the
parties under this Agreement shall be in writing and be either hand delivered or
faxed (with a following letter) as follows:
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(a)
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to
the Securityholders at the address and fax number listed on the first page
of this Agreement;
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(b)
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to
Signet:
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Signet Energy
Inc.
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0000, 000 - 0xx
Xxxxxx XX
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Xxxxxxx, XX X0X
0X0
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Attention: Executive Chairman and
Chief Executive Officer
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Fax: (000)
000-0000;
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(c)
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to
Andora:
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Andora
Energy Corporation
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000, 000 - 00xx
Xxxxxx XX
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Xxxxxxx,
XX X0X 0X0
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Attention:
Chief Executive Officer
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Fax:
(000) 000-0000;
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and shall
be deemed to be received by the party to whom such notice is given on the date
of delivery or transmission.
12. Successors
This
Agreement will be binding upon, enure to the benefit of and be enforceable by
the Securityholders and their respective successors.
13. Time
of the Essence
Time
shall be of the essence of this Agreement.
14. Applicable
Law
This
Agreement shall be governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein and the courts of
such Province shall have exclusive jurisdiction over any dispute hereunder, to
which jurisdiction the parties attorn.
4
15. Counterpart
Execution
This
Agreement may be signed by fax and in counterparts, which, together, shall be
deemed to constitute one valid and binding agreement and delivery of such
counterparts may be effected by means of telecopier.
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Yours
truly,
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SIGNET ENERGY
INC.
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Per: /s/ X.X.
Xxxxx
Xxxxxxx
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X.X. Xxxxx Xxxxxxx
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Executive
Chairman and Chief Executive Officer
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ANDORA ENERGY
CORPORATION
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Per:
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Name:
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Title:
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Acceptance by the
Securityholders
The
foregoing is hereby accepted as of and with effect from the date first above
written and the undersigned hereby confirms that the undersigned beneficially
owns or exercises control or direction over:
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11,350,000
Shares;
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SURGE
GLOBAL ENERGY
INC.
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Name of
Securityholder
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00000 Xx Xxxxxx Xxxx, Xxxxx
000
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Xxx Xxxxx, XX 00000 XXX Fax:
000.000.0000
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Signatures of authorized
signatories on behalf of
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SURGE GLOBAL
ENERGY INC.
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/s/
Xxxxx Xxxxx
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Xxxxx
Xxxxx, Chairman & Director
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850,000
Shares;
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/s/
Xxxxx Xxxxx
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XXXXX
XXXXX
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00000
Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000 XXX Fax:
000.000.0000
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5
