ESCROW AGREEMENT
EXHIBIT
10.9
THIS
AGREEMENT made the 2nd
day of
March, 2007
BURSTALL
WINGER LLP, barristers
and solicitors, a partnership, having an office in the Province of Alberta
(“BW”
or “Escrow Agent”, as applicable)
-
and
-
PEACE
OIL CORP.,
a body
corporate, incorporated pursuant to the laws of the Province of Alberta
(hereinafter referred to as “Peace”)
-
and
-
SURGE
GLOBAL ENERGY, INC.,
a body
corporate, incorporated pursuant to the laws of the Province of Delaware
(hereinafter referred to as “Surge”)
-
and
-
COLD
FLOW ENERGY ULC.,
a body
corporate, incorporated pursuant to the laws of the Province of Alberta
(hereinafter referred to as “Cold Flow”)
-
and
-
1304146
ALBERTA LTD.,
a body
corporate, incorporated pursuant to the laws of the Province of Alberta
(hereinafter referred to as “Newco”)
WHEREAS
Cold
Flow, Surge and Peace are parties to a Stock Purchase Agreement among Cold
Flow,
Surge, Peace and the Shareholders of Peace dated as of November 30, 2006,
as
amended (the “Sale Agreement”);
AND
WHEREAS
pursuant
to the Sale Agreement, Closing has occurred and the Purchaser has issued
the
Notes;
AND
WHEREAS if
Purchaser does not meet all of its obligations contained in the Notes, Peace,
Surge and Cold Flow agreed to convey the Assets to Newco in accordance with
the
conveyance agreement dated March 2, 2007 amongst Peace, Surge, Cold Flow
and
Newco (the “Conveyance Agreement”);
-0-
X:\XXX\Xxxxx
Xxx Xxxx - 00000\Xxxx flow\Escrow agreement v.6.doc
AND
WHEREAS the
Conveyance Agreement has been executed by all parties thereto and the parties
hereto wish to place the five (5) originals of the Conveyance Agreement in
escrow with BW on the following terms and conditions.
AND
WHEREAS the
parties hereto wish to place the Exchangeable Shares and the Warrants in
escrow
with BW on the following terms and conditions.
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1.
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Definitions
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In
this
Agreement (including the premises hereto, this section and the appendices),
the
words and phrases set forth below have the meanings ascribed thereto below,
namely:
“Agreement”
means
this agreement and all appendices attached hereto together with all instruments
supplemental hereto or in amendment or confirmation hereof;
“Escrow
Period”
means
the period of time commencing on the date hereof and unless further extended
by
the written agreement of the Parties, running until 4:00 p.m., Calgary time,
on
the earlier of:
|
(i)
|
the
day immediately following the date upon which the Escrow Agent
has
released the Conveyance Agreement in accordance with section 7
hereof;
and
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|
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(ii)
|
September
1, 2007;
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“Exchangeable
Shares”
means
share certificate numbers _________ through __________ of Cold Flow representing
in aggregate 8,965,390 exchangeable shares in the capital of Cold
Flow;
“Notes”
mean the
promissory notes executed by Cold Flow in favour of Newco in the amounts
of
$1,000,000, $1,500,000 and $1,000,000, copies of which are attached hereto
as
Schedule “A”;
“Party”
means
any of BW, Peace, Newco, Cold Flow and Surge and “Parties”
means
all of the parties to this Agreement; and
“Warrants”
means
warrant certificate numbers _______ through _______ issued by Surge representing
1,000,000 warrants to purchase shares of the common stock of Surge at an
exercise price of $1.00 per share on the terms contained
therein.
-2-
Capitalized
terms not otherwise defined in this Agreement shall have the meaning set
forth
in the Purchase and Sale Agreement and such definitions are incorporated
herein
by this reference.
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2.
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Schedules
|
|
The
following schedules are attached hereto and form a part
hereof:
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Schedule
“A” - Notes
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3.
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Headings
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The
headings of sections herein are inserted for convenience of reference only
and
shall not affect or be considered to affect the construction of the provisions
hereof.
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4.
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Gender
and Number
|
This
Agreement shall be read with all changes in gender and number as may be required
by the context.
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5.
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Appointment
and Acceptance of Escrow Agent
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Peace,
Newco, Cold Flow and Surge hereby appoint BW as the Escrow Agent hereunder
and
BW accepts such appointment. Newco represents that it has the authority to
act
on behalf of the Shareholders and deposit the Exchangeable Shares and Warrants
on their behalf.
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6.
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Receipt
of Conveyance Agreement, Exchangeable Shares and
Warrants
|
The
Escrow Agent hereby acknowledges receipt of five (5) originals of the Conveyance
Agreement, the Exchangeable Shares and the Warrants from the Purchaser and
agrees to hold and administer the same in trust in accordance with the terms
hereof. The Escrow Agent shall not make any copies of the Conveyance
Agreement.
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7.
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Release
of Conveyance Agreement, Exchangeable Shares and
Warrants
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-3-
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(a)
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Pursuant
to the Notes, BW, as agent for Newco, is to receive payment of
all amounts
owing to Newco pursuant to the Notes. In the event that all of
the amounts
required to be paid by the Notes have not been paid to BW on or
before the
date required for each Note, the Parties hereto hereby irrevocably
instruct BW to release one (1) original of the Conveyance Agreement
to
each of the Parties hereto such that pursuant to the terms of the
Conveyance Agreement the Assets shall be owned by Newco effective
as of
March 2, 2007. In addition, BW shall return all of the certificates
representing the Exchangeable Shares and all of the certificates
representing the Warrants to Surge. For greater certainty, if an
amount
due under one of the Notes is not paid by the time required by
that Note,
BW is irrevocably instructed to release the Conveyance Agreement,
Exchangeable Shares and the Warrants in accordance with this paragraph
7(a).
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(b)
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If
all of the payments required to be made under the Notes are paid
to BW on
or before the date required for each Note, the Parties hereto hereby
irrevocably instruct BW to forthwith destroy all originals of the
Conveyance and the Conveyance shall be deemed to be void and of
no force
and effect without any further action on the part of any Party.
In
addition, BW shall release all of the certificates representing
the
Exchangeable Shares and all of the certificates representing the
Warrants
to Newco. BW shall issue a letter to each of the Parties hereto
stating
that it has complied with its obligations in this paragraph 7(b)
within
five (5) business days of the date on which the Conveyance becomes
void
and of no force and effect pursuant to this subclause
7(b).
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(c)
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Any
dispute or controversy arising hereunder between the Parties in
relation
to the return or release of the Conveyance Agreement or the amount
of any
calculations, adjustments or amendments hereunder may be referred
to
arbitration before a single arbitrator. Any such arbitration, including
the selection of the arbitrator, shall be governed by the Arbitration
Act
(Alberta). The decision of any such arbitrator shall be final and
binding
on the Parties and the costs and fees relating thereto shall be
borne and
paid in a manner determined by such
arbitrator.
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In
such
circumstances, the Escrow Agent is hereby irrevocably instructed by the Parties
as follows:
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(i)
|
it
shall be under no obligation to act, except under process or order
of any
court, until it has been adequately indemnified to its full satisfaction,
and that it shall sustain no liability for its failure to act pending
such
process or court order or indemnification; and
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(ii)
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it
may, in its sole, absolute and unconditional discretion, deposit
all five
(5) originals of the Conveyance Agreement with the Clerk of the
Court in
Calgary, Alberta, and upon so depositing and filing its interpleader,
it
shall be released and discharged as Escrow Agent hereunder and
be relieved
of all liability under the terms
hereof.
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-4-
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8.
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Escrow
Period
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This
escrow will come into force upon execution of this Agreement by the Parties
hereto and shall continue in effect until the expiration of the Escrow Period,
unless further extended by a written agreement among Peace, Newco, Cold Flow,
Surge and Escrow Agent.
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9.
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Successor
Escrow Agent
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The
Escrow Agent (or any successor) may at any time resign by giving notice in
writing to the Parties and shall be discharged from its duties under this
Agreement upon the appointment of a successor Escrow Agent as provided herein.
The successor Escrow Agent shall be appointed by mutual agreement of the
Parties. Should mutual agreement not be reached, the successor Escrow Agent
shall be appointed by utilizing the arbitration provisions contained in
subsection 7(c) of this Agreement. Any successor Escrow Agent shall deliver
to
the Parties a written instrument accepting its appointment under this Agreement
whereupon it shall succeed to all the rights and duties of the predecessor
Escrow Agent hereunder and shall be entitled to receive from the predecessor
Escrow Agent, and the predecessor Escrow Agent shall be obligated to deliver
to
the successor Escrow Agent, all documentation then held pursuant to the
provisions hereof.
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10.
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Rights,
Privileges, Immunities and Liabilities of the Escrow
Agent
|
The
following shall govern the rights, privileges, immunities and liabilities
of the
Escrow Agent acting within the scope of their authority to act in implementing
the terms and intent of this Agreement:
|
(a)
|
the
Escrow Agent is not a party to, and is not bound by, any agreements
involving the Parties except by this Agreement;
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(b)
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The
Parties hereby jointly and severally release the Escrow Agent from,
and
agree to forthwith indemnify and save the Escrow Agent harmless
form and
against, any and all liability, loss, costs, claims, actions, damages,
expenses, demands or causes of action, whether direct or indirect,
resulting from or related to the exercise in good faith by the
Escrow
Agent of its functions hereunder, except insofar as the same arose
through
the gross negligence or willful misconduct on the part of Escrow
Agent or
otherwise arose from any breach of its obligations
hereunder;
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(c)
|
the
Escrow Agent shall be entitled to act upon any written notice,
request,
waiver, consent, certificate, receipt, authorization, power of
attorney,
affidavit or other paper or document furnished to it and executed
by the
Parties or any other authorized third party, both as to the due
execution,
validity and effectiveness of its provisions and as to the truth
and
accuracy of any information therein contained, which the Escrow
Agent in
good faith believes to be genuine and what it purports to
be;
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-5-
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(d)
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the
Escrow Agent shall not be liable for any act done or step taken
or omitted
by it in good faith in connection therewith;
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(e)
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in
the event of any disagreement involving the Parties resulting in
adverse
claims or demands being made in connection with the monies and
documentation held hereunder, the Escrow Agent shall refrain from
releasing the Conveyance Agreement except in accordance with section
7 of
this Agreement until (i) the rights of all interested Parties shall
have
been fully and finally adjudicated by the Court from which no further
appeal may be taken; or (ii) all differences shall have been adjusted
and
all doubt resolved by agreement (or arbitration) among all the
interested
Parties, and the Escrow Agent shall have been notified thereof
in writing
signed by all such Parties. The rights of the Escrow Agent hereunder
are
in addition to any and all other rights which it may have by law
or
otherwise;
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(f)
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the
Escrow Agent may consult with, obtain advice from and be represented
by
independent legal counsel in the event of any question arising
with
respect to any matter concerning this Agreement and shall incur
no
liability and shall be fully protected in acting in good faith
in
accordance with the opinion and instructions of such
counsel;
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(g)
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the
Escrow Agent, having disbursed all documentation held hereunder
in
accordance with the terms hereof, shall be discharged from any
further
obligation hereunder; and
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(h)
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the
Escrow Agent is empowered as and when required to issue correspondence
at
the request of the Parties to third parties confirming the amount
or
nature of the monies and documentation being administered
hereunder.
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11.
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Notices
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The
initial addresses of the Parties for notice or other writings required,
permitted or desired hereunder shall be as follows:
-6-
Purchaser: Cold
Flow
Energy ULC
00000
Xx
Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000)
000-0000
Purchaser: Surge
Global Energy, Inc.
00000
Xx
Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000)
000-0000
Newco:
1304146
Alberta Ltd.
c/o
Burstall Winger LLP
0000,
000
-0xx
Xxxxxx
X.X.
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax:
(000) 000-0000
Attention:
Xxxxx Xxxxxxxxx
-7-
BW: Burstall
Winger LLP
0000,
000
-0xx
Xxxxxx
X.X.
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax:
(000) 000-0000
Attention:
Xxxxx Xxxxxxxxx
Peace: Peace
Oil
Corp.
c/o
Xxxx
Xxxxxx
0000
Xxxxxxxxx Xxxxxx X.X.
Xxxxxxx,
Xxxxxxx X0X 0X0
Any
of
the Parties hereto may from time to time change its address for service
hereunder by giving written notice to the other Parties hereto in the manner
provided herein. Any such notice or other writing may be served by personal
service, by mailing the same by prepaid post in a properly addressed envelope
addressed to the intended addressee at its address for service hereunder
or by
fax to the number hereunder. Any notice given by personal service shall be
deemed to be given on the date of such service and any notice given by mail
shall be deemed to be given to and received by the addressee on the fifth
day
(except Saturdays, Sundays, statutory holidays and days upon which the postal
service in Canada is interrupted) after the mailing thereof. Any notice given
by
fax shall be deemed to be given to and received by the addressee on the next
day
(except Saturdays, Sundays and statutory holidays) after the sending thereof
with appropriate answerback acknowledged. In the event of postal service
in
Canada is or is threatened to be interrupted, all notices and other writings
shall be served by personal service or fax. Notwithstanding the foregoing,
a
direction by the Shareholders and Purchaser for the release of funds shall
be by
originally executed written notice only.
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12.
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Enurement
|
This
Agreement shall be binding upon and shall enure to the benefit of the Parties
hereto and their respective successors, receivers, receiver-managers, trustees
and permitted assigns.
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13.
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Further
Assurances
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Each
Party hereto, without further consideration, shall do or perform or cause
to be
done or performed all such further acts and other things, execute, acknowledge
and deliver or cause to be executed, acknowledged and delivered such further
and
other instruments, deeds and other writings and generally shall take or cause
to
be taken all such further and other actions as may be necessary or desirable
to
carry out their respective obligations under this Agreement.
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14.
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Governing
Law
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This
Agreement shall, in all respects, be subject to and interpreted, construed
and
enforced in accordance with the laws in effect in the Province of Alberta.
Each
Party hereto accepts the jurisdiction of the Court and all courts of appeal
therefrom.
-8-
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15.
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Counterpart
Execution
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This
Agreement may be executed in counterpart and by facsimile, each of which
shall
be an original but all of which together shall constitute one and the same
instrument.
IN
WITNESS WHEREOF the
Parties hereto have executed this Agreement as of the date first above
written.
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BURSTALL
WINGER LLP
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PEACE
OIL CORP.
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Per:
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/s/ Xxxxx
Xxxxxxxxx
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Per:
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/s/
Xxxxx Xxxxx
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Per:
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Per:
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COLD
FLOW ENERGY ULC
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Per:
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/s/
Xxxxx Xxxxx
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Per:
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/s/
Xxxxx Xxxxx
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Per:
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Per:
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/s/
Xxxxxxx X. Xxxxxx
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1304146
ALBERTA LTD.
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By:
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/s/ Xxxx
Xxxxxx
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Name:
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Title:
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-9-
SCHEDULE
“A”
NOTES
-10-
