REDEMPTION AGREEMENT
EXHIBIT
10.2
This
Redemption Agreement (this “Agreement”),
dated
as of August 8, 2007, is entered into by and among Surge Global Energy, Inc.,
a
Delaware corporation (“Company”),
and
Gemini Master Fund, Ltd. (“Investor”).
R
E C I T A L S:
WHEREAS,
the Investor purchased 2,000,000 shares (the “Shares”)
of
common stock, par
value
$0.001 per share (“Common
Stock”),
of
the Company pursuant to that certain Securities Purchase Agreement (as amended,
the “Purchase
Agreement”)
and
that certain Registration Rights Agreement (as amended, the “Registration
Rights Agreement”),
each
dated as of November 28, 2006;
WHEREAS,
in consideration for the surrender of the Shares, an additional $250,000 cash
investment, and a temporary waiver of breaches under the Registration Rights
Agreement, on or about April 19, 2007 the Company issued to the Investor a
Convertible Note Due May 1, 2008 in the original principal amount of $1,150,000
(the “Note”)
pursuant to that certain Exchange, Purchase and Amendment Agreement dated on
or
about April 19, 2007 (“Amendment”);
initially capitalized terms used in this Agreement and not otherwise defined
shall have the respective meanings ascribed thereto in the Note;
WHEREAS,
pursuant to Section 5 of the Note, the Investor has delivered a Mandatory
Redemption Notice to the Company following an Event of Default under the Note;
and
WHEREAS,
the Company has requested that the Mandatory Redemption Date be postponed until
November 1, 2007 in contemplation of a potential revocation of the Mandatory
Redemption Notice by the Investor, and the Investor wishes to accommodate such
request, on the terms and conditions contained herein;
A
G R E E M E N T:
NOW
THEREFORE, in consideration of the foregoing premises and the mutual covenants
set forth in this Agreement, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Postponement
of Redemption Date.
The
Mandatory Redemption Date shall be postponed until November 1, 2007 (as may
be
extended as provided herein, the “Revised
Mandatory Redemption Date”).
The
Company and the Investor acknowledge and agree that the Mandatory Redemption
Price is $1,380,000.
The Company acknowledges
and agrees that (a) the Investor may revoke the Mandatory Redemption Notice
in
its sole and absolute discretion (in which case the Company shall not redeem
the
Note), (b) the Mandatory Redemption Notice is currently and shall remain valid
and in full force and effect unless and until revoked by the Investor, and
(c)
an Event of Default has occurred and is continuing and, unless the Mandatory
Redemption Notice is revoked by the Investor prior to the Investor’s actual
receipt of the Mandatory Redemption Price on or after the Revised Mandatory
Redemption Date, the Company shall redeem the Note for the Mandatory Redemption
Price on the Revised Mandatory Redemption Date notwithstanding any curing or
discontinuance of the Event of Default. On or prior to November 1, 2007, the
Investor may extend the Revised Mandatory Redemption Date until December 31,
2007. On or about October 25, 2007, the Investor shall deliver to the Company
(which may be by fax or a digital image file (e.g.
PDF) to
the address set forth in Section 6 below) a written notice (“Direction
Notice”)
in the
form of Exhibit A hereto electing to either (i) redeem the Note for the
Mandatory Redemption Price on the Revised Mandatory Redemption Date, (ii) revoke
the Mandatory Redemption Notice, or (iii) extend the Revised Mandatory
Redemption Date until December 31, 2007. If the Investor elects clauses (i)
or
(ii) above, the Investor shall also deliver such Direction Notice to the Escrow
Agent (as defined below). If the Investor elects to extend the Revised Mandatory
Redemption Date, then the Company shall redeem the Note for the Mandatory
Redemption Price on December 31, 2007 unless prior to such date the Investor
submits another Direction Notice electing to revoke the Mandatory Redemption
Notice. If the Mandatory Redemption Price is not paid in full to the Investor
within two (2) business days following the Revised Mandatory Redemption Date
on
which the Mandatory Redemption is intended to occur, any unpaid portion of
the
Mandatory Redemption Price shall increase at the Default Interest Rate. The
Company shall remain liable for payment of the Mandatory Redemption Price in
full to the extent the funds delivered to the Investor from the Escrow Agent
are
less than the Mandatory Redemption Price for any reason.
2. Registration.
Notwithstanding the delivery and effectiveness of the Mandatory
Redemption Notice, the Company shall register the resale of the Conversion
Shares in accordance with the terms of the Registration Rights
Agreement.
3. Escrow.
Contemporaneously with the execution hereof, the Company and the Investor hereby
agree to enter into an escrow agreement (“Escrow
Agreement”)
with
Xxxxxx Xxxxx Bank, a California banking association, as escrow agent
(“Escrow
Agent”),
in
the form of Exhibit I attached hereto. Immediately upon execution of this
Agreement and such Escrow Agreement, the Company shall deposit with Escrow
Agent
an amount equal to One Million Three Hundred Eighty Thousand Dollars
($1,380,000) in immediately available funds to be held in escrow pursuant to
the
terms of the Escrow Agreement. This Agreement shall not become effective until
the Escrow Agent receives such funds.
4. Notices.
All
notices, requests, demands and other communications provided for by this
Agreement shall be in writing and shall be deemed to have been given when hand
delivered, when received if sent by facsimile or email or by same day or
overnight recognized commercial courier service or three business days after
being mailed in any general or branch office of the United States Postal
Service, enclosed in a registered or certified postpaid envelope, addressed
to
the address of the parties stated below or to such changed address as such
party
may have fixed by notice:
If
to the
Company:
00000
Xx
Xxxxxx Xxxx, Xxx. 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attn:
Xxxx Xxxxxx
Facsimile:
(000) 000-0000
Email:
Xxxx@XxxxxXxxxxxXxxxxx.xxx
With
a copy to (if applicable) (other than Direction Notice):
Xxxx,
Forward, Xxxxxxxx & Scripps, LLP
00000
Xx
Xxxxxx Xxxx Xxx. 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attn:
Xxxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
If
to
the
Investor:
Gemini
Master Fund, Ltd.
c/o
Gemini Strategies, LLC
00000
Xx
Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000-0000
Attn: Xxxxxx
Xxxxxxx
Fax:
(000)
000-0000
With
a copy to:
Xxxxx
X.
Xxxxxxx, P.C.
00
Xxxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Fax:
(000)
000-0000
Email:
xxxxxxxx@xxxxxxxx.xxx
2
5. Execution
of Agreement.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. The exchange
of copies of this Agreement and of signature pages by facsimile transmission
or
PDF shall constitute effective execution and delivery of this Agreement as
to
the parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the parties transmitted by facsimile or PDF shall be deemed to
be
their original signatures for any purposes whatsoever.
6. Section
Headings, Construction.
The
headings of sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation.
7. Waiver.
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power or privilege under this Agreement or the documents referred to
in
this Agreement will operate as a waiver of such right, power or privilege,
and
no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or
the
exercise of any other right, power or privilege. To the maximum extent permitted
by applicable law: (a) no claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one party, in
whole
or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will
be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to
take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
8. Entire
Agreement and Modification.
This
Agreement supersedes all prior agreements among the parties with respect to
its
subject matter and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may
not
be amended except by a written agreement executed by the Company and the
Investor.
9. Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York applicable to contracts made and to be performed entirely
within the State of New York. The Company irrevocably submits to the
non-exclusive jurisdiction of any State or Federal Court sitting in San Diego,
California, over any suit, action, or proceeding arising out of or relating
to
this Note. The Company irrevocably waives, to the fullest extent permitted
by
law, any objection which it may now or hereafter have to the laying of the
venue
of any such suit, action, or proceeding brought in such a court and any claim
that suit, action, or proceeding has been brought in an inconvenient forum.
The
Company agrees that the service of process upon it mailed by certified or
registered mail (and service so made shall be deemed complete three days after
the same has been posted as aforesaid) or by personal service shall be deemed
in
every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect any party’s right to serve process in
any other manner permitted by law. The Company agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive
and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES ANY AND
ALL
RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED
ON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT.
3
10. Miscellaneous.
(a) Full
Force and Effect.
Except
as otherwise expressly provided herein, each of the Purchase Agreement, the
Registration Rights Agreement, the Amendment, the Note, the Warrants and the
other agreements and transactions contemplated thereby (“Transaction
Documents”)
shall
remain in full force and effect. Except for any waivers and modifications
contained herein, if any, this Agreement shall not in any way waive or prejudice
any of the rights or obligations of the Investor or the Company under the
Transaction Documents, under any law, in equity or otherwise, and such waivers
and modifications shall not constitute a waiver or modification of any other
provision of the Transaction Documents nor a waiver or modification of any
subsequent default or breach of any obligation of the Company or of any
subsequent right of the Investor.
(b) Authority.
Each
party hereto hereby represents and warrants to the other party that the
execution and delivery by such party of this Agreement, and the performance
by
such party of its obligations hereunder, have been duly and validly authorized
by such party, with no other action on the part of such party being necessary.
This Agreement has been duly and validly executed and delivered by such party
and constitutes a legal, valid and binding obligation of such party enforceable
against such party in accordance with its terms.
(c) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(d) Assignment;
Successors.
The
Investor may assign this Agreement or its respective rights or obligations
hereunder in connection with any transfer of the Note. This Agreement shall
be
binding upon each party’s respective successors.
4
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of
the date first written above.
COMPANY:
By:
/s/
Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
CFO
INVESTOR:
GEMINI
MASTER FUND, LTD.
By:
GEMINI
STRATEGIES, LLC, as investment manager
By:
/s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title:
Managing Director
5
Exhibit
A
DIRECTION
NOTICE
Date:
____________________
00000
Xx
Xxxxxx Xxxx, Xxx. 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attn:
Xxxx Xxxxxx
Facsimile:
(000) 000-0000
Email:
Xxxx@XxxxxXxxxxxXxxxxx.xxx
Xxxxxx
Xxxxx Bank
00000
Xx
Xxxxxx Xxxx, Xxx. 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attn:
Teofla Rich, SVP
Facsimile:
000-000-0000
Email:
XXxxx@XxxxxxXxxxxXxxx.xxx
Reference
is made to (1) that certain Redemption Agreement (“Redemption Agreement”) dated
as of August 8, 2007 between Surge Global Energy, Inc. (“Company”) and Gemini
Master Fund, Ltd. (“Investor”), and (2) that certain Escrow Agreement (“Escrow
Agreement”) dated as of August 8, 2007 among the Company, the Investor and
Xxxxxx Xxxxx Bank, as escrow agent (“Escrow Agent”). Initially capitalized terms
used in this Direction Notice but not defined herein shall have the meanings
ascribed to them in the Escrow Agreement.
Pursuant
to the Escrow Agreement, Gemini Master Fund, Ltd. elects to:
1.
Redeem
the Note for the Mandatory Redemption Price and hereby
directs the Escrow Agent to distribute the Mandatory
Redemption Price to the Investor by wire transfer to the following account
on:
—
November 1, 2007
—
December 31, 0000
Xxxxx
Xxxxxxxxx Xxxx, X.X.
ABA# 000-000-000
F/A/O
Goldman
Xxxxx & Co., N.Y.
A/C#
000-0-000000
F/F/C
Gemini
Master Fund, Ltd.
FFC#
002-36198
2. Revoke
the Mandatory Redemption Notice and hereby
directs the Escrow Agent to distribute the Mandatory
Redemption Price to the Company by transfer to the Company’s bank account held
at the Escrow Agent (A/C # 0339002522).
3. Extend
the Revised Mandatory Redemption Date (as defined in the Redemption Agreement)
until December 31, 2007.1
GEMINI
MASTER FUND, LTD.
By:
GEMINI
STRATEGIES, LLC, as investment manager
By:
_______________________________
Xxxxxx
Xxxxxxx, President
1
If this election is made, this Direction Notice will only
be
delivered to the Company until another election is
made.
