Escrow Agreement


     

    
      EXHIBIT
        10.9

      


      


      ESCROW
        AGREEMENT

      


      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”); 


      
        
          
          

        

        
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      I:\KWT\Peace
        Oil Corp - 31109\Cold 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.

      


      


      
        	
                1.

              	
                Definitions

              


      

      


      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;

      


      “Court”
        means
        the Court of Queen's Bench of Alberta in Calgary, Alberta;

      


      “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

              
	 	 	 
	 	
                (ii)

              	
                September
                  1, 2007;

              


      

      


      “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.



      
        
          
          

        

        
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      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.

      


      
        	
                2.

              	
                Schedules

              
	 	 
	 	
                The
                  following schedules are attached hereto and form a part
                  hereof:

              
	 	 
	 	
                Schedule
                  “A” - Notes

              
	 	 
	
                3.

              	
                Headings

              


      

      


      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.

      


      
        	
                4.

              	
                Gender
                  and Number

              


      

      


      This
        Agreement shall be read with all changes in gender and number as may be required
        by the context.

      


      
        	
                5.

              	
                Appointment
                  and Acceptance of Escrow Agent

              


      

      


      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.

      


      
        	
                6.

              	
                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.

      


      
        	
                7.

              	
                Release
                  of Conveyance Agreement, Exchangeable Shares and
                  Warrants

              


      

       

      
        
          
          

        

        
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                (a)

              	
                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).

              
	 	 
	
                (b)

              	
                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).

              
	 	 
	
                (c)

              	
                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.

              


      

      


      In
        such
        circumstances, the Escrow Agent is hereby irrevocably instructed by the Parties
        as follows:

      


      
        	
                (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

              
	 	 
	
                (ii)

              	
                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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                8.

              	
                Escrow
                  Period

              


      

      


      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. 

      


      
        	
                9.

              	
                Successor
                  Escrow Agent

              


      

      


      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.

      


      
        	
                10.

              	
                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;

              
	 	 
	
                (b)

              	
                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;

              
	 	 
	
                (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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                (d)

              	
                the
                  Escrow Agent shall not be liable for any act done or step taken
                  or omitted
                  by it in good faith in connection therewith;

              
	 	 
	
                (e)

              	
                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;

              
	 	 
	
                (f)

              	
                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;

              
	 	 
	
                (g)

              	
                the
                  Escrow Agent, having disbursed all documentation held hereunder
                  in
                  accordance with the terms hereof, shall be discharged from any
                  further
                  obligation hereunder; and

              
	 	 
	
                (h)

              	
                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.

              


      

      


      
        	
                11.

              	
                Notices

              


      

       

      The
        initial addresses of the Parties for notice or other writings required,
        permitted or desired hereunder shall be as follows:


      
        
          
          

        

        
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      Purchaser:    Cold
        Flow
        Energy ULC

      c/o
        Surge
        Global Energy, Inc.

      12220
        El
        Camino Real, Suite 410

      San
        Diego, CA 92130

      Telephone:
        (858) 704-5018

      Facsimile:
        (858)
        704-5011

       

      


      Purchaser:    Surge
        Global Energy, Inc.

      12220
        El
        Camino Real, Suite 410

      San
        Diego, CA 92130

      Telephone:
        (858) 704-5018

      Facsimile:
        (858)
        704-5011

       

      


      Newco:    
1304146
        Alberta Ltd.

      c/o
        Burstall Winger LLP

      1600,
        333
        -7th
        Avenue
        S.W.

      Calgary,
        Alberta T2P 2Z1

      Fax:
        (403) 265-8565

      Attention:
        Keith Templeton



      
        
          
          

        

        
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      BW:      Burstall
        Winger LLP

      1600,
        333
        -7th
        Avenue
        S.W.

      Calgary,
        Alberta T2P 2Z1

      Fax:
        (403) 265-8565

      Attention:
        Keith Templeton

      


      


      Peace:       Peace
        Oil
        Corp.

      c/o
        Dale
        Fisher

      1129
        Lansdowne Avenue S.W.

      Calgary,
        Alberta T2S 1A4

      


      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.

      


      
        	
                12.

              	
                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.

      


      
        	
                13.

              	
                Further
                  Assurances

              


      

      


      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.

      


      
        	
                14.

              	
                Governing
                  Law

              


      

      


      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.


      
        
          
          

        

        
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                15.

              	
                Counterpart
                  Execution

              


      

      


      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.

      


      
        	
                BURSTALL
                  WINGER LLP

                 

              	 	
                PEACE
                  OIL CORP.

                 

              
	
                Per:

              	
                 /s/ Keith
                  Templeton 
                  

                

              	 	
                Per:

              	/s/
                David Perez 
                
  
	
                Per:

              	 

                

              	 	
                Per:

              	  

                

              


      

      


      
        	
                COLD
                  FLOW ENERGY ULC

                 

              	 	
                SURGE
                  GLOBAL ENERGY, INC.

                 

              
	
                Per:

              	
                /s/
                  David Perez 
                  

                

              	 	
                Per:

              	/s/
                David Perez 
                

              
	
                Per:

              	 

                

              	 	
                Per:

              	 /s/
                William F. Greene 
                

              


      

      


      
        	 	 	
                1304146
                  ALBERTA LTD.

                 

              
	 	 	 	
                By:

              	 /s/ Jeff
                Cairns 
                

              
	 	 	 	
                Name:

              	  

                

              
	 	 	 	
                Title:

              	 

                

              


      

      



      
        
          
          

        

        
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      SCHEDULE
        “A”

      


      NOTES

       

       

       

       

       

       

      
 

      


      
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