Petroleum Natural Gas


    EXHIBIT
      10.8

    


     

    PETROLEUM,
      NATURAL GAS AND
      GENERAL RIGHTS CONVEYANCE

     

    THIS
      AGREEMENT is dated this 2nd
      day of
      March, 2007

     

    BETWEEN:

     

    1304146
      ALBERTA LTD. a
      body
      corporate, having an office in the City of Calgary, in the Province of Alberta
      (the "Purchaser")

     

    -
      and
      -

     

    PEACE
      OIL CORP.,
      a body
      corporate, having an office in the City of Calgary, in the Province of Alberta
      (the "Vendor")

     

    -
      and
      -

     

    COLD
      FLOW ENERGY ULC,
      a body
      corporate, having an office

     

    in
      the
      City of San Diego, in the State of California ("Cold Flow")

     

    -
      and
      -

     

    SURGE
      GLOBAL ENERGY, INC.,
      a body
      corporate, having an office

     

    in
      the
      City of San Diego, in the State of California ("Surge")


     

    WHEREAS
      the Vendor has agreed to sell the Assets to the Purchaser and the Purchaser
      has
      agreed to purchase the Assets from the Vendor subject to the terms of this
      Agreement;

     

    NOW
      THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the Purchase Price
      (as defined below), all applicable taxes, and for other good and valuable
      consideration, the receipt and sufficiency of which is acknowledged by each
      of
      the Parties hereto, the Parties agree as follows:

     

    
      	
              1.

            	
            	
              Definitions

            


    

     

    Capitalized
      terms used herein and not otherwise defined shall have the meaning ascribed
      thereto in the Stock Purchase Agreement and in addition, the following terms
      shall have the following meanings:

     

    
      	
              (a)

               

            	
              "Agreement"
                means this petroleum, natural gas and general rights conveyance,
                including
                the recitals and schedules hereto and all instruments supplemental
                to it
                or in amendment or confirmation of it;

               

            
	
              (b)

               

            	
              "Assets"
                means the Petroleum and Natural Gas Rights, the Tangibles and the
                Miscellaneous Interests;

               

            
	
              (c)

               

            	
              "Claims"
                means any claim, lien, charge, pledge, hypothecation, mortgage, title
                retention agreement, security agreement, option or encumbrance of
                any
                nature or kind whatsoever;

               

            
	
              (d)

               

            	
              "Default"
                means any default by Vendor in its obligation to the Purchaser under
                this
                Agreement;

               

            
	
              (e)

               

            	
              "Guaranteed
                Obligations"
                shall have the meaning ascribed to such term in Section 4(a);

               

            
	
              (f)

               

            	
              "Lands"
                means the lands set out in Schedule "A" under the heading
                "Lands";

               

            


    


    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    


    
      	
              (g)

               

            	
              "Leased
                Substances"
                means all Petroleum Substances, rights to or in respect of which
                are
                granted, reserved or otherwise conferred by or under the Title Documents
                (but only to the extent that the Title Documents pertain to the
                Lands);

               

            
	
              (h)

               

            	
              "Miscellaneous
                Interests"
                means, subject to any and all limitations and exclusions provided
                for in
                this definition, all property, assets, interests and rights pertaining
                to
                the Petroleum and Natural Gas Rights and the Tangibles, or either
                of them,
                but only to the extent that such property, assets, interests and
                rights
                pertain to the Petroleum and Natural Gas Rights and the Tangibles,
                or
                either of them, including without limitation any and all of the
                following:

            


    

     

    
      	
              (i)

               

            	
              contracts
                and agreements relating to the Petroleum and Natural Gas Rights and
                the
                Tangibles, or either of them, including without limitation gas purchase
                contracts, processing, joint operating agreements, transportation
                agreements and agreements for the construction, ownership and operation
                of
                facilities, but excluding production sales contracts pertaining to
                the
                Leased Substances or any of them that cannot be terminated on notice
                of 31
                days or less (without an early termination penalty or other cost),
                gas
                balancing or similar agreements pertaining to the Leased Substances
                or any
                of them, agreements for the transportation, processing or disposal
                of the
                Leased Substances or any of them or substances produced in connection
                with
                the Leased Substances or any of them, agreements for the contract
                operation by a Third Party of the Assets or any of them and agreements
                to
                provide transportation, processing or disposal capacity or service
                to any
                Third Party,

               

            
	
              (ii)

               

            	
              fee
                simple rights to, and rights to enter upon, use or occupy, the surface
                of
                any lands which are or may be used to gain access to or otherwise
                use the
                Petroleum and Natural Gas Rights and the Tangibles, or either of
                them,
                excluding any such rights that pertain only to a well or wells other
                than
                the Well,

               

            
	
              (iii)

               

            	
              all
                records, books, documents, licences, reports and data which relate
                to the
                Petroleum and Natural Gas Rights and the Tangibles, or either of
                them,
                including any of the foregoing that pertain to geological or geophysical
                matters, and

               

            
	
              (iv)

               

            	
              the
                Wells, including the wellbores and any and all casing;

               

            


    

    


     

    
      	
              (i)

               

            	
              "Parties"
                means the Vendor and the Purchaser, collectively, and "Party"
                means any one of them;

               

            
	
              (j)

               

            	
              "Person"
                means any individual, corporation, partnership, incorporated syndicate,
                unincorporated organization, trust, trustee, executor, administrator
                or
                other legal representative;

               

            
	
              (k)

               

            	
              "Permitted
                Encumbrances"
                means:

               

            


    


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    
      	
              (i)

               

            	
              liens
                for taxes, assessments and governmental charges which are not due
                or the
                validity of which is being diligently contested in good faith by
                or on
                behalf of Vendor,

               

            
	
              (ii)

               

            	
              liens
                incurred or created in the ordinary course of business as security
                in
                favour of the person who is conducting the development or operation
                of the
                property to which such liens relate for Vendor's proportionate share
                of
                the costs and expenses of such development or operation,

               

            
	
              (iii)

               

            	
              mechanics',
                builders' and materialmen's liens in respect of services rendered
                or goods
                supplied for which payment is not due,

               

            
	
              (iv)

               

            	
              easements,
                rights of way, servitudes and other similar rights in land (including
                without limitation rights of way and servitudes for highways and
                other
                roads, railways, sewers, drains, gas and oil pipelines, gas and water
                mains, electric light, power, telephone, telegraph and cable television
                conduits, poles, wires and cables) which do not materially impair
                the use
                of the Assets affected thereby,

               

            
	
              (v)

               

            	
              the
                right reserved to or vested in any municipality or government or
                other
                public authority by the terms of any lease, licence, franchise, grant
                or
                permit or by any statutory provision, to terminate any such lease,
                licence, franchise, grant or permit or to require annual or other
                periodic
                payments as a condition of the continuance thereof,

               

            
	
              (vi)

               

            	
              rights
                of general application reserved to or vested in any governmental
                authority
                to levy taxes on the Leased Substances or any of them or the income
                therefrom, and governmental requirements and limitations of general
                application as to production rates on the operations of any
                property,

               

            
	
              (vii)

               

            	
              statutory
                exceptions to title, and the reservations, limitations, provisos
                and
                conditions in any original grants from the Crown of any of the mines
                and
                minerals within, upon or under the Lands, and

               

            
	
              (viii)

               

            	
              all
                encumbrances and other claims set out in Schedule "B";

               

            


    

     

    
      	
              (l)

               

            	
              "Petroleum
                and Natural Gas Rights"
                means all rights to the Leased Substances and the Title Documents
                (but
                only to the extent that the Title Documents pertain to the Lands),
                including without limitation the interests set out in Schedule
                "A";

               

            
	
              (m)

               

            	
              "Petroleum
                Substances"
                means any of crude oil, crude bitumen and products derived therefrom,
                synthetic crude oil, petroleum, natural gas, natural gas liquids,
                and any
                and all other substances related to any of the foregoing, whether
                liquid,
                solid or gaseous, and whether hydrocarbons or not, including without
                limitation sulphur;

               

            
	
              (n)

               

            	
              "Purchase
                Price"
                has the meaning ascribed thereto in Paragraph 3(b) hereof;

               

            
	
              (o)

               

            	
              "Stock
                Purchase Agreement"
                means that certain stock purchase agreement dated November 30, 2006,
                as
                amended, among Cold Flow, Surge, Vendor, and the shareholders of
                the
                Vendor, as set forth on Schedule "I" thereto;

               

            
	
              (p)

               

            	
              "Tangibles"
                means any and all tangible depreciable property and assets, which
                are
                located within, upon or in the vicinity of the Lands and which are
                used or
                are intended to be used to produce, process, gather, treat, measure,
                make
                marketable or inject the Leased Substances or any of them or in connection
                with water injection or removal operations that pertain to the Petroleum
                and Natural Gas Rights, including without limitation any and all
                gas
                plants, oil batteries, buildings, production equipment, pipelines,
                pipeline connections, meters, generators, motors, compressors, treaters,
                dehydrators, scrubbers, separators, pumps, tanks, boilers and
                communication equipment;

            


    


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	
              (q)

               

            	
              "Third
                Party"
                means any individual or entity other than Vendor and Purchaser, including
                without limitation any partnersh1`ip, corporation, trust, unincorporated
                organization, union, government and any department and agency thereof
                and
                any heir, executor, administrator or other legal representative of
                an
                individual;

               

            
	
              (r)

               

            	
              "Title
                Documents"
                means, collectively, any and all certificates of title, leases,
                reservations, permits, licences, assignments, trust declarations,
                operating agreements, royalty agreements, gross overriding royalty
                agreements, participation agreements, farm-in agreements, sale and
                purchase agreements, pooling agreements and any other documents and
                agreements granting, reserving or otherwise conferring rights to
                (i) explore
                for, drill for, produce, take, use or market Petroleum Substances,
                (ii) share
                in the production of Petroleum Substances, (iii) share
                in the proceeds from, or measured or calculated by reference to the
                value
                or quantity of, Petroleum Substances which are produced, and (iv) rights
                to acquire any of the rights described in items (i)
                to
                (iii)
                of
                this definition; but only if the foregoing pertain in whole or in
                part to
                Petroleum Substances within, upon or under the Lands; and

               

            
	
              (s)

               

            	
              "Wells"
                means all wells (including without limitation producing, shut-in,
                abandoned,
                water source, water disposal and water injection wells) located on
                the
                Lands or lands pooled or unitized therewith.

               

            


    

     

    
      	
              2.

            	
               

            	
              Schedules

            


    

     

    The
      following schedules are attached hereto and form part of this
      Agreement:

     

    Schedule
      "A" - Title Documents, Lands and Encumbrances

     

    
      	
              3.

            	
            	
              Purchase
                and Sale

            


    

     

    
      	
              (a)

               

            	
              Purchase
                and Sale

               

            
	 	
              Subject
                to the terms of this Agreement, Vendor hereby sells, assigns, transfers,
                conveys and sets over unto Purchaser, its entire right, title, interest
                and estate in and to the Assets, free and clear of all Claims except
                the
                Permitted Encumbrances, TO HAVE AND TO HOLD the same unto Purchaser,
                together with all benefit and advantage to be derived therefrom,
                absolutely, and Purchaser hereby purchases the same.

               

            
	
              (b)

               

            	
              Purchase
                Price

               

            
	 	
              The
                purchase price for the Assets is One Dollars ($1.00) (the "Purchase
                Price") and Vendor acknowledges receipt of the Purchase Price from
                the
                Purchaser.

               

            


    

     

    
      	
              4.

            	
               

            	
              Guarantee

            


    

     

    
      	
              (a)

               

            	
              Cold
                Flow and Surge, jointly and severally, hereby irrevocably and
                unconditionally guarantee to and in favour of Purchaser the due and
                punctual performance by Vendor to Purchaser of all indebtedness,
                liabilities and obligations, direct or indirect, absolute or contingent,
                present or future, matured or not matured, of Vendor to Purchaser
                under
                this Agreement, (the "Guaranteed Obligations").

               

            


    


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)

               

            	
              Cold
                Flow and Surge guarantee that the Guaranteed Obligations will be
                paid or
                performed, as the case may be, strictly in accordance with the terms
                of
                this Agreement regardless of any law, rule, regulation or order now
                or
                hereafter in effect in any jurisdiction affecting any of such terms
                or the
                rights of Purchaser with respect thereto and regardless of any defence,
                counterclaim, right of set-off or equities which either Cold Flow
                or Surge
                may have. Neither Cold Flow nor Surge shall be released from any
                of its
                obligations under this Agreement as a consequence of, and this Agreement
                shall be effective and binding on Cold Flow and Surge
                notwithstanding:

               

            


    

     

    
      	
              (i)

               

            	
              any
                lack of or limitation on the status or power of the Vendor or the
                directors or agents thereof;

               

            
	
              (ii)

               

            	
              any
                lack of validity or enforceability of this Agreement, the Stock Purchase
                Agreement or any other agreement among Cold Flow, Surge, Vendor,
                and the
                shareholders of the Vendor (as set forth in the Stock Purchase Agreement)
                or any provision thereof, or of any other document or instrument
                relating
                thereto or hereto;

               

            
	
              (iii)

               

            	
              any
                change in the time, manner or place of payment of, or in any other
                term of
                any of the Guaranteed Obligations, or any other amendment or waiver
                of, or
                any consent to or departure from any of the terms of the Guaranteed
                Obligations, the Agreement, or of any other document or instrument
                relating thereto or hereto, or any indulgence which Purchaser may
                from
                time to time grant to the Vendor, Cold Flow, Surge or any other
                Person;

               

            
	
              (iv)

               

            	
              any
                exchange or release of, or any failure to perfect or otherwise protect
                any
                interest in, any collateral held by Purchaser as security for any
                of the
                Guaranteed Obligations;

               

            
	
              (v)

               

            	
              any
                limitation at any time upon any remedy available to Purchaser under
                this
                Agreement, the Stock Purchase Agreement or any other document relating
                thereto;

               

            
	
              (vi)

               

            	
              any
                irregularity, defect or informality in this Agreement, the Stock
                Purchase
                Agreement, or any other document relating thereto;

               

            
	
              (vii)

               

            	
              the
                lack of validity or enforceability or the avoidance or subordination
                of
                all or any part of the Guaranteed Obligations;

               

            
	
              (viii)

               

            	
              any
                winding-up, dissolution, receivership or bankruptcy of Surge, Cold
                Flow,
                Vendor or any other Person, any amalgamation, merger, reorganization
                or
                fundamental corporate change (including any change of name) affecting
                Surge, Cold Flow, Vendor or any other Person, any reorganization
                of any or
                all of the obligations of Surge, Cold Flow, Vendor or any other Person,
                or
                any transaction including any amalgamation, merger, consolidation,
                arrangement, transfer, sale, lease or other disposition, whereby
                all or
                any part of the undertaking, property and assets of Surge, Cold Flow,
                Vendor or any other Person become the property of any other Person
                or
                Persons; and

               

            
	
              (ix)

               

            	
              any
                other circumstance which might otherwise constitute a defence available
                to, or a discharge of, Surge, Cold Flow, Vendor or any other Person
                in
                respect of the Guaranteed Obligations, this Agreement, the Stock
                Purchase
                Agreement or any documents relating thereto.

               

            


    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    
      	
              (c)

               

            	
              Cold
                Flow and Surge each hereby waive presentment, protest, promptness,
                diligence, notice of acceptance and, except as otherwise expressly
                provided herein, any other notice or demand with respect to any of
                the
                Guaranteed Obligations and acknowledges that Purchaser shall be entitled
                without in any way prejudicing or affecting any of its rights hereunder
                and without in any way limiting or lessening the liability of Cold
                Flow or
                Surge under this Agreement to, without limitation:

               

            


    

     

    
      	
              (i)

               

            	
              give
                up, vary, exchange, release, discharge or otherwise deal with or
                fail to
                deal with any security (including any other guarantee) relating to
                the
                Guaranteed Obligations, this Agreement or the Stock Purchase Agreement,
                all as Purchaser considers appropriate;

               

            
	
              (ii)

               

            	
              grant
                time for payment or any other indulgence in respect of the Guaranteed
                Obligations, this Agreement or the Stock Purchase Agreement or any
                other
                obligation or guarantee relating thereto or arising
                thereunder;

               

            
	
              (iii)

               

            	
              accept
                or make any compositions, arrangements or plans of reorganization
                with any
                Person as Purchaser considers appropriate;

               

            
	
              (iv)

               

            	
              agree
                to any change in, amendment to, waiver of, or departure from, any
                term of
                the Guaranteed Obligations, this Agreement or the Stock Purchase
                Agreement
                including, without limitation, any renewal, extension, release, discharge,
                compromise or settlement of any of the foregoing; and

               

            
	
              (v)

               

            	
              abstain
                from taking, protecting, securing, registering, filing, recording,
                renewing, perfecting, insuring or realizing upon any security or
                other
                guarantee, exercising any remedy or pursuing or exhausting any other
                right, action or recourse against the Vendor, any other Person or
                any
                security or other guarantee before exercising its rights under this
                Agreement; and no loss in respect of any security received or held
                for and
                on behalf of Purchaser, whether occasioned by fault, omission or
                negligence of any kind, whether of Purchaser or any other Person,
                shall in
                any way limit or lessen the liability of Cold Flow or Surge under
                this
                Agreement.

               

            


    

     

    
      	
              (d)

               

            	
              Purchaser
                shall not be bound to exhaust its recourse against the Vendor or
                any other
                Person or any security it may at any time hold before being entitled
                to
                payment from either Cold Flow or Surge of the Guaranteed Obligations.
                

               

            
	
              (e)

               

            	
              Any
                release, discharge or settlement between the Surge, Cold Flow and
                Purchaser shall be conditional upon no security, disposition or payment
                to
                Purchaser by the Vendor or any other Person being void, set aside
                or
                ordered to be refunded pursuant to any enactment or law relating
                to
                bankruptcy, liquidation, administration or insolvency or for any
                other
                reason whatsoever and if such condition shall not be fulfilled Purchaser
                shall be entitled to enforce this Agreement subsequently as if such
                release, discharge or settlement had not occurred and any such payment
                had
                not been made.

               

            
	
              (f)

               

            	
              If
                a Default has occurred and is continuing Purchaser may make a demand
                upon
                Cold Flow or Surge, or both, for the payment in full of the Guaranteed
                Obligations and Cold Flow or Surge, or both shall pay such amount
                to
                Purchaser forthwith in full, without any set-off or counterclaim
                whatsoever and free and clear of any deductions or withholdings,
                in
                immediately available funds, to Purchaser in Calgary, Alberta or
                such
                other place as Purchaser may designate by notice to Surge or Cold
                Flow.

               

            


    


    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    


    
      	
              (g)

               

            	
              After
                the making of a demand pursuant to Section 4(f) and the failure of
                either
                Cold Flow or Surge, or both to make payment forthwith, Purchaser
                may
                proceed directly and at once, without further notice, against Surge
                or
                Cold Flow to collect and recover the full amount, or any portion
                of, the
                Guaranteed Obligations. Purchaser shall have the exclusive right
                to
                determine the application of payments and credits, if any, from Surge
                and
                Cold Flow or from any other Person on account of the Guaranteed
                Obligations.

               

            
	
              (h)

               

            	
              No
                failure on the part of Purchaser to exercise and no delay in exercising
                any right hereunder shall operate as a waiver thereof, nor shall
                any
                single or partial exercise of any right hereunder preclude any other
                or
                further exercise thereof or the exercise of any other right.

               

            
	
              (i)

               

            	
              This
                Agreement shall:

               

            


    

     

    
      	
              (i)

               

            	
              remain
                in full force and effect until the earlier of payment in full of
                the
                Guaranteed Obligations and all other amounts payable
                hereunder;

               

            
	
              (ii)

               

            	
              be
                binding upon Cold Flow, Surge and its respective successors and assigns;
                and

               

            
	
              (iii)

               

            	
              enure,
                together with the rights and remedies of Purchaser hereunder, to
                the
                benefit of and be enforceable by Purchaser and its successors and
                assigns.

               

            


    

     

    
      	
              (j)

               

            	
              This
                Agreement is in addition to and not in substitute for any other guarantee
                of the Guaranteed Obligations or any other security by whomsoever
                given or
                at any time held by Purchaser in respect of the Guaranteed Obligations
                and
                Purchaser shall at all times have the right to proceed against or
                realize
                upon all or any portion of any other guarantees or security or any
                other
                moneys or assets to which Purchaser may become entitled or have a
                claim in
                such order and in such manner as Purchaser in its sole discretion
                may deem
                fit, all without any obligation to marshall any of such
                securities.

               

            
	
              (k)

               

            	
              Possession
                of this Agreement by Purchaser shall be conclusive evidence against
                Cold
                Flow and Surge that this Guarantee was not delivered in escrow or
                pursuant
                to any agreement that it should not be effective until any conditions
                precedent or subsequent had been complied with.

               

            


    

     

    
      	
              5.

               

            	
              Representations
                and Warranties

               

            


    

     

    
      	
              (a)

               

            	
              Vendor'
                Representations and Warranties

               

            


    

    Vendor
      makes the following representations and warranties to Purchaser:

     

    
      	
              (i)

               

            	
              Vendor
                is a corporation duly incorporated pursuant to the laws of the province
                of
                Alberta; 

               

            
	
              (ii)

               

            	
              Vendor
                has all necessary corporate power, authority and capacity to enter
                into
                this Agreement and to perform its obligations under this
                Agreement;

               

            
	
              (iii)

               

            	
              the
                execution and delivery of this Agreement and the consummation of
                the
                transaction contemplated under it have been duly authorized by all
                necessary corporate action on the part of Vendor;

               

            


    


    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    


    
      	
              (iv)

               

            	
              this
                Agreement constitutes a valid and binding obligation of Vendor enforceable
                against it in accordance with its terms, subject, however, to limitations
                with respect to enforcement imposed by law in connection with bankruptcy,
                insolvency or similar proceedings relating to creditor's rights generally
                and to the extent that equitable remedies such as specific performance
                and
                injunction are in the discretion of a court of competent
                jurisdiction;

               

            
	
              (v)

               

            	
              except
                as expressly set forth in this Agreement, Vendor does not warrant
                title to
                the Assets but does warrant that, except for Permitted Encumbrances,
                the
                Assets are now free and clear of all Claims, options, net profit
                interests, mortgages, royalties and adverse claims or other burdens
                created by, through or under it or of which it is otherwise actually
                aware;

               

            
	
              (vi)

               

            	
              The
                interests of Vendor in the Assets are not subject either to reduction,
                by
                reference to payout of a well or otherwise, or to change to an interest
                of
                any other size or nature whatsoever by virtue of any right or interest
                granted by, through or under it or of which it is otherwise actually
                aware, except for the Permitted Encumbrances and any such rights
                and
                interests identified Schedule "A" and it has not alienated or encumbered
                the Assets or any part or portions thereof and it is not aware of
                there
                having been committed any act or omission whereby the right of it
                in any
                of the Assets may be cancelled or determined;

               

            
	
              (vii)

               

            	
              Except
                for the Permitted Encumbrances, there are no unsatisfied judgments
                and no
                claims, proceedings, actions, governmental investigations or lawsuits
                in
                existence, and to the Vendor's knowledge, contemplated or threatened
                against or with respect to the Assets or the interests of it therein
                which
                might result in impairment or loss of the interest of it in and to
                the
                Assets or which might otherwise adversely affect the Assets, and
                to it’s
                knowledge there exists no particular circumstance which will give
                rise to
                such a claim, proceeding, action, governmental investigation or lawsuit;
                and

               

            
	
              (viii)

               

            	
              Subject
                to the rents, covenants, conditions and stipulations in the Title
                Documents and Permitted Encumbrances, Purchaser is entitled to hold
                and
                enjoy the interests attributed to it in the schedules hereto for
                Purchaser's own use and benefit without any interruption of or by
                it or
                any Third Party claiming by, through or under it.

               

            


    

    


     

    
      	
              (b)

               

            	
              Cold
                Flow and Surge's Representations and Warranties

               

            


    

    Cold
      Flow
      and Surge each make the following representations and warranties to
      Purchaser:

     

    
      	
              (i)

               

            	
              Cold
                Flow is a corporation duly incorporated pursuant to the laws of the
                province of Alberta; 

               

            
	
              (ii)

               

            	
              Surge
                is a corporation duly incorporated pursuant to the laws of the state
                of
                Delaware; 

               

            
	
              (iii)

               

            	
              Cold
                Flow and Surge each have all necessary corporate power, authority
                and
                capacity to enter into this Agreement and to perform its obligations
                under
                this Agreement;

               

            


    


    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    


    
      	
              (iv)

               

            	
              the
                execution and delivery of this Agreement and the consummation of
                the
                transaction contemplated under it have been duly authorized by all
                necessary corporate action on the part of each of Cold Flow and
                Surge;

               

            
	
              (v)

               

            	
              this
                Agreement constitutes a valid and binding obligation of Cold Flow
                and
                Surge, enforceable against each of them in accordance with its terms,
                subject, however, to limitations with respect to enforcement imposed
                by
                law in connection with bankruptcy, insolvency or similar proceedings
                relating to creditor's rights generally and to the extent that equitable
                remedies such as specific performance and injunction are in the discretion
                of a court of competent
                jurisdiction;

            


    

     

    
      	
              (c)

               

            	
              Purchaser's
                Representations and Warranties

               

            


    

    The
      Purchaser makes the following representations and warranties to Vendor:


     

    
      	
              (i)

               

            	
              The
                Purchaser is a corporation duly incorporated pursuant to the laws
                of the
                province of Alberta; 

               

            
	
              (ii)

               

            	
              the
                Purchaser has all necessary power, authority and capacity to own
                the
                Assets;

               

            
	
              (iii)

               

            	
              the
                Purchaser has all necessary corporate power, authority and capacity
                to
                enter into this Agreement and to perform its obligations under this
                Agreement;

               

            
	
              (iv)

               

            	
              the
                execution and delivery of this Agreement and the consummation of
                the
                transaction contemplated under it have been duly authorized by all
                necessary corporate action on the part of the Purchaser; and

               

            
	
              (v)

               

            	
              this
                Agreement constitutes a valid and binding obligation of the Purchaser
                enforceable against it in accordance with its terms, subject, however,
                to
                limitations with respect to enforcement imposed by law in connection
                with
                bankruptcy, insolvency or similar proceedings relating to creditor's
                rights generally and to the extent that equitable remedies such as
                specific performance and injunction are in the discretion of a court
                of
                competent jurisdiction.

               

            


    

     

    
      	
              (d)

            	
              Limitations
                on Vendor's Representations and Warranties


            


    

     

    The
      Purchaser acknowledges and agrees that the Assets are being sold and purchased
      on an "as is, where is" basis and, except for the express representations and
      warranties given in Paragraph 5(a), no representation or warranty either
      expressed or implied has been or is given by the Vendor concerning the Assets.
      

     

    
      	
              6.

            	
              Indemnities
                for Breach of Representations and
                Warranties

            


    

     

    
      	
              (a)

               

            	
              Indemnity
                for Breach of Vendor's Representations and Warranties

               

            


    

    Vendor,
      Surge and Cold Flow shall each be jointly and severally liable to Purchaser
      for
      and shall, in addition, indemnify Purchaser from and against, all losses, costs,
      claims, damages, expenses and liabilities suffered, sustained, paid or incurred
      by Purchaser which would not have been suffered, sustained, paid or incurred
      had
      all of the representations and warranties contained in Paragraph 5(a) been
      accurate and truthful, provided however that nothing in this Paragraph 6(a)
      shall be construed so as to cause Vendor to be liable to or indemnify Purchaser
      in connection with any representation or warranty contained in Paragraph 5(c)
      if
      and to the extent that Purchaser did not rely upon such representation or
      warranty


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)

               

            	
              Indemnity
                for Breach of Purchaser's Representations and Warranties

               

            


    

    Purchaser
      shall be liable to Vendor for and shall, in addition, indemnify Vendor from
      and
      against, all losses, costs, claims, damages, expenses and liabilities suffered,
      sustained, paid or incurred by Vendor which would not have been suffered,
      sustained, paid or incurred had all of the representations and warranties
      contained in Paragraph 5(c) been accurate and truthful, provided however that
      nothing in this Paragraph 6(b) shall be construed so as to cause Purchaser
      to be
      liable to or indemnify Vendor in connection with any representation or warranty
      contained in Paragraph 5(a) if and to the extent that Vendor did not rely upon
      such representation or warranty.

     

    
      	
              (c)

               

            	
              The
                maximum cumulative liability of Vendor, Cold Flow and Surge for the
                indemnities pursuant to paragraph 6(a) shall not exceed $16,350,000.00
                less any amounts paid to the Shareholders under the Notes and less
                the
                cash portion of the Purchase Price paid to Shareholders at
                Closing.

               

            


    

     

    
      	
              7.

               

            	
              General

               

            


    

     

    
      	
              (a)

               

            	
              Time

               

            
	 	
              Time
                shall be of the essence.

               

            
	
              (b)

               

            	
              Notices

               

            


    

    Any
      notice or other writing required or permitted to be given under this Agreement
      or for the purposes of it to any Party, shall be sufficiently given if delivered
      personally, or if sent by prepaid registered mail or if transmitted by telex,
      telefax or other form of recorded communication to that Party:

     

    
      
        	
                Vendor, Cold Flow or Surge:

                 

              
	 	
                Surge
                  Global Energy Inc.

              
	 	
                12220
                  El Camino Real, Suite 410

              
	 	
                San
                  Diego, CA 92130

              
	 	
                Fax:
                  (858)
                  704-5011

              
	 	 
	
                The
                  Purchaser:

                 

              
	 	
                1304146
                  Alberta Ltd.

              
	 	
                c/o
                  Burstall Winger LLP

              
	 	
                1600,
                  333 - 7th
                  Avenue S.W.

              
	 	
                Calgary,
                  Alberta

              
	 	
                T2P
                  2Z1

              
	 	
                Fax:
                  (403) 233-2131

              


      

    


    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    


    or
      at any
      other address as the Party to whom the writing is to be given shall have last
      notified the other Party. Any notice delivered to the Party to whom it is
      addressed shall be deemed to have been given and received on the day it is
      delivered at that address, provided that if that day is not a business day
      then
      the notice shall be deemed to have been given and received on the first business
      day next following that day. Any notice mailed shall be deemed to have been
      given and received on the third business day next following the date of its
      mailing. Any notice transmitted by telex, telefax or other form of recorded
      communication shall be deemed given and received on the first business day
      after
      its transmission.

     

    
      	 	
              (c)

            	
              Assignment

            


    

     

    Neither
      this Agreement nor any rights, remedies, liabilities or obligations arising
      under it or by reason of it shall be assignable by any Party without the prior
      written consent of the other Party. Subject thereto, this Agreement shall enure
      to the benefit of and be binding on the Parties and their respective heirs,
      executors, administrators, personal representatives, successors and permitted
      assigns.

     

    
      	 	
              (d)

            	
              Further
                Assurances

            


    

     

    The
      Parties shall with reasonable diligence do all things and provide all reasonable
      assurances as may be required to consummate the transactions contemplated by
      this Agreement, and each Party shall provide further documents or instruments
      required by any other Party as may be reasonably necessary or desirable to
      effect the purpose of this Agreement and to carry out its
      provisions.

     

    
      	 	
              (e)

            	
              Entire
                Agreement 

            


    

     

    The
      Agreement constitutes the entire agreement between the Parties and except as
      stated in it and in the instruments and documents to be executed and delivered,
      contains all the representations and warranties of the respective Parties.
      There
      are no oral representations or warranties or collateral agreements between
      the
      Parties of any kind relating to the subject-matter herein. This Agreement may
      not be amended or modified in any respect except by written instrument signed
      by
      both Parties.

     

    
      	 	
              (f)

            	
              Applicable
                Law

            


    

     

    This
      Agreement shall be interpreted in accordance with the laws of the Province
      of
      Alberta and the laws of Canada applicable therein, excluding any choice or
      conflict of law provision (whether of Alberta, Canada or any other
      jurisdiction), that would permit or cause the application of the laws of any
      other jurisdiction. The parties irrevocably attorn to the exclusive jurisdiction
      of the courts of the Province of Alberta.

     

    
      	 	
              (g)

            	
              Counterpart
                and Facsimile Execution

            


    

     

    This
      Agreement may be executed in any number of counterparts and each such
      counterpart shall be deemed to be an original instrument but all such
      counterparts together shall constitute one agreement. The Parties hereto shall
      be entitled to rely upon delivery of an executed facsimile copy of this
      Agreement and such facsimile copy shall be legally effective to create a valid
      and binding agreement among the Parties hereto.

     


    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    


    
      	
              8.                 
                

            	
              Release

            


    

     

    In
      the
      event that pursuant to this Agreement, the Purchaser becomes the sole owner
      of
      the Assets, any other remedies which the Purchaser has against any of the
      Vendor, Cold Flow or Surge for non-payment of accounts owing to the Purchaser
      shall become null and void and have no further force and effect including the
      Promissory Notes, the Share Pledge, the Debentures and the Guarantees. In
      addition, the Purchaser covenants to discharge all security registrations
      against any of Callco, Cold Flow or Surge.

     

    IN
      WITNESS WHEREOF the Parties have executed this Agreement as of the date first
      written above.

     

    
      
        	
                1304146
                  ALBERTA LTD.

              	 	
                PEACE
                  OIL CORP.

              
	 	 	 
	
                Per:
                  /s/ Jeff Cairns 
                  

                

              	 	
                
                  Per:
                    /s/ David Perez 
                    

                  

                

              
	
                 

                SURGE
                  GLOBAL ENERGY, INC.

              	 	
                 

                COLD
                  FLOW ENERGY ULC

              
	 	 	 
	
                
                  Per:
                    /s/ David Perez 
                    

                  

                

              	 	
                
                  Per:
                    /s/ David Perez 
                    

                  

                

              


      

    

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    


    THIS
      IS SCHEDULE "A" ATTACHED TO AND FORMING PART OF A PETROLEUM, NATURAL GAS AND
      GENERAL RIGHTS CONVEYANCE MADE AS OF THE 2ND
      DAY
      OF MARCH, 2007 BETWEEN 1304146 ALBERTA LTD., PEACE OIL CORP., COLD FLOW ENERGY
      ULC AND SURGE GLOBAL ENERGY, INC.

    


    SCHEDULE
      “A”

    


    JV
      LANDS

    


    


    
      	
              OIL
                SANDS LEASE

            	
              LANDS

            	
              PEACE
                WORKING INTEREST

            
	
              OS7405120334

               

            	
              Twp
                89, Rge 8 W5

              Sections
                1-3, 10-15

               

            	
              30.0%

               

            
	
              OS7405120335

               

            	
              Twp
                89, Rge 8 W5

              Sections
                4-9, 16-18

               

            	
              30.0%

               

            
	
              OS7405120336

               

            	
              Twp
                89, Rge 8 W5

              Sections
                19-21, 28-33

               

            	
              30.0%

               

            
	
              OS7405120337

               

            	
              Twp
                89, Rge 8 W5

              Sections
                22-27, 34-36

               

            	
              30.0%

               

            
	
              OS7405120339

               

            	
              Twp
                89, Rge 10 W5

              Sections
                1-3, 10-15

               

            	
              30.0%

               

            
	
              OS7405120340

               

            	
              Twp
                89, Rge 10 W5

              Sections
                22-27, 34-36

               

            	
              30.0%

               

            
	
              OS7406020462

               

            	
              Twp
                88, Rge 08 W5

              Sections
                04-09, 16-18

               

            	
              30.0%

               

            
	
              OS7406020463

               

            	
              Twp
                88, Rge 08, W5

              Sections
                19-21, 28-33

               

            	
              30.0%

               

            
	
              OS7406020464

               

            	
              Twp
                88, Rge 09 W5

              Sections
                01-03, 10-15

               

            	
              30.0%

               

            
	
              OS7406020467

               

            	
              Twp
                88, Rge 09 W5

              Sections
                22-27, 34-36

               

            	
              30.0%

               

            
	
              OS7406020465

               

            	
              Twp
                88, Rge 09 W5

              Sections
                04-09, 16-18

               

            	
              30.0%

               

            
	
              OS7406030666

               

            	
              Twp
                88, Rge 07 W5

              Sections
                22-27, 34-36

               

            	
              30.0%

               

            
	
              OS7406030667

               

            	
              Twp
                89, Rge 07 W5

              Sections
                01-03, 10-15

               

            	
              30.0%

               

            
	
              OS7406030668

               

            	
              Twp
                89, Rge 07 W5

              Sections
                04-09, 16-18

               

            	
              30.0%

               

            
	
              OS7406060674

               

            	
              Twp
                87, Rge 11 W5

              Sections
                19-21, 28-33

               

            	
              30.0%

               

            


    

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    


    THIS
      IS SCHEDULE "B" ATTACHED TO AND FORMING PART OF A PETROLEUM, NATURAL GAS AND
      GENERAL RIGHTS CONVEYANCE MADE AS OF THE 2ND
      DAY
      OF MARCH, 2007 BETWEEN 1304146 ALBERTA LTD., PEACE OIL CORP., COLD FLOW ENERGY
      ULC AND SURGE GLOBAL ENERGY, INC.

    


    SCHEDULE
      “B”

    


    PERMITTED
      ENCUMBRANCES

    


    


    All
      encumbrances, liens, charges, Claims, royalties, easements, proceedings, claims,
      rights, options, net profit interests, mortgages or any other adverse claims
      or
      rights without limitation existing, arising or accruing on or prior to the
      effective time of the purchase by Cold Flow Energy ULC of 800 Class “A” Shares
      and 6,333,332 Class “I” Shares of the Vendor pursuant to the that certain Stock
      Purchase Agreement among the Purchaser, Surge, the Vendor and the shareholders
      of the Vendor dated as of November 30, 2006, as amended.

     

     

     

     

     

     

     

    -14-