EXHIBIT
10.23


 


SECURITIES
PURCHASE AGREEMENT


 


                This
Securities Purchase Agreement (this “Agreement”) is dated as November
16, 2005 between Surge Global Energy, Inc., a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and collectively the “Purchasers”);
and


 


                WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”)
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
each Purchaser, and each Purchaser, severally and not jointly, desires to
purchase from the Company, securities of the Company as more fully described in
this Agreement.


 


                NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser
agrees as follows:


 


ARTICLE
I.

DEFINITIONS


 


                1.1
Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:


 


                “Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a Person as such terms are used in and construed
under Rule 144. With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.


 


                “Business Day” means any day except Saturday,
Sunday and any day which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or
other governmental action to close.


 


                “Closing” means the closing of the purchase
and sale of the Common Stock and the Warrants pursuant to Section 2.1.


 


                “Closing Date” means the Trading Day when all
of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to the Purchasers’ obligations to
pay the Subscription Amount have been satisfied or waived.


 


                “Closing Price” means on any particular date
(a) the last reported closing bid price per share of Common Stock on such date
on the Trading Market (as reported by Bloomberg L.P. at 4:00 p.m. (New York
time), or (b) if there is no such price on such date, then the closing bid
price on the Trading Market on the date nearest preceding such date (as
reported by Bloomberg L.P. at 4:00 PM (New York time) for the closing bid price
for regular session trading on such day), or (c) if the Common Stock is not
then


 


 





















 


listed or quoted on a
Trading Market and if prices for the Common Stock are then quoted on the OTC
Bulletin Board, the closing bid price of the Common Stock for such date (or the
nearest preceding date) on the OTC Bulletin Board (as reported by Bloomberg
L.P. at 4:00 PM (New York time), (d) if the Common Stock is not then listed or
quoted on the Trading Market and if prices for the Common Stock are then
reported in the “pink sheets” published by the Pink Sheets LLC (formerly the
National Quotation Bureau Incorporated (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (e) if the shares of Common Stock are
not then publicly traded the fair market value of a share of Common Stock as
determined by a qualified independent appraiser selected in good faith by the
Purchasers of a majority in interest of the Shares then outstanding.


 


                “Commission” means the Securities and Exchange
Commission.


 


                “Common Stock” means the common of the
Company, $0.01 par value per share, and any securities into which such common
stock may hereafter be reclassified.


 


                “Company Counsel” means Sichenzia Ross
Friedman Ference LLP.


 


                “Effective Date” means the date that the
Registration Statement is first declared effective by the Commission.


 


                “Exchange Act” means the Securities Exchange
Act of 1934, as amended.


 


                “Per Share Purchase Price” equals $1.00 USD, subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement.


 


                “Person” means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or any agency or
subdivision thereof) or other entity of any kind.


 


                “Registration Statement” means the
registration statement to be filed by the Company pursuant to the Registration
Rights Agreement.


 


                “Registration Rights Agreement” means the
Registration Rights Agreement, dated as of the date of this Agreement, among
the Company and each Purchaser, in the form of Exhibit A hereto.


 


                “Rule 144” means Rule 144 promulgated by the
Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.


 


                “SEC Reports” shall have the meaning ascribed
to such term in Section 3.1(c).


 


                “Securities” means the Shares, the Warrants
and the Warrant Shares.


 


                “Securities Act” means the Securities Act of
1933, as amended.


 


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                “Shares” means the shares of Common Stock
issued or issuable to each Purchaser pursuant to this Agreement.


 


                “Subscription Amount” means, as to each
Purchaser, the amounts set forth below such Purchaser’s signature block on the
signature page hereto, in United States dollars and in immediately available
funds.


 


                “Trading Day” means (i) a day on which the
Common Stock is traded on a Trading Marking, or (ii) if the Common Stock is not
listed on a Trading Market, a day on which the Common Stock is traded on the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii), and (iii) hereof, then
Trading Day shall mean a Business Day.


 


                “Trading Market” means the following markets
or exchanges on which the Common Stock is listed or quoted for trading on the
date in question: the American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the Nasdaq Capital Market.


 


                “Transaction Documents” means this Agreement,
the Warrants and the Registration Rights Agreement and any other documents or
agreements executed in connection with the transactions contemplated hereunder.


 


                “Warrants” means the Common Stock purchase
warrants, in the forms of Exhibit B, issuable to the Purchasers at the Closing,
as defined in Section 2(a) herein.


 


                “Warrant Shares” means the shares of Common
Stock issuable upon exercise of the Warrants.


 


 


ARTICLE
II.


PURCHASE
AND SALE


 


                2.1
Closing. At the Closing, each Purchaser shall purchase from the Company,
severally and not jointly with the other Purchasers, and the Company shall
issue and sell to each Purchaser, (a) a number of Shares equal to such
Purchaser’s Subscription Amount divided by the Per Share Purchaser Price and
(b) the Warrants as determined pursuant to Section 2.2(a)(iii). the maximum
aggregate Subscription Amounts shall not exceed $10,000,000 USD. Upon
satisfaction of the conditions set forth in Section 2.2, the Closing shall
occur at the offices of the Company Counsel, or such other location as the parties
shall mutually agree (the “Closing”).


 


                2.2
Closing Conditions.


 


                                                                (a) At the Closing the Company
shall deliver or cause to be delivered to each Purchaser the following:


 


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                (i)            this Agreement duly executed by the Company;


 


                (ii)           within 5 Trading Days of the Closing Date, a certificate
evidencing a number of Shares equal to such Purchaser’s Subscription Amount
divided by the Per Share Purchaser Price, registered in the name of such
Purchaser;


 


                (iii)          a Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to purchase up to the
number of shares of Common Stock equal to 200% (2 warrants for each share
purchased) of the Shares to be issued to such Purchaser at the Closing, which
shall be exercisable immediately and have an exercise price equal to $1.00 and
be exercisable for a period of five (5) years from the Closing Date (the “Warrant”);


 


                (iv)          the Registration Rights Agreement duly executed by the
Company;


 


                (v)           a certificate evidencing the incorporation and good
standing of the Company and each of its operating subsidiaries such corporation’s
jurisdiction of incorporation issued by the Secretary of State or applicable
official of such jurisdiction of incorporation as of a date within 10 days of
the Closing Date;


 


                (vi)          a certified copy of the Certificate of Incorporation as
certified by the Secretary of State or applicable official within 10 days of
the Closing Date;


 


                (vii)         a certificate, executed by the Secretary of the Company an
dated as of the Closing Date, as to (i) the resolutions consistent with Section
3.1(a) as adopted by the Company’s Board of 
Directors in a form reasonably acceptable to each Purchaser, (ii) the
Certificate of Incorporation and (iii) the Bylaws, each as in effect at the
Closing;


 


                (viii)        such other documents relating to the transactions
contemplated by this Agreement as each Purchaser or its counsel may reasonably
request.


 


                                                                (b) At the Closing each
Purchaser shall deliver or cause to be delivered to the Company the following:


 


                (i)            this Agreement duly executed by such Purchaser;


 


                (ii)           such Purchaser’s Subscription Amount by wire transfer to
an account as specified in writing by the Company; and


 


                (iii)          the Registration Rights Agreement duly executed by such
Purchaser.


 


                                                                (c) All representations and
warranties of the other party contained herein shall remain true and correct as
of the Closing Date and all covenants of the other party shall have been
performed if due prior to such date. Each Purchaser shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by such Purchaser.


 


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                                                                (d) From the date hereof to the
Closing Date, trading in the Common Stock shall not have been suspended by the
Commission (expect for any suspension of trading of limited duration agreed to
by the Company, which suspension shall be terminated prior to the Closing),
and, at any time prior to the Closing Date, trading in securities generally as
reported by Bloomberg Financial Markets shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity of such magnitude in
its effect on, or any material adverse change in any, financial markets which,
in each case, in the reasonable judgment of each Purchaser, makes it
impracticable or inadvisable to purchase the Shares at the such Closing.


 


                                                                (e) At the Closing Date, the
Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Common Shares and
the Warrants.


 


ARTICLE
III.

REPRESENTATIONS AND WARRANTIES


 


                3.1
Representations and Warranties of the Company. Except as set forth under
the corresponding section of the disclosure schedules delivered to the
Purchasers concurrently herewith (the “Disclosure Schedules”) which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser:


 


                                                                (a)           Organization and Qualification. Each of the Company
and its “Subsidiaries” (which for purposes of
this Agreement means any entity (i) in which the Company, directly or
indirectly, owns capital stock or holds an equity or similar interest and (ii)
which has operations and material assets) are corporations duly organized and
validly existing in good standing under the laws of the jurisdiction in which
they are incorporated, and have the requisite corporate power and authorization
to own their properties and to carry on their business as now being conducted.
Each of the Company and its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by its
makes such qualification necessary, expected to the extent that the failure to
be so qualified or be in good standing would not have a Material Adverse
Effect. As used in this Agreement. “Material Adverse Effect”
means any material adverse effect on the business, properties, assets,
operations, results of operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, or on the
transactions contemplated hereby and the other Transaction Documents or by the
agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below). The Company has
no Subsidiaries except as set forth on Schedule 3.1(a).


 


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                                (b)           Authorization; Enforcement;
Validity. The Company has the requisite corporate power and authority to
enter into and perform its obligations under the Transaction Documents and to
issue the Securities in accordance with the terms hereof and thereof. The execution
and delivery of the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Common Shares and the Warrants and the
reservation for issuance and the issuance of the Warrant Shares issuable upon
exercise of the Warrant have been duly authorized by the Company’s Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders. This Agreement and the other
Transaction Documents have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditor’s
rights and remedies.


 


                                (c)           Issuance of the Securities.
The Shares and Warrants are duly authorized and, when issued and paid for in
accordance with the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all taxes, liens and charges
with respect to the issue thereof (“Liens”). The Warrant Shares, when issued in
accordance with terms of the Transaction Documents, will be validly issued,
fully paid and nonassessable, free and clear of all Liens with respect to the
issuance thereof. The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants.


 


                                (d)           No Conflicts. The execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Common Shares and Warrants
and reservation for issuance and issuance of the Warrant Shares) will not (i)
result in a violation of the Certificate of Incorporation (as defined below) or
Bylaws (as defined below) of the Company or any of its Subsidiaries or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company or any of its Subsidiaries
is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and the rules
and regulations of the Trading Market) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is
bound or affected.


 


                                (e)           Consents. The Company is not
required to obtain any consent, authorization or order of, or make any filing
or registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction
Documents, in each case in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the


 


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Closing Date. The Company
and its Subsidiaries are unaware of any facts or circumstances that might
prevent the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence. The Company is not
in violation of the listing requirements of a Trading Market and has no
knowledge of any facts that would reasonably lead to delisting or suspension of
the Common Stock in the foreseeable future.


 


                                (f)            No General Solicitation;
Placement Agent’s Fee. Neither the Company, nor any of its affiliates, nor
any Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D)
in connection with the offer or sale of the Securities. The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, or brokers’ commissions (other than for persons engaged by any Purchaser
or its investment advisor) relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold each Purchaser harmless
against, any liability, loss or expense (including, without limitation,
attorney’s fees and out-of-pocket expenses) arising in connection with any such
claim. The Company has not engaged any placement agent or other agent in
connection with the sale of the Securities.


 


                                (g)           Capitalization. As of the date
hereof, the authorized capital stock of the Company consists of
(x) 75,000,000 shares of Common Stock, of which as of the date hereof,
25,442,097 shares are issued and outstanding, 6,706,406 shares are
reserved for issuance pursuant to the Company’s employee stock option plan,
1,105,000 shares are reserved for issuance pursuant to warrants (other
than the Warrants) exercisable into shares of Common Stock and
200,000 shares reserved for issuance under other outstanding commitments,
and (y) 10,000,000 shares of preferred stock, of which as of the date
hereof, no shares of preferred stock are issued and outstanding. An additional
7,822,366 shares of Common Stock are issued in escrow to Deep Well
Oil & Gas (the “Deep Well Shares”). Except for the Deep Well Shares
(the terms of the issuance of which is described on Schedule 3.1(g)),
all of such outstanding shares have been, or upon issuance will be, validly
issued and are fully paid and nonassessable. Except as set forth above in this
Section 3.1(g) or on Schedule 3.1(g): (i) no shares of
the Company’s capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights, to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares of capital stock of the Company or
any of its Subsidiaries; (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness (as defined in Section 3.1(i)) of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the
aggregate, filed in connection with the Company; (v)


 


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there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the Securities Act (except
the Registration Rights Agreement); (vi) there are not outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption of similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation
rights or “phantom stock” plans or agreements or any similar plan or agreement;
and (ix) the Company and its Subsidiaries have no liabilities or
obligations required to be disclosed in the SEC Report (as defined herein) but
not so disclosed in the SEC Reports, other than those incurred in the ordinary
course of the Company’s or any Subsidiary’s respective businesses and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect. The Company has furnished or made available to the Purchaser upon such
Purchaser’s request, true, correct and complete copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof
(the “Certificate of Incorporation”), and the
Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into,
or exercisable or exchangeable for, Common Stock and the material rights of the
holders thereof in respect thereto. Schedule 3.1(g) sets forth the
shares of Common Stock owned beneficially or of record and Common Stock
equivalents held by each director and executive officer.


 


                                (h)           SEC Reports; Financing Statements.
The Company has filed all reports required to be filed by it under the
Securities Act and the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law to file such material) (the foregoing
materials being collectively referred to herein as the “SEC Reports”) on
a timely basis or has received a valid extensions of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension.
As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Reports, and none of the SEC
Reports, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the company included in the
SEC Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude footnotes or may
be condensed or summary statements) and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results
of its operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audited adjustments). No other
information provided by or on behalf of the


 


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Company to each Purchaser
which is not included in the SEC Reports contains any untrue statement of a
material fact or omits to state any material fact necssary in order to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading.


 


                                (i)            Indebtedness and Other Contracts. Except as disclosed in Schedule 3.1(i), neither the
Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as
defined below), (ii) is a party to any contract, agreement or instrment, the
violation of which, or default under which, by the other party(ies) to such
contract, agreement or instrument would result in a Material Adverse Effect,
(iii) is in violation of any term of or in default under any contract,
agreement or instrument relating to any Indebtedness, except where such
violations and defaults would not result, individually or in the aggregate, in
a Material Adverse Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. No outstanding Indebtedness is secured. For purposes of this
Agreement: (x) “Indebtedness” of any Person means,
without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instrments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even through the rights and remedites of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any
Person, even through the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct
or indirect liability, contingent or otherwise, of that Person with respect to
any indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.


 


                                (j)            [Intertionally Omitted].


 


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                                (k)           Absence of Litigation. Except
for the lawsuit filed against the Company and Surge Global Energy (Canada) Ltd.
in the Alberta Court of Queen’s Bench by Deep Well Oil & Gas, Inc. (“DWOG”),
a Nevada corporation and Northern Alberta Oil Ltd. (“Northern”), an Alberta
corporation (the “Deep Well Lawsuit”), there is no action, suit, proceeding,
inquiry or investigation before or by a Trading Market, any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company, the
Common Stock or any of its Subsidiaries or any of the Company’s Subsidiary’s
officers or directors, whether of a civil or criminal nature or otherwise. The
Company represents and warrants that it has entered into a settlement agreement
with DWOG and Northern providing for the complete dismissal of the Deep Well Lawsuit
upon the completion of the financing described in Section 3.1(j).


 


                                (l)            Environmental Laws. The
Company and its Subsidiaries (i) are in compliance with any and all
Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval where, in each of
the foregoing clauses (i), (ii) and (iii), the failure to so comply could be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term “Environmental Laws”
means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.


 


                                (m)          Private Placement. Assuming the
accuracy of each Purchaser’s representations and warranties set forth in
Section 3.2, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Purchasers as contemplated
hereby in accordance with the terms of the Transaction Documents. The issuance
and sale of the Securities hereunder does not contravene the rules and
regulations of the Trading Market.


 


                                (n)           Investment Company. The
Company is not, and is not an Affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.


 


                                (o)           Manipulation of Price. The
Company has not, and to its knowledge no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed


 


10





















 


to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.


 


                                (p)           Disclosure. All disclosure
provided to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company are true and correct and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. Each press
release issued by the Company during the twelve (12) months preceding the date
of this Agreement did not at the time of release contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any Subsidiary or either of its or their respective business, properties,
prospects, operations or financial conditions, which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed (assuming for this
purpose that the Company’s reports filed under the Exchange Act are being
incorporated into an effective registration statement filed by the Company under
the Securities Act).


 


                3.2
Representations and Warranties of the Purchasers. Each Purchaser hereby,
for itself and for no other Purchaser, represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows.


 


                                (a) Organization;
Authority. The execution, delivery and performance by each Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of such Purchaser. Each Transaction
Document to which it is party has been duly executed by such Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.


 


                                (b) Investment
Intent. Each Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, has no present
intention of distributing any of such Securities and has no arrangement or
understanding with any other persons regarding the distribution of such
Securities (this representation and warranty not limiting such Purchaser’s
right to sell the Securities pursuant to the Registration Statement or
otherwise in compliance with applicable federal and state securities laws).
Such Purchaser is acquiring the Securities hereunder in the ordinary course of
its business.


 


11





















 


Such Purchaser does not have
any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.


 


                                (c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and
at the date hereof it is, and on each date on which it exercises any Warrants,
it will be either; (i) an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such
Purchaser is not required to be registered as a broker-dealer under Section 15
of the Exchange Act.


 


                                (d) Experience
of such Purchaser. Such Purchaser, both alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford
a complete loss of such investment.


 


                                (c) General
Solicitation. Such Purchaser is not purchasing the Securities as a result
of any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.


 


                                (f) Residence.
If such Purchaser is an individual, then such Purchaser resides in the state or
province identified in the address of such Purchaser set forth on the signature
page hereto; if such Purchaser is a partnership, corporation, limited liability
company or other entity, then the office or offices of such Purchaser in which
its investment decision was made is located at the address or addresses of such
Purchaser set forth on the signature page hereto.


 


                                (g) Rule 144.
Subject to Section 4.1(a), such Purchaser acknowledges and agrees that the
Securities are “restricted securities” as defined in Rule 144 promulgated
under the Securities Act as in effect from time to time and must be held
indefinitely unless they are subsequently registered under the Securities Act
or an exemption from such registration is available. Such Purchaser has been
advised or is aware of the provision s of Rule 144, which permits limited
resale of shares purchased in a private placement subject to the satisfaction
of certain conditions, including, among other things: the availability of
certain current public information about the Company, the resale occurring
following the required holding period under Rule 144 and the number of shares
being sold during any three-month period not exceeding specified limitations.


 


ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES


 


                4.1
Restriction on Sales, Short Sales and Hedging Transactions.


 


                                (a)
The Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an


 


12





















 


effective registration
statement or Rule 144, to the Company or to an Affiliate of a Purchaser, the
Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable Company, the
form and substance of which opinion and shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.


 


                                (b) Each
Purchaser agrees to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing Securities:


 


THESE SECURITIES HAVE NOT
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.


 


                                (c)
The legend set forth in Section 4.1(b) shall be removed and the Company shall
issue a certificate without such legend or any other legend to the holder of
the applicable Securities upon which it is stamped, if (i) such Securities are
registered for resale under the Securities Act, (ii) in connection with a sale,
assignment or other transfer, such holder provides the Company with an opinion
of counsel, in a generally acceptable form, to the effect that such sale,
assignment or transfer of such Securities may be made without registration
under the applicable requirements of the Securities Act, or (iii) such holder
provides the Company with reasonable assurance that such Securities can be
sold, assigned or transferred pursuant to Rule 144. Following the Effective
Date or at such earlier time as a legend is no longer required for certain
Securities, the Company will no later than three Business Days following the
delivery by a Purchaser to the Company or the Company’s transfer agent of a
legend certificate representing such Securities, deliver or cause to be
delivered to such Purchaser a certificate representing such Securities that is
free from all restrictive and other legends. Following the Effective Date and
upon the delivery to any Purchaser of any certificate representing Securities
that is free from all restrictive and other legends, such Purchaser agrees that
any sale of such Securities shall be made pursuant to the Registration
Statement and in accordance with the plan of distribution described therein or
pursuant to an available exemption from the registration requirements of the
Securities Act. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in Section 4.1(a). The Company will not effect or
publicly announce its intention to effect any exchange, recapitalization or
other transaction that effectively requires or rewards physical delivery of
certificates evidencing the Common Stock.


 


13





















 


                4.2 Reservation
of Common Stock. As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the
purpose of enabling the Company to issue Shares pursuant to this Agreement and
Warrant Shares pursuant to any exercise of the Warrants.


 


                4.3 Form D and
Blue Sky. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each
Purchaser promptly after such filing. The Company, on or before the Closing
Date, shall take such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Securities for sale to
the Purchasers at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States (or to obtain
an exemption from such qualification), and shall provide evidence of any such
action so taken to the Purchasers on or prior to the Closing Date. The Company
shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or “Blue Sky” laws of the
states of the United States following the Closing Date.


 


                4.4 Reporting
Status. Until the date on which the Purchasers shall have sold all the
Common Shares and Warrant Shares and none of the Warrants is outstanding (the “Reporting Period”), the Company shall timely file all
reports required to be filed with the SEC pursuant to the Exchange Act, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.


 


                4.5 Fees.
At the Closing and subject to providing supporting documentation, the Company
shall reimburse the fees and expenses in connection with the preparation,
execution and performance of this Agreement and the transactions contemplated
hereunder, of Jack & Sandy Zemer TTEE UADTD 12-21-1993 by Zemer Family
Trust (the “Trust”) or its designee(s) (in addition to any other expense
amounts paid to any Purchaser prior to the date of this Agreement) up to $7,500
(equal to 3% of the Trust’s Subscription amount), which amount shall be
withheld by the Trust from its Purchase Price at the Closing. The Company shall
be responsible for the payment of any placement agent’s fees, financial
advisory fees, or broker’s commissions (other htan for Persons engaged by any
Purchaser) relating to or arising out of the transactions contemplated hereby,
including, without limitation, any fees or commissions payable to the Agents.
The Company shall pay, and hold each Purchaser harmless against, any liability,
loss or expense (including, without 
limitation, reasonable attorney’s fees and out-of-pocket expenses)
arising in connection with any claim relating to any such payment. Except as
otherwise set forth in the Transaction Documents, each party to this Agreement
shall bear its own expenses in connection with the sale of the Securities to
the Purchaser.


 


                4.6 Additional
Registration Statements. Until the Effective Date, the Company will not
file a registration statement under the Securities Act relating to securities
that are not the Securities.


 


                4.7 Breach.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to a Purchaser. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Agreement
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of


 


14





















 


this Agreement, that a Purchaser shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.


 


ARTICLE V.


MISCELLANEOUS


 


                5.1 Entire
Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.


 


                5.2 Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached  hereto
prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading
Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 6:30
p.m. (New York City time) on any Trading Day, (c) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages attached hereto.


 


                5.3 Amendments;
Waivers. No provision of this Agreement may be waived or amended except in
a written instrument signed, in the case of an amendment, by the Company and
each of the Purchaser or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.


 


                5.4 Construction.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in the Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.


 


                5.5 Governing
Law; Venue; Waiver of Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, borough of
Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and


 


15





















 


agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions
of this Agreement, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its attorney's fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.


 


                5.6 Survival.
The representations, warranties and covenants contained herein shall survive
the Closing and delivery and/or exercise of the Securities, as applicable.


 


                5.7 Execution.
This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.


 


                5.8 Severability.
If any provision of this Agreement is held to be invalid or unenforceable in
any respect, the validity and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affected or impaired
thereby and the parties will attempt to agree upon a valid and enforceable
provision that is a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.


 


                5.9 Indemnification.
In consideration of each Purchaser's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Purchaser and each other
holder of the Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
forgoing Persons' agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this
Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by
the Company in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby
or (c) any cause of action, suit or claim brought or


 


16





















 


made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Company) and arising out
of or resulted from (i) the execution, delivery, performance or enforcement of
the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities, or (iii) the status of such Purchaser or holder of the Securities
as an investor in the Company. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each other Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 5.9 shall be the same as those set forth in
Section 5 of the Registration Rights Agreement.


 


(Signature Page Follows)


 


17





















 


IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.


 


	
   

  	
  Surge
  Global Energy, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Fred W.
  Kelly

  	
   

  
	
   

  	
  Name:

  	
  Fred W. Kelly

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notice:

  	
   

  
	
   

  	
  12220 El Camino
  Real

  	
   

  
	
   

  	
  Suite 400

  	
   

  
	
   

  	
  San Diego, CA
  92130

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Darrin M.
  Ocasio, Esq.

  	
   

  
	
   

  	
  Sichenzia Ross
  Friedman Ference LLP

  	
   

  
	
   

  	
  1065 Avenue of
  Americas

  	
   

  
	
   

  	
  New York, NY
  10018

  	
   

  
					



 


[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 


18





















 


[PURCHASERS SIGNATURE
PAGE – SRGG]


 


                IN WITNESS
WHEREOF, the undersigned have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.


 


Name of Purchaser:  Jack & Sandy Zemer TTEE UADTD 12-21-1993 by
Zemer Family Trust


 


Signature of Authorized Signatory of Purchaser:  /s/ Jack Zemer


Name of Authorized Signatory: Jack Zemer


Title of Authorized Signatory:                                     


Email Address of Purchaser:  jdz@zemer.us


Facsimile of Purchaser:  1-858-454-9944


Telephone:  1-858-454-0011
x 821                 Mobile:
1-858-945-3775


Address for Notice of Purchaser:


 


Jack Zemer


Alor Int'l


1227 Prospect Avenue


La Jolla, CA 92037


United States of America


 


Address for Delivery of Securities for Purchaser (if not same as
above):


 










 


Subscription Amount in USD:  $500,000 - [Five Hundred Thousand US Dollars]


Shares:  500,000
shares - [Five Hundred Thousand Shares]


Warrant Shares:  1,000,000 shares - [Two Hundred Thousand Shares]


EIN# or SS# Number: 


[MUST PROVIDE THIS UNDER SEPARATE COVER]