Document:

Support Agreement

    EXHIBIT
      10.3

    

     

    SUPPORT
      AGREEMENT (“Agreement”)
      made
      as of the 2nd
      day of
      March,
      2007.

     

    AMONG:

     

    SURGE
      GLOBAL ENERGY, INC.,
      a
      corporation incorporated under the laws of Delaware
      (hereinafter referred to as “Acquiror”)

     

    -
      and
      -

     

    COLD
      FLOW ENERGY ULC,
      an
      unlimited liability company incorporated under the laws of Alberta (hereinafter
      referred to as the “Corporation”)

     

    -
      and
      -

     

    1294697
      ALBERTA LTD.,
      a
      corporation incorporated under the laws of Alberta (hereinafter referred to
      as
“Callco”)

     

    WHEREAS:

     

    
      	
              A.

               

            	
              in
                connection with a stock purchase agreement (the “Acquisition
                Agreement”)
                made as of November
                30,
                2006 among Acquiror, Peace Oil Corp., a corporation incorporated
                under the
                laws of Alberta (“Peace”),
                the Corporation and the shareholders of Peace, the Corporation is
                to issue
                exchangeable shares (the “Exchangeable
                Shares”)
                to the holders of Class “A” and Class “I” shares in the capital of Peace
                in consideration, in part, for the acquisition of their Class “A” and
                Class “I” shares in the capital of Peace; and

               

            
	
              B.

               

            	
              pursuant
                to the Acquisition Agreement, Acquiror has agreed to, and to cause
                the
                Corporation to, execute this Agreement.

               

            

    

    NOW
      THEREFORE
      in
      consideration of the respective covenants and agreements provided in this
      Agreement and for other good and valuable consideration (the receipt and
      sufficiency of which are hereby acknowledged), the parties hereto covenant
      and
      agree as follows:

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    ARTICLE 1

    INTERPRETATION

     

    
      	
              1.1

            	
              DEFINED
                TERMS

            

    

     

    Each
      term
      denoted herein by initial capital letters and not otherwise defined herein
      shall
      have the meaning ascribed thereto in the rights, privileges, restrictions and
      conditions (collectively, the “Exchangeable
      Share Provisions”)
      attaching to the Exchangeable Shares attached as Exhibit 3.1 to the Acquisition
      Agreement.

     

    
      	
              1.2

            	
              INTERPRETATION
                NOT AFFECTED BY HEADINGS

            

    

     

    The
      division of this Agreement into articles, sections and other portions and the
      insertion of headings are for convenience of reference only and shall not affect
      the construction or interpretation hereof. Unless otherwise indicated, all
      references to an “Article” or “Section” followed by a number refer to the
      specified Article or Section of this Agreement. The terms “this Agreement,”
“hereof,” “herein” and “hereunder” and similar expressions refer to this
      Agreement and not to any particular Article, Section or other portion hereof
      and
      include any agreement or instrument supplementary or ancillary
      hereto.

     

    
      	
              1.3

            	
              RULES
                OF CONSTRUCTION

            

    

     

    Unless
      otherwise specifically indicated or the context otherwise requires, (a) all
      references to “dollars” or “$” mean United States dollars, (b) words importing
      the singular shall include the plural and vice versa and words importing any
      gender shall include all genders, and (c) “include,” “includes” and “including”
shall be deemed to be followed by the words “without limitation.”

     

    
      	
              1.4

            	
              DATE
                FOR ANY ACTION

            

    

     

    If
      the
      event that any date on which any action is required to be taken hereunder by
      any
      of the parties hereto is not a Business Day, such action shall be required
      to be
      taken on the next succeeding day that is a Business Day.

     

     

    ARTICLE 2

    COVENANTS
      OF ACQUIROR AND THE CORPORATION

     

    
      	
              2.1

            	
              COVENANTS
                REGARDING EXCHANGEABLE
                SHARES

            

    

     

    So
      long
      as any Exchangeable Shares not owned by Acquiror or its Affiliates are
      outstanding, Acquiror will:

     

    
      	
              (a)

               

            	
              not
                declare or pay any dividend on the Acquiror Shares unless (i) the
                Corporation shall (w) simultaneously declare or pay, as the case
                may be,
                an equivalent dividend or other distribution economically equivalent
                thereto (as provided for in the Exchangeable Share Provisions) on
                the
                Exchangeable Shares (an “Equivalent
                Dividend”)
                and (x) the Corporation shall have sufficient money or other assets
                or
                authorized but unissued securities available to enable the due declaration
                and the due and punctual payment, in accordance with applicable law
                and
                the terms of the Exchangeable Share Provisions, of any such Equivalent
                Dividend, or, if the dividend or other distribution is a stock dividend
                or
                distribution of stock, in lieu of such dividend (ii) the Corporation
                shall (y) effect a corresponding, contemporaneous and economically
                equivalent subdivision of the Exchangeable Shares (as provided for
                in the
                Exchangeable Share Provisions) (an “Equivalent
                Stock Subdivision”),
                and (z) have sufficient authorized but unissued securities available
                to
                enable the Equivalent Stock Subdivision;

               

            

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)

               

            	
              advise
                the Corporation sufficiently in advance of the declaration by Acquiror
                of
                any dividend on Acquiror Shares and take all such other actions as
                are
                reasonably necessary, in cooperation with the Corporation, to ensure
                that
                (i) the respective declaration date, record date and payment date
                for an
                Equivalent Dividend on the Exchangeable Shares shall be the same
                as the
                declaration date, record date and payment date for the corresponding
                dividend on the Acquiror Shares, or (ii) the record date and effective
                date for an Equivalent Stock Subdivision shall be the same as the
                record
                date and payment date for the stock dividend on the Acquiror Shares
                and
                that such dividend on the Exchangeable Shares will correspond with
                any
                requirement of the principal stock exchange on which the Exchangeable
                Shares are listed, if any;

               

            
	
              (c)

               

            	
              ensure
                that the record date for any dividend declared on Acquiror Shares
                is not
                less than 10 Business Days after the declaration date of such
                dividend;

               

            
	
              (d)

               

            	
              take
                all such actions and do all such things as are reasonably necessary
                or
                desirable to enable and permit the Corporation, in accordance with
                applicable law, to pay and otherwise perform its obligations with
                respect
                to the satisfaction of the Liquidation Amount, the Retraction Price
                or the
                Redemption Price in respect of each issued and outstanding Exchangeable
                Share (other than Exchangeable Shares owned by Acquiror or its Affiliates)
                upon the liquidation, dissolution or winding-up of the Corporation
                or any
                other distribution of the assets of the Corporation among its shareholders
                for the purpose of winding-up its affairs, the delivery of a Retraction
                Request by a holder of Exchangeable Shares or a redemption of Exchangeable
                Shares by the Corporation, as the case may be, including all such
                actions
                and all such things as are necessary or desirable to enable and permit
                the
                Corporation to cause to be delivered Acquiror Shares to the holders
                of
                Exchangeable Shares in accordance with the provisions of Article
                5, 6 or
                7, as the case may be, of the Exchangeable Share Provisions and cash
                in
                respect of declared and unpaid dividends;

            

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	
              (e)

               

            	
              take
                all such actions and do all such things as are reasonably necessary
                or
                desirable to enable and permit Callco, in accordance with applicable
                law,
                to perform its obligations arising upon the exercise by it of the
                Liquidation Call Right, the Retraction Call Right or the Redemption
                Call
                Right, including all such actions and all such things as are necessary
                or
                desirable to enable and permit Callco to cause to be delivered Acquiror
                Shares to the holders of Exchangeable Shares in accordance with the
                provisions of the Liquidation Call Right, the Retraction Call Right
                or the
                Redemption Call Right, as the case may be, and cash in respect of
                declared
                and unpaid dividends; and

               

            
	
              (f)

               

            	
              not
                (and will ensure that Callco or any of its Affiliates does not) exercise
                its vote as a shareholder to initiate the voluntary liquidation,
                dissolution or winding-up of the Corporation or any other distribution
                of
                the assets of the Corporation among its shareholders for the purpose
                of
                winding up its affairs nor take any action or omit to take any action
                (and
                Acquiror will not permit Callco or any of its Affiliates to take
                any
                action or omit to take any action) that is designed to result in
                the
                liquidation, dissolution or winding up of the Corporation or any
                other
                distribution of the assets of the Corporation among its shareholders
                for
                the purpose of winding up its affairs.

               

            

    

     

    
      	
              2.2

            	
              SEGREGATION
                OF FUNDS

            

    

     

    
      	
              (a)

               

            	
              Acquiror
                will cause the Corporation to deposit a sufficient amount of funds
                in a
                separate account of the Corporation and segregate a sufficient amount
                of
                such other assets and property as is necessary to enable the Corporation
                to pay dividends when due and to pay or otherwise satisfy its respective
                obligations under Article 5, 6 or 7 of the Exchangeable Share
                Provisions or, if required, to pay the purchase price for Acquiror
                Shares
                as contemplated by Section 2.5,
                as applicable.

               

            
	
              (b)

               

            	
              Acquiror
                will cause Callco to deposit a sufficient amount of funds in a separate
                account of Callco and segregate a sufficient amount of such other
                assets
                and property as is necessary to enable Callco to pay the purchase
                price
                for Acquiror Shares as contemplated by Section 2.5.

               

            

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    
      	
              2.3

            	
              RESERVATION
                OF ACQUIROR SHARES

            

    

     

    Acquiror
      hereby represents, warrants and covenants in favour of the Corporation that
      Acquiror has reserved for issuance and will, at all times while any Exchangeable
      Shares (other than Exchangeable Shares held by Acquiror or its Affiliates)
      are
      outstanding, keep available, free from preemptive and other rights, out of
      its
      authorized and unissued capital stock such number of Acquiror Shares (or other
      shares or securities into which Acquiror Shares may be reclassified or changed
      as contemplated by Section 2.7
      hereof)
      (a) as is equal to the sum of (i) two times the number of Exchangeable Shares
      issued and outstanding from time to time and (ii) two times the number of
      Exchangeable Shares issuable upon the exercise of all rights to acquire
      Exchangeable Shares outstanding from time to time and (b) as are now and may
      hereafter be required to enable and permit Acquiror to meet its obligations
      under the Voting and Exchange Trust Agreement, to enable and permit Callco
      to
      meet its obligations arising upon exercise by it of each of the Liquidation
      Call
      Right, the Retraction Call Right and the Redemption Call Right and to enable
      and
      permit the Corporation to meet its obligations hereunder and under the
      Exchangeable Share Provisions.

     

    
      	
              2.4

            	
              NOTIFICATION
                OF CERTAIN EVENTS

            

    

     

    In
      order
      to assist Acquiror in compliance with its obligations hereunder and to permit
      Callco to exercise the Liquidation Call Right, the Retraction Call Right and
      the
      Redemption Call Right, the Corporation will notify Acquiror and Callco of each
      of the following events at the times set forth below:

     

    
      	
              (a)

               

            	
              in
                the event of any determination by the Board of Directors of the
                Corporation to institute voluntary liquidation, dissolution or winding-up
                proceedings with respect to the Corporation or to effect any other
                distribution of the assets of the Corporation among its shareholders
                for
                the purpose of winding up its affairs, at least 60 days prior to
                the
                proposed effective date of such liquidation, dissolution, winding-up
                or
                other distribution;

               

            
	
              (b)

               

            	
              promptly,
                upon the earlier of receipt by the Corporation of notice of and the
                Corporation otherwise becoming aware of any threatened or instituted
                claim, suit, petition or other proceeding with respect to the involuntary
                liquidation, dissolution or winding-up of the Corporation or to effect
                any
                other distribution of the assets of the Corporation among its shareholders
                for the purpose of winding up its affairs;

               

            
	
              (c)

               

            	
              promptly,
                upon receipt by the Corporation of a Retraction Request;

               

            
	
              (d)

               

            	
              promptly
                following the date on which notice of redemption is given to holders
                of
                Exchangeable Shares, upon the determination of a Redemption Date
                in
                accordance with the Exchangeable Share Provisions; and

               

            

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    
      	
              (e)

               

            	
              promptly
                upon the issuance by the Corporation of any Exchangeable Shares or
                rights
                to acquire Exchangeable Shares (other than the issuance of Exchangeable
                Shares and rights to acquire Exchangeable Shares in exchange for
                outstanding Peace Shares pursuant to the Acquisition
                Agreement).

               

            

    

     

    
      	
              2.5

            	
              DELIVERY
                OF ACQUIROR SHARES TO THE
                CORPORATION

            

    

     

    In
      furtherance of its obligations under Section 2.1(d)
      hereof,
      upon notice from the Corporation or Callco of any event that requires the
      Corporation or Callco to cause to be delivered Acquiror Shares to any holder
      of
      Exchangeable Shares, Acquiror shall forthwith issue and deliver the requisite
      number of Acquiror Shares to be received by, and issued to or to the order
      of,
      the former holder of the surrendered Exchangeable Shares, as the Corporation
      or
      Callco shall direct. All such Acquiror Shares shall be duly authorized, validly
      issued and fully paid and non-assessable and shall be free and clear of any
      lien, claim or encumbrance. In consideration of the issuance and delivery of
      such Acquiror Share, the Corporation or Callco, as the case may be, shall pay
      a
      purchase price equal to the fair market value of such Acquiror
      Share.

     

    
      	
              2.6

            	
              QUALIFICATION
                OF ACQUIROR SHARES

            

    

     

    Acquiror
      covenants that if any Acquiror Shares (or other shares or securities into which
      Acquiror Shares may be reclassified or changed as contemplated by
      Section 2.7
      hereof)
      to be issued and delivered hereunder (including for greater certainty, pursuant
      to the Exchangeable Share Provisions or pursuant to the Change of Law Call
      Right, Exchange Right or the Automatic Exchange Rights (each as defined in
      the
      Voting and Exchange Trust Agreement)) require registration or qualification
      with, or approval of, or the filing of any document, including any prospectus
      or
      similar document, the taking of any proceeding with, or the obtaining of any
      order, ruling or consent from, any governmental or regulatory authority under
      any Canadian or United States federal, provincial, territorial or state
      securities or other law or regulation or pursuant to the rules and regulations
      of any securities or other regulatory authority, or the fulfilment of any other
      United States or Canadian legal requirement (collectively, the “Applicable
      Laws”)
      before
      such shares (or other shares or securities into which Acquiror Shares may be
      reclassified or changed as contemplated by Section 2.7
      hereof)
      may be issued and delivered by Acquiror at the direction of the Corporation
      or
      Callco, if applicable, to the holder of surrendered Exchangeable Shares or
      in
      order that such shares (or other shares or securities into which Acquiror Shares
      may be reclassified or changed as contemplated by Section 2.7
      hereof)
      may be freely traded thereafter (other than any restrictions of general
      application on transfer by reason of a holder being a “control person” of
      Acquiror for purposes of Canadian provincial securities law or an “affiliate” of
      Acquiror for purposes of United States federal or state securities law),
      Acquiror will use its reasonable best efforts and in good faith expeditiously
      take all such actions and do all such things as are necessary or desirable
      and
      within its power to cause such Acquiror Shares (or other shares or securities
      into which Acquiror Shares may be reclassified or changed as contemplated by
      Section 2.7
      hereof)
      to be and remain duly registered, qualified or approved under United States
      and/or Canadian law, as the case may be, to the extent expressly provided in
      the
      Acquisition Agreement. Acquiror will use its reasonable best efforts and in
      good
      faith expeditiously take all such actions and do all such things as are
      reasonably necessary or desirable to cause all Acquiror Shares (or other shares
      or securities into which Acquiror Shares may be reclassified or changed as
      contemplated by Section 2.7
      hereof)
      to be delivered hereunder to be listed, quoted or posted for trading on all
      stock exchanges and quotation systems on which outstanding Acquiror Shares
      (or
      other shares or securities into which Acquiror Shares may be reclassified or
      changed as contemplated by Section 2.7
      hereof)
      are listed and are quoted or posted for trading at such time.

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    
      	
              2.7

            	
              ECONOMIC
                EQUIVALENCE

            

    

     

    So
      long
      as any Exchangeable Shares not owned by Acquiror or its Affiliates are
      outstanding:

     

    
      	
              (a)

               

            	
              Acquiror
                will not, without prior approval of the Corporation and the prior
                approval
                of the holders of the Exchangeable Shares given in accordance with
                Section
                10.2 of the Exchangeable Share
                Provisions:

            

    

     

    
      	
              (i)

               

            	
              issue
                or distribute Acquiror Shares (or securities exchangeable for or
                convertible into or carrying rights to acquire Acquiror Shares) to
                the
                holders of all or substantially all of the then outstanding Acquiror
                Shares by way of stock dividend or other distribution, other than
                an issue
                of Acquiror Shares (or securities exchangeable for or convertible
                into or
                carrying rights to acquire Acquiror Shares) to holders of Acquiror
                Shares
                who (A) exercise an option to receive dividends in Acquiror Shares
                (or
                securities exchangeable for or convertible into or carrying rights
                to
                acquire Acquiror Shares) in lieu of receiving cash dividends, or
                (B)
                pursuant to any dividend reinvestment plan or scrip dividend;
                or

               

            
	
              (ii)

               

            	
              issue
                or distribute rights, options or warrants to the holders of all or
                substantially all of the then outstanding Acquiror Shares entitling
                them
                to subscribe for or to purchase Acquiror Shares (or securities
                exchangeable for or convertible into or carrying rights to acquire
                Acquiror Shares); or

               

            

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    
      	
              (iii)

               

            	
              issue
                or distribute to the holders of all or substantially all of the then
                outstanding Acquiror Shares (A) shares or securities of Acquiror
                of any
                class other than Acquiror Shares (other than shares convertible into
                or
                exchangeable for or carrying rights to acquire Acquiror Shares),
                (B)
                rights, options or warrants other than those referred to in
                Section 2.7(a)(ii)
                above, (C) evidences of indebtedness of Acquiror or (D) assets of
                Acquiror, unless the economic equivalent on a per share basis of
                such
                rights, options, warrants, securities, shares, evidences of indebtedness
                or other assets is issued or distributed simultaneously to holders
                of the
                Exchangeable Shares; provided that, for greater certainty, the above
                restrictions shall not apply to any securities issued or distributed
                by
                Acquiror in order to give effect to and to consummate the transactions
                contemplated by, and in accordance with, the Acquisition
                Agreement.

               

            

    

     

    
      	
              (b)

               

            	
              Acquiror
                will not without the prior approval of the Corporation and the prior
                approval of the holders of the Exchangeable Shares given in accordance
                with Section 10.2 of the Exchangeable Share
                Provisions:

            

    

     

    
      	
              (i)

               

            	
              subdivide,
                redivide or change the then outstanding Acquiror Shares into a greater
                number of Acquiror Shares; or

               

            
	
              (ii)

               

            	
              reduce,
                combine, consolidate or change the then outstanding Acquiror Shares
                into a
                lesser number of Acquiror Shares; or

               

            
	
              (iii)

               

            	
              reclassify
                or otherwise change Acquiror Shares or effect an amalgamation, merger,
                reorganization or other transaction affecting the Acquiror
                Shares,

               

            

    

    unless
      the same or an economically equivalent change shall simultaneously be made
      to,
      or in the rights of the holders of, the Exchangeable Shares; provided that,
      for
      greater certainty, the above restrictions shall not apply to any securities
      issued or distributed by Acquiror in order to give effect to and to consummate
      the transactions contemplated by, and in accordance with, the Acquisition
      Agreement.

     

    
      	
              (c)

               

            	
              Acquiror
                will ensure that the record date for any event referred to in
                Section 2.7(a)
                or
                2.7(b)
                above, or (if no record date is applicable for such event) the effective
                date for any such event, is not less than five Business Days after
                the
                date on which such event is declared or announced by Acquiror (with
                contemporaneous notification thereof by Acquiror to the
                Corporation).

               

            
	
              (d)

               

            	
              The
                Board of Directors of the Corporation shall determine, in good faith
                and
                in its sole discretion, economic equivalence for the purposes of
                any event
                referred to in Section 2.7(a)
                or
                2.7(b)
                above and each such determination shall be conclusive and binding
                on
                Acquiror and the holders of Exchangeable Shares. In making each such
                determination, the following factors shall, without excluding other
                factors determined by the Board of Directors of the Corporation to
                be
                relevant, be considered by the Board of Directors of the
                Corporation:

            

    

     

    
      	
              (i)

               

            	
              in
                the case of any stock dividend or other distribution payable in Acquiror
                Shares, the number of such shares issued as a result of any stock
                dividend
                or other distribution in proportion to the number of Acquiror Shares
                previously outstanding;

               

            
	
              (ii)

               

            	
              in
                the case of the issuance or distribution of any rights, options or
                warrants to subscribe for or purchase Acquiror Shares (or securities
                exchangeable for or convertible into or carrying rights to acquire
                Acquiror Shares), the relationship between the exercise price of
                each such
                right, option or warrant and the Current Market Price, the volatility
                of
                the Acquiror Shares and the term of any such instrument;

               

            
	
              (iii)

               

            	
              in
                the case of the issuance or distribution of any other form of property
                (including any shares or securities of Acquiror of any class other
                than
                Acquiror Shares, any rights, options or warrants other than those
                referred
                to in Section 2.7(d)(ii)
                above, any evidences of indebtedness of Acquiror or any assets of
                Acquiror), the relationship between the fair market value (as determined
                by the Board of Directors of the Corporation in the manner above
                contemplated) of such property to be issued or distributed with respect
                to
                each outstanding Acquiror Share and the Current Market Price;

               

            
	
              (iv)

               

            	
              in
                the case of any subdivision, redivision or change of the then outstanding
                Acquiror Shares into a greater number of Acquiror Shares or the reduction,
                combination, consolidation or change of the then outstanding Acquiror
                Shares into a lesser number of Acquiror Shares or any amalgamation,
                merger, reorganization or other transaction affecting Acquiror Shares,
                the
                effect thereof upon the then outstanding Acquiror Shares;
                and

            

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    
      	
              (v)

               

            	
              in
                all such cases, the general taxation consequences of the relevant
                event to
                holders of Exchangeable Shares to the extent that such consequences
                may
                differ from the taxation consequences to holders of Acquiror Shares
                as a
                result of differences between taxation laws of Canada and the United
                States (except for any differing consequences arising as a result
                of
                differing marginal taxation rates and without regard to the individual
                circumstances of holders of Exchangeable
                Shares).

            

    

     

    
      	
              (e)

               

            	
              The
                Corporation agrees that, to the extent required, upon due notice
                from
                Acquiror, the Corporation will use its best efforts to take or cause
                to be
                taken such steps as may be necessary for the purposes of ensuring
                that
                appropriate dividends are paid or other distributions are made by
                the
                Corporation, or subdivisions, redivisions or changes are made to
                the
                Exchangeable Shares, in order to implement the required economic
                equivalent with respect to the Acquiror Shares and Exchangeable Shares
                as
                provided for in this Section 2.7.

            

    

     

    
      	
              2.8

            	
              TENDER
                OFFERS

            

    

     

    For
      so
      long as Exchangeable Shares remain outstanding (not including Exchangeable
      Shares held by Acquiror and its Affiliates), in the event that a tender offer,
      share exchange offer, issuer bid, take-over bid or similar transaction with
      respect to Acquiror Shares (an “Offer”)
      is
      proposed by Acquiror or is proposed to Acquiror or its shareholders and is
      recommended by the Board of Directors of Acquiror, or is otherwise effected
      or
      to be effected with the consent or approval of the Board of Directors of
      Acquiror, and the Exchangeable Shares are not redeemed by the Corporation or
      purchased by Callco pursuant to the Redemption Call Right, Acquiror will use
      its
      reasonable best efforts expeditiously and in good faith to take all such actions
      and do all such things as are necessary or desirable to enable and permit
      holders of Exchangeable Shares (other than Acquiror and its Affiliates) to
      participate in such Offer to the same extent and on an economically equivalent
      basis as the holders of Acquiror Shares, without discrimination. Without
      limiting the generality of the foregoing, Acquiror will use its reasonable
      best
      efforts expeditiously and in good faith to ensure that holders of Exchangeable
      Shares may participate in each such Offer without being required to retract
      Exchangeable Shares as against the Corporation (or, if so required, to ensure
      that any such retraction, shall be effective only upon, and shall be conditional
      upon, the closing of such Offer and only to the extent necessary to tender
      or
      deposit to the Offer). Nothing herein shall affect the rights of the Corporation
      (or Callco to purchase pursuant to the Redemption Call Right) to redeem
      Exchangeable Shares in the event of an Acquiror Control
      Transaction.

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    
      	
              2.9

            	
              OWNERSHIP
                OF OUTSTANDING SHARES

            

    

     

    Without
      the prior approval of the Corporation and the prior approval of the holders
      of
      the Exchangeable Shares given in accordance with Section 10.2 of the
      Exchangeable Share Provisions, Acquiror covenants and agrees in favour of the
      Corporation that, as long as any outstanding Exchangeable Shares are owned
      by
      any Person other than Acquiror or any of its Affiliates, Acquiror will be and
      remain the direct or indirect beneficial owner of all issued and outstanding
      voting shares in the capital of the Corporation and Callco. Notwithstanding
      the
      foregoing, Acquiror shall not be in violation of this section if any person
      or
      group of persons acting jointly or in concert acquires all or substantially
      all
      of the assets of Acquiror or the Acquiror Shares pursuant to any merger of
      Acquiror pursuant to which Acquiror was not the surviving
      corporation.

     

    
      	
              2.10

            	
              ACQUIROR
                AND AFFILIATES NOT TO VOTE EXCHANGEABLE
                SHARES

            

    

     

    Acquiror
      and Callco each covenants and agrees that it will not, and will cause its
      Affiliates not to, exercise any voting rights which may be exercisable by
      holders of Exchangeable Shares from time to time pursuant to the Exchangeable
      Share Provisions or pursuant to the provisions of the ABCA (or any successor
      or
      other corporate statute by which the Corporation may in the future be governed)
      with respect to any Exchangeable Shares held by it or by its Affiliates in
      respect of any matter considered at any meeting of holders of Exchangeable
      Shares.

     

    
      	
              2.11

            	
              RULE
                10B-18 PURCHASES

            

    

     

    For
      greater certainty, nothing contained in this Agreement, including the
      obligations of Acquiror contained in Section 2.8
      hereof,
      shall limit the ability of Acquiror or the Corporation to make a “Rule l0b-18
      purchase” of Acquiror Shares pursuant to Rule 10b-18 of the United States
Securities
      Exchange Act of
      1934,
      as
      amended, or any successor rule.

     

     

    ARTICLE 3

    ACQUIROR
      SUCCESSORS

     

    
      	
              3.1

            	
              CERTAIN
                REQUIREMENTS IN RESPECT OF COMBINATION,
                ETC.

            

    

     

    Neither
      Acquiror nor Callco shall consummate any transaction (whether by way of
      reconstruction, reorganization, consolidation, merger, transfer, sale, lease
      or
      otherwise) whereby all or substantially all of its undertaking, property and
      assets would become the property of any other Person or, in the case of a
      merger, of the continuing corporation resulting therefrom unless, but may do
      so
      if:

     

    
      	
              (a)

               

            	
              such
                other Person or continuing corporation (the “Acquiror
                Successor”)
                by operation of law, becomes, without more, bound by the terms and
                provisions of this Agreement or, if not so bound, executes, prior
                to or
                contemporaneously with the consummation of such transaction, an agreement
                supplemental hereto and such other instruments (if any) as are reasonably
                necessary or advisable to evidence the assumption by the Acquiror
                Successor of liability for all moneys payable and property deliverable
                hereunder and the covenant of such Acquiror Successor to pay and
                deliver
                or cause to be delivered the same and its agreement to observe and
                perform
                all the covenants and obligations of Acquiror or Callco, as the case
                may
                be, under this Agreement; 

            

    

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)

               

            	
              in
                the event that the Acquiror Shares are reclassified or otherwise
                changed
                as part of such transaction, the same or an economically equivalent
                change
                is simultaneously made to, or in the rights of the holders of, the
                Exchangeable Shares; and

               

            
	
              (c)

               

            	
              such
                transaction shall be upon such terms and conditions as substantially
                to
                preserve and not to impair in any material respect any of the rights,
                duties, powers and authorities of the other parties hereunder or
                the
                holders of Exchangeable Shares.

               

            

    

     

    
      	
              3.2

            	
              VESTING
                OF POWERS IN SUCCESSOR

            

    

     

    Whenever
      the conditions of Section 3.1
      have
      been duly observed and performed, the parties, if required by
      Section 3.1,
      shall
      execute and deliver the supplemental agreement provided for in
      Section 3.1(a)
      and
      thereupon the Acquiror Successor shall possess and from time to time may
      exercise each and every right and power of Acquiror or Callco, as the case
      may
      be, under this Agreement in the name of Acquiror or otherwise and any act or
      proceeding by any provision of this Agreement required to be done or performed
      by the Board of Directors of Acquiror or any officers of Acquiror may be done
      and performed with like force and effect by the directors or officers of such
      Acquiror Successor.

     

    
      	
              3.3

            	
              WHOLLY-OWNED
                SUBSIDIARIES

            

    

     

    Nothing
      herein shall be construed as preventing the amalgamation or merger of any
      wholly-owned direct or indirect subsidiary of Acquiror (other than the
      Corporation or Callco) with or into Acquiror or the winding-up, liquidation
      or
      dissolution of any wholly-owned subsidiary of Acquiror provided that all of
      the
      assets of such subsidiary are transferred to Acquiror or another wholly-owned
      direct or indirect subsidiary of Acquiror and any such transactions are
      expressly permitted by this Article 3.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    
      	
              3.4

            	
              SUCCESSORSHIP
                TRANSACTION

            

    

     

    Notwithstanding
      the foregoing provisions of Article 3,
      in the
      event of an Acquiror Control Transaction:

     

    
      	
              (a)

               

            	
              in
                which Acquiror merges or amalgamates with, or in which all or
                substantially all of the then outstanding Acquiror Shares are acquired
                by,
                one or more other corporations to which Acquiror is, immediately
                before
                such merger, amalgamation or acquisition, “related” within the meaning of
                the Income
                Tax Act (Canada)
                (otherwise than by virtue of a right referred to in paragraph 251(5)(b)
                thereof);

               

            
	
              (b)

               

            	
              which
                does not result in an acceleration of the Redemption Date in accordance
                with paragraph (b) of that definition; and

               

            
	
              (c)

               

            	
              in
                which all or substantially all of the then outstanding Acquiror Shares
                are
                converted into or exchanged for shares or rights to receive such
                shares
                (the “Other
                Shares”)
                of another corporation (the “Other
                Corporation”)
                that, immediately after such Acquiror Control Transaction, owns or
                controls, directly or indirectly, Acquiror;

               

            

    

    then
      all
      references herein to “Acquiror” shall thereafter be and be deemed to be
      references to “Other Corporation” and all references herein to “Acquiror Shares”
shall thereafter be and be deemed to be references to “Other Shares” (with
      appropriate adjustments, if any, as are required to result in a holder of
      Exchangeable Shares on the exchange, redemption or retraction of such shares
      pursuant to the Exchangeable Share Provisions or exchange of such shares
      pursuant to the Voting and Exchange Trust Agreement immediately subsequent
      to
      the Acquiror Control Transaction being entitled to receive that number of Other
      Shares equal to the number of Other Shares such holder of Exchangeable Shares
      would have received if the exchange, redemption or retraction of such shares
      pursuant to the Exchangeable Share Provisions or exchange of such shares
      pursuant to the Voting and Exchange Trust Agreement had occurred immediately
      prior to the Acquiror Control Transaction and the Acquiror Control Transaction
      was completed) without any need to amend the terms and conditions of the
      Exchangeable Shares and without any further action required.

     

     

    ARTICLE 4

    GENERAL

     

    
      	
              4.1

            	
              TERM

            

    

     

    This
      Agreement shall come into force and be effective as of the date hereof and
      shall
      terminate and be of no further force and effect at such time as no Exchangeable
      Shares (or securities or rights convertible into or exchangeable for or carrying
      rights to acquire Exchangeable Shares) are held by any Person other than
      Acquiror and any of its Affiliates.

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    
      	
              4.2

            	
              CHANGES
                IN CAPITAL OF ACQUIROR AND THE
                CORPORATION

            

    

     

    At
      all
      times after the occurrence of any event contemplated pursuant to
      Sections 2.7
      and
2.8
      hereof
      or otherwise, as a result of which either Acquiror Shares or the Exchangeable
      Shares or both are in any way changed, this Agreement shall forthwith be deemed
      amended and modified as necessary in order that it shall apply with full force
      and effect, mutatis
      mutandis,
      to all
      new securities into which Acquiror Shares or the Exchangeable Shares or both
      are
      so changed and the parties hereto shall execute and deliver an agreement in
      writing giving effect to and evidencing such necessary amendments and
      modifications.

     

    
      	
              4.3

            	
              NOTICES
                TO PARTIES

            

    

     

    All
      notices and other communications hereunder shall be in writing and shall be
      deemed given when delivered personally, telecopied (which is confirmed) or
      dispatched (postage prepaid) to a nationally recognized overnight courier
      service with overnight delivery instructions, in each case addressed to the
      particular party at:

     

    If
      to
      Acquiror:

     

    Surge
      Global Energy, Inc.

    12220
      El
      Camino Real, Suite 410

    San
      Diego, California 92130

     

    Attention:
      CEO
      and
      Chairman

    Telecopier
      Number: (858)
      704-5011

     

    If
      to the
      Corporation:

     

    c/o
      Surge
      Global Energy, Inc.

    12220
      El
      Camino Real, Suite 410

    San
      Diego, California 92130

     

    Attention:
      CEO
      and
      Chairman

    Telecopier
      Number: (858)
      704-5011

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    With
      copies to:

     

    Greenberg
      Traurig, LLP

    650
      Town
      Center Drive, 17th
      Floor

    Costa
      Mesa, California 92626

     

    Attention:
      Steven Anapoell

    Telecopier
      Number: (714) 708-6501

     

    And:

     

    Stikeman
      Elliott LLP

    4300,
      888
      - 3rd
      Street
      S.W.

    Calgary,
      Alberta T2P 5C5

     

    Attention:
      Keith Chatwin

    Telecopier
      Number: (403) 266-9034

     

    or
      at
      such other address of which any party may, from time to time, advise the other
      parties by notice in writing given in accordance with the
      foregoing.

     

    
      	
              4.4

            	
              ASSIGNMENT

            

    

     

    No
      party
      hereto may assign this Agreement or any of its rights, interests or obligations
      under this Agreement (whether by operation of law or otherwise) except that
      the
      Corporation may assign in its sole discretion, any or all of its rights,
      interests and obligations hereunder to any wholly-owned subsidiary of
      Acquiror.

     

    
      	
              4.5

            	
              BINDING
                EFFECT

            

    

     

    Subject
      to Section 4.4,
      this
      Agreement shall be binding upon, enure to the benefit of and be enforceable
      by
      the parties hereto and their respective successors and assigns.

     

    
      	
              4.6

            	
              AMENDMENTS,
                MODIFICATIONS

            

    

     

    Subject
      to Sections 4.2,
      4.7
      and
4.11,
      this
      Agreement may not be amended or modified except by an agreement in writing
      executed by the Corporation, Callco and Acquiror and approved by the holders
      of
      the Exchangeable Shares in accordance with Section 10.2 of the Exchangeable
      Share Provisions.

     

    
      	
              4.7

            	
              MINISTERIAL
                AMENDMENTS

            

    

     

    Notwithstanding
      the provisions of Section 4.6,
      the
      parties to this Agreement may in writing at any time and from time to time,
      without the approval of the holders of the Exchangeable Shares, amend or modify
      this Agreement for the purposes of:

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    
      	
              (a)

               

            	
              adding
                to the covenants of any or all parties provided that the board of
                directors of each of the Corporation, Callco and Acquiror shall be
                of the
                good faith opinion that such additions will not be prejudicial to
                the
                rights or interests of the holders of the Exchangeable
                Shares;

               

            
	
              (b)

               

            	
              making
                such amendments or modifications not inconsistent with this Agreement
                as
                may be necessary or desirable with respect to matters or questions
                which,
                in the good faith opinion of the board of directors of each of the
                Corporation, Callco and Acquiror, it may be expedient to make, provided
                that each such board of directors shall be of the good faith opinion
                that
                such amendments or modifications will not be prejudicial to the rights
                or
                interests of the holders of the Exchangeable Shares; or

               

            
	
              (c)

               

            	
              making
                such changes or corrections which, on the advice of counsel to the
                Corporation, Callco and Acquiror, are required for the purpose of
                curing
                or correcting any ambiguity or defect or inconsistent provision or
                clerical omission or mistake or manifest error, provided that the
                board of
                directors of each of the Corporation, Callco and Acquiror shall be
                of the
                good faith opinion that such changes or corrections will not be
                prejudicial to the rights or interests of the holders of the Exchangeable
                Shares.

               

            

    

     

    
      	
              4.8

            	
              MEETING
                TO CONSIDER AMENDMENTS

            

    

     

    The
      Corporation, at the request of Acquiror, shall call a meeting or meetings of
      the
      holders of the Exchangeable Shares for the purpose of considering any proposed
      amendment or modification requiring approval pursuant to
      Section 4.6
      hereof;
      provided that any such meeting shall only be called for a bona fide business
      purpose and not for the principal purpose of causing a Redemption Date to occur
      or transpire. Any such meeting or meetings shall be called and held in
      accordance with the bylaws of the Corporation, the Exchangeable Share Provisions
      and all applicable laws.

     

    
      	
              4.9

            	
              AMENDMENTS
                ONLY IN WRITING

            

    

     

    No
      amendment to or modification or waiver of any of the provisions of this
      Agreement otherwise permitted hereunder shall be effective unless made in
      writing and signed by all of the parties hereto.

     

    
      	
              4.10

            	
              GOVERNING
                LAWS; CONSENT TO
                JURISDICTION

            

    

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      Province of Alberta and the laws of Canada applicable therein and shall be
      treated in all respects as an Alberta contract. Each party hereby irrevocably
      attorns to the jurisdiction of the courts of the Province of Alberta in respect
      of all matters arising under or in relation to this Agreement.

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    
      	
              4.11

            	
              SEVERABILITY

            

    

     

    If
      any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by any rule of law or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      hereby is not affected in any manner materially adverse to any party. Upon
      such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the parties hereto shall negotiate in good faith to modify
      this Agreement so as to effect the original intent of the parties as closely
      as
      possible in an acceptable manner to the end that transactions contemplated
      hereby are fulfilled to the extent possible.

     

    
      	
              4.12

            	
              COUNTERPARTS

            

    

     

    This
      Agreement may be executed in counterparts, each of which shall be deemed to
      be
      an original but all of which together shall constitute one and the same
      instrument.

     

    IN
      WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
      executed as of the date first above written.

     

    
      	
              SURGE
                GLOBAL ENERGY, INC.

               

            
	
              By:
                /s/ David Perez 
                

              

              Name:
                David Perez

            
	
              Title:
                CEO & Chairman

               

            
	
              COLD
                FLOW ENERGY ULC

               

            
	
              By:
                /s/ David Perez 
                

              

              Name:
                David Perez

            
	
              Title:

               

            
	
              1294697
                ALBERTA LTD.

               

            
	
              By:
                /s/  David Perez
                

              

              Name:
                David Perez

            
	
              Title:

               

            

    

    

     -16-Promissory Note

    EXHIBIT
      10.4

     

    COLD
      FLOW
      ENERGY ULC

     

    PROMISSORY
      NOTE

    
      	
               

              Principal
                Amount: $1,500,000.00

            	
               

              Date:
                March 2, 2007

            

    

     

    FOR
      VALUE
      RECEIVED, the undersigned, Cold Flow Energy ULC (the "Borrower"), PROMISES
      TO
      PAY to or to the order of 1304146 Alberta Ltd. (the "Lender"),
      at the offices of the agent of the Lender, Burstall Winger LLP ("BW") at
      Suite
      1600,
      Dome Tower, 333 - 7th,
      Avenue
      S.W., Calgary, Alberta, T2P 2Z1 Attention: Keith Templeton, the principal amount
      of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) in lawful money
      of
      Canada with interest on such amount at the Interest Rate (as defined herein),
      calculated in the manner and payable at the times, specified in this
      Note.

     

    The
      principal amount remaining from time to time unpaid and outstanding shall bear
      interest, both before and after demand and judgment to the date of the repayment
      in full of the principal amount, at the rate of SEVEN (7%) percent per annum
      (the "Interest Rate"). Interest at the Interest Rate shall be simple and
      non-compounding and shall accrue daily and be calculated on the basis of the
      actual number of days elapsed in a year of 365 days.

     

    The
      aggregate principal amount of this Note and all interest accruing hereunder
      at
      the Interest Rate shall become due and payable by the Borrower to the Lender
      on
      June 30, 2007.

     

    The
      Borrower shall make commercially reasonable efforts to prepay the whole or
      any
      portion of the principal amount of this Note and interest thereon from time
      to
      time remaining unpaid and outstanding.

     

    The
      Borrower and all endorsers of this Note waive presentment for payment and notice
      of non-payment and agree and consent to all extensions or renewals of this
      Note
      without notice.

     

    Neither
      the Borrower nor the
      Lender
      may assign its rights or obligations hereunder without the prior written consent
      of the other. This Note shall enure to the benefit of the Lender and its
      respective successors and permitted assigns and shall be binding upon the
      Borrower and its respective successors and assigns.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      any other provision herein, this Note and all obligations of the Borrower
      hereunder, including without
      limitation
      the obligations of the Borrower to

     

    pay
      the
      principal amount of this Note to the Lender, shall automatically terminate
      and
      be of no force and effect in the event the Petroleum, Natural Gas and General
      Rights Conveyance dated effective the date hereof among the Lender, Borrower,
      Peace Oil Corp. and Surge Global Energy, Inc. (collectively, the "Parties")
      is
      released pursuant to subsection 7(a) of the Escrow Agreement between the Parties
      and BW.

     

    This
      Note
      shall be governed by and interpreted and enforced in accordance with the laws
      of
      the Province of Alberta and the federal laws of Canada applicable
      therein.

     

    IN
      WITNESS WHEREOF the Borrower has executed this Note.

     

    
      	
               

              COLD
                FLOW ENERGY ULC

            
	
               

              Per:
                /s/
                David Perez

            
	
              Name:
                David Perez

            
	
              Title:
                CEO & Chairman

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