The Agent will be granted an option (the "Over-Allotment Option") to purchase up to an additional 3,764,706 Subscription Receipts on the same terms and conditions, such option being exercisable, in whole or in part, up to 48 hours prior to the closing of the Financing. If the Over-Allotment Option is fully exercised, the total gross proceeds raised will be $10,200,000.
The gross proceeds received on the Financing will be deposited in escrow, such escrowed funds to be released on the date that is the later of: (i) the date all of the conditions to the completion of the transaction with Transeuro Energy Corp. ("Transeuro") (trading symbol "TSU" TSXV) relating to a proposed purchase by Surge of certain assets from Transeuro (the "Transaction") are met or waived; and (ii) conditional approval from the Exchange to Surge becoming a Tier 2 issuer on the Exchange has been obtained ("Escrow Release Date"). If the Escrow Release Date does not occur on or before the date that is 115 days from the closing of the Financing (the "Final Escrow Deadline"), such escrowed funds plus interest shall be returned pro rata to each holder of the Subscription Receipts in exchange for the cancellation of the Subscription Receipts of such holder. For more information regarding the conditions to the Transaction and the assets involved see the press release of Surge dated June 4, 2007 which is available at www.sedar.com.
As consideration for their services in connection with the Financing, the Agent is entitled to receive a corporate finance fee of $35,000, a cash commission of 6% of the gross proceeds of the Financing and an agent's warrant permitting the Agent to purchase Common Shares representing a number equal to 5% of the Subscription Receipts issued pursuant to the Financing, exercisable at a price of $0.85 per Common Share for a period of 12 months following the Escrow Release Date.
The closing of the Financing is expected to occur on or about June 28, 2007 and is subject to receipt of normal course regulatory approvals. The net proceeds of the Financing will be used to fund the advancement of the assets to be acquired pursuant to the Transaction and for general working capital purposes.
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