Exhibit
10.19


 


 


SHAREHOLDERS
AGREEMENT


 


AMONG


 


SURGE GLOBAL ENERGY, INC., LEIGH
CASSIDY, FRED KELLY


 


AND


 


SURGE GLOBAL ENERGY (CANADA),
LTD.


 


 


Dated as of November 15,
2005


 





















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
  ARTICLE 1 INTERPRETATION

  	
  2

  
	
  1.1

  	
  Definitions

  	
  2

  
	
  1.2

  	
  Construction

  	
  3

  
	
  ARTICLE 2 IMPLEMENTATION OF AGREEMENT

  	
  4

  
	
  2.1

  	
  Certain
  Covenants Regarding Implementation

  	
  4

  
	
  2.2

  	
  No
  Unanimous Shareholder Agreement

  	
  5

  
	
  ARTICLE 3 DIRECTORS

  	
  5

  
	
  3.1

  	
  Initial
  Board Composition

  	
  5

  
	
  3.2

  	
  Further
  Directors

  	
  5

  
	
  3.3

  	
  Chairman
  to Have Casting Vote

  	
  5

  
	
  ARTICLE 4 CERTAIN OTHER MATTERS

  	
  5

  
	
  4.1

  	
  Going
  Public Transaction

  	
  5

  
	
  4.2

  	
  Insurance

  	
  5

  
	
  4.3

  	
  Remaining
  Sawn Lake Assets

  	
  6

  
	
  4.4

  	
  Articles
  and Bylaws

  	
  6

  
	
  4.5

  	
  Appointment
  of Auditor

  	
  6

  
	
  4.6

  	
  Change
  in Name

  	
  6

  
	
  4.7

  	
  News
  Releases or Public Announcements

  	
  6

  
	
  ARTICLE 5 TERMINATION

  	
  7

  
	
  5.1

  	
  Article 3
  Termination Events

  	
  7

  
	
  5.2

  	
  Termination
  Events

  	
  7

  
	
  5.3

  	
  No
  Termination Upon Going Public Transaction

  	
  8

  
	
  ARTICLE 6 MISCELLANEOUS

  	
  8

  
	
  6.1

  	
  Assignment

  	
  8

  
	
  6.2

  	
  Enurement

  	
  8

  
	
  6.3

  	
  Notice

  	
  8

  
	
  6.4

  	
  Invalidity

  	
  8

  
	
  6.5

  	
  No
  Joint Venture or Partnership

  	
  8

  
	
  6.6

  	
  Proper
  Law; Attornment

  	
  9

  
	
  6.7

  	
  Amendment,
  Waiver, Variation

  	
  9

  
	
  6.8

  	
  Counterpart
  Execution

  	
  9

  



 





















 


SHAREHOLDERS
AGREEMENT


 


This
Shareholders Agreement with respect to Surge Global Energy (Canada), Ltd. is
made as of November 15, 2005.


 


AMONG:


 


SURGE GLOBAL ENERGY (CANADA),
LTD., a corporation incorporated
under the laws of Alberta (the “Corporation”)


 


- and -


 


SURGE GLOBAL ENERGY,
INC., a corporation incorporated
under the laws of Delaware (“Surge US”)


 


- and -


 


LEIGH CASSIDY (“Cassidy”)


 


- and -


 


FRED KELLY (“Kelly”)


 


 


WHEREAS:


 


A.                                   The Corporation was
incorporated under the ABCA;


 


B.                                     The authorized capital of the
Corporation consists of an unlimited number of common shares of which the
following are issued and outstanding as at the date of this Agreement:


 


	
  Shareholder

  	
   

  	
  Number and Class of Shares

  	
   

  
	
  Surge US

  	
   

  	
  11,350,000 common

  	
   

  
	
  Northern

  	
   

  	
  6,795,000 common

  	
   

  
	
  Deep Well (Alberta)

  	
   

  	
  755,000 common

  	
   

  
	
  Cassidy

  	
   

  	
  1,700,000 common

  	
   

  
	
  Cassidy – in trust

  	
   

  	
  1,700,000 common

  	
   

  
	
  Kelly

  	
   

  	
  1,700,000 common

  	
   

  
	
   

  	
   

  	
  24,000,000 common

  	
   

  



 


C.                                     Surge US, Cassidy and Kelly
(collectively, the “Shareholders”)
beneficially own or hold a proxy to vote all of the currently issued and
outstanding Shares; and


 





















 


D.                                    The Shareholders wish to
establish certain rights and obligations in respect of the election of
directors of the Corporation, the management and control of certain of the
Corporation’s affairs and other matters as hereinafter set forth.


 


NOW THEREFORE the parties
agree as follows:


 


ARTICLE 1

INTERPRETATION


 


1.1                                                                               Definitions


 


In this
Agreement:


 


“ABCA” means the Business Corporations Act (Alberta).


 


“Agreement” means this shareholders
agreement as amended or supplemented from time to time, and the expression “Article” or “Section” followed by a number or letter means and refers to
the specified Article or Section of this Agreement.


 


“Articles” means the articles of
incorporation of the Corporation, as amended from time to time.


 


“Board” or “Board of Directors” means the board of directors of the
Corporation and “Director” means a
member of the Board.


 


“Business Day” means any day, other than a
Saturday or a Sunday or a statutory holiday in Calgary.


 


“By-Laws” means the by-laws of the
Corporation, as amended from time to time.


 


“Deep Well” means Deep Well Oil &
Gas, Inc., a Nevada corporation.


 


“Deep Well Alberta” means Deep Well Oil &
Gas (Alberta), Ltd., an Alberta corporation.


 


“Farmout Agreement” means the farmout agreement dated as of February 25, 2005 among Deep Well,
Northern, Surge US and the Corporation, as assigned, amended, extended and
supplemented from time to time.


 


“Going Public Transaction” means: means: (i) a
final receipt for a prospectus of the Corporation filed in at least one “jurisdiction”
(as listed in Appendix B to Multilateral Instrument 45-102) has been obtained
and the common Shares are listed and posted for trading on the Toronto Stock
Exchange (the “TSX”) or the TSX
Venture Exchange (the “TSXV”) (or
any successor exchange thereof); or (ii) the sale, exchange,
reorganization or arrangement of all of the common Shares for, or the sale of
all or substantially all of the assets of the Corporation in a transaction that
results in the holders of common Shares receiving for their common Shares
consideration consisting of: (A) cash; and/or (B) securities which are
not subject to resale restrictions (except for those applicable to “control
persons”) in Alberta and Ontario and are listed and posted for trading on the
TSX or the TSXV (or any successor exchange thereof).


 


“Management Shareholders” means Cassidy and
Kelly.


 


“Northern” means Northern Alberta Oil Ltd.,
an Alberta corporation.


 


2





















 


“Person” means an individual, a partnership,
a corporation, a trust, a joint venture, an unincorporated organization, a
union, a government or any department or agency thereof and the heirs, executor’s
administrators or other legal representatives of an individual.


 


“Remaining Sawn Lake Assets” means the interests in the 69.5 sections that are the subject of the
Farmout Agreement not currently owned by the Corporation.


 


“Shareholders” is defined in the Recitals.


 


“Shares” means the shares in the capital of
the Corporation or any other voting or non-voting shares or stock which the
Corporation may at any time be authorized to issue.


 


“Voting Trust Agreement” means the voting
trust agreement dated as of November 15, 2005 among Northern, Deep Well
Alberta and Surge US.


 


1.2                                                                               Construction


 


In this
Agreement, unless a clear contrary intention appears:


 


(a)                                  the singular number includes the plural number and vice versa;


 


(b)                                 reference to any Person includes such Person’s successors and
assigns but, if applicable, only if such successors and assigns are permitted
by this Agreement;


 


(c)                                  use of the masculine, feminine or neuter gender includes all
genders;


 


(d)                                 where a term is defined in this Agreement, a grammatical variation
of that term will have a corresponding meaning;


 


(e)                                  reference to any agreement (including this Agreement), document or
instrument means such agreement, document or instrument as amended, restated or
modified and in effect from time to time in accordance with the terms thereof;


 


(f)                                    reference in this Agreement to any Section, Appendix, Annex, Schedule or
Exhibit means the specified Section, Appendix, Annex, Schedule or Exhibit to
this Agreement;


 


(g)                                 “Agreement”, “this Agreement”, “herein”, “hereunder”,
“hereof”, “hereto” and words of similar import are
references to this Agreement as a whole including the Recitals and not, unless
a particular section or other part thereof is referred to, to any
particular section or other part;


 


(h)                                 “including” (and, with
correlative meaning, “include”)
means including without limiting the generality of any description preceding or
succeeding such term, and the rule of ejusdem
generis will not be applicable to limit a general statement
preceded, followed by or referable to an enumeration of specific matters, to
matters similar to those specifically mentioned;


 


(i)                                     the division of this Agreement and the table of contents and
headings herein are for convenience of reference only and do not affect the
construction or interpretation hereof;


 


(j)                                     unless otherwise indicated all computations and payments required
hereunder will be expressed in or converted to Canadian dollars;


 


(k)                                  payments are to be made in immediately available funds;


 


3





















 


(l)                                     references to time of day or date means the local time or date in
Calgary, Alberta;


 


(m)                               any obligation of a party hereto, however expressed, including a
statement that it must, shall or will do or refrain from doing anything, will
be construed as a covenant by that party;


 


(n)                                 this Agreement was negotiated by the parties hereto with the benefit
of legal representation and any rule of construction or interpretation
otherwise requiring an agreement to be construed or interpreted against any
party hereto shall not apply to any construction or interpretation hereof;


 


(o)                                 an undertaking by a party hereto not to do or to omit to do any act
or thing includes an undertaking not to allow, cause or assist in the doing or
omission of such act or thing; and


 


(p)                                 “fully diluted basis”
means, at the relevant time, that any options, warrants or rights to acquire
Shares are deemed to have been exercised and the Shares in respect thereof
deemed to be issued and outstanding at such time.


 


ARTICLE 2

IMPLEMENTATION OF AGREEMENT


 


2.1                                                                               Certain Covenants Regarding Implementation


 


(a)                                  Each of the Shareholders covenants and agrees that it will vote or
cause to be voted the Shares of the Corporation beneficially owned by it, or in
respect of which it holds a proxy, to accomplish and give effect to the terms
and conditions of this Agreement and against any proposed corporate action
contrary to the true intent and meaning of this Agreement.


 


(b)                                 Each of the Shareholders covenant, represent and warrant that it has
the necessary power, authority and capacity to enter into this Agreement and
this Agreement constitutes a valid and legally binding obligation of the
Shareholder enforceable against the Shareholder in accordance with its terms.


 


(c)                                  The parties hereto agree to execute and deliver such further and
other documents and perform and cause to be performed such further and other
acts and things as may be necessary or desirable in order to give full effect
to this Agreement and every part thereof.


 


(d)                                 Each of the Shareholders agrees to vote or cause to be voted the
Shares owned by it, or in respect of which it holds a proxy, so as to cause the
Articles and/or the By-Laws to be amended to resolve any such conflict in
favour of the provisions of this Agreement.


 


(e)                                  The Corporation by its execution hereof acknowledges that it has
actual notice of the terms of this Agreement, consents hereto and hereby
covenants with each of the Shareholders that it will at all times during the
term of this Agreement be governed by the terms and provisions hereof in
carrying out its business and affairs and, accordingly, will give or cause to
be given such notices, execute or cause to be executed such documents and do or
cause to be done all such acts, matters and things as may from time to time be
necessary or required to carry out the terms and intent hereof.


 


(f)                                    For greater certainty, Surge US acknowledges and agrees that
pursuant to the Voting Trust Agreement it holds proxies for a period up to February 25,
2007 in respect of the 7,550,000 Shares held by Deep Well Alberta and Northern
and that it will at all times (up to February 25, 2007) vote such Shares
in accordance with the terms of this Agreement.


 


4





















 


(g)                                 The parties hereto acknowledge and agree that Cassidy holds
1,700,000 Shares in trust to be transferred to individuals in the management of
the Corporation subsequent to the date hereof. 
Cassidy will be entitled to vote such Shares at all times during which
he holds such Shares.  Concurrently with
and as a condition of the transfer of such Shares to the applicable individual,
the parties hereto will use commercially reasonable efforts to cause each such
individual to become a party to this Agreement as a “Shareholder”.


 


2.2                                                                               No Unanimous Shareholder Agreement


 


The parties
hereto acknowledge and agree that this Agreement is not intended to be and will
not be a unanimous shareholder agreement in respect of the Corporation under Section 146
of the ABCA.


 


ARTICLE 3

DIRECTORS


 


3.1                                                                               Initial Board Composition


 


Subject to Section 3.2,
the Board will initially consist of three Directors, and (i) one (and only
one) nominee of Surge US will be a Director who will initially be David Perez, (ii) one
(and only one) nominee of the Management Shareholders will be a Director who
will initially be Cassidy, and (iii) such two Directors will from time to
time determine the third independent Director who will be Tony Loria of MGI
Securities Inc.  The Chairman of the
Board will be Cassidy.


 


3.2                                                                               Further Directors


 


The Board may from time to time increase the number of
and appoint additional Directors each of whom, in all cases, must have no
direct or indirect material relationship with any of the then existing
Directors, Surge US and the Management Shareholders.


 


3.3                                                                               Chairman to Have Casting Vote


 


The Chairman
of any meeting of the Board of Directors will be entitled to a second or
casting vote.


 


ARTICLE 4

CERTAIN OTHER MATTERS


 


4.1                                                                               Going Public Transaction


 


The parties
hereto acknowledge and agree that it is their intent that the Corporation
implement a Going Public Transaction upon such terms, conditions and timing as
may be determined by the Board.


 


4.2                                                                               Insurance


 


(a)                                  Surge US will at all times obtain and maintain in full force and
effect directors and officers liability insurance, which will be in line with
best industry practice for other entities in the Alberta petroleum industry,
with the Corporation and each of the directors and officers of the Corporation
from time to time as additional insured. 
The amount of cover will not be less than $10,000,000 for each and every
loss and occurrence.


 


5





















 


(b)                                 Surge US will from time to time pay the costs (as they pertain to
the insurances in respect of the Corporation and the directors and officers of
the Corporation) of the insurances referred to in Section 4.2(a) as
to that same proportion as the proportion of the Shares held by Surge US on a
fully diluted basis.  The Corporation
will pay the balance of the costs (as they pertain to the insurances in respect
of the Corporation and the directors and officers of the Corporation) of such
insurances.


 


(c)                                  Surge US will from time to time deliver to the Corporation a
certificate in a form acceptable to the Corporation issued by the insurance
brokers to Surge US, in respect of the insurances referred to in Section 4.2(a).


 


(d)                                 Notwithstanding the obtaining and maintenance by Surge US of the
insurances referred to in Section 4.2(a), the Corporation may, in its
discretion, obtain and maintain such additional insurances as it may consider
necessary.


 


4.3                                                                               Remaining Sawn Lake Assets


 


Surge
US will support and facilitate the acquisition by the Corporation
of the Remaining Sawn Lake Assets, including by way of a merger or other
business combination among Deep Well, Deep Well Alberta, Northern or such other
entity as may own an interest in the Remaining Sawn Lake Assets and Surge US
followed by or concurrently with a transaction pursuant to which Surge US will
contribute the Remaining Sawn Lake Assets to the Corporation.


 


4.4                                                                               Articles and Bylaws


 


The parties
hereto acknowledge and agree that it is their intent that the Articles and
Bylaws of the Corporation are to amended or restated only upon such terms,
conditions and timing as may be determined by the Board.


 


4.5                                                                               Appointment of Auditor


 


The parties hereto acknowledge and agree
that it is their intent that KPMG LLP be appointed auditors for the Corporation
and should KPMG LLP decline to appointment as auditors then alternate Canadian
auditors of similar credentials may be appointed upon such terms, conditions
and timing as may be determined by the Board.


 


4.6                                                                               Change in Name


 


The parties hereto
acknowledge and agree that it is their intent to change the name of the
Corporation as soon as practical on recommendation from the Board to a name
determined by the Board.


 


4.7                                                                               News Releases or Public Announcements


 


The Shareholders agree that no news
releases or public announcements, except as provided for herein, respecting any
aspect of operations conducted by the Corporation shall be made by a
Shareholder without first obtaining the approval from the Corporation of the
content of such news release or public announcement.  The Shareholders
agree that such approval shall not be unreasonably withheld.


 


Notwithstanding the provisions of this Section 4.7,
any Shareholder, without the consent of the Corporation, may at any time
provide disclosure of operations conducted by, but excluding


 


6





















 


confidential or commercially sensitive information pertaining to, the
Corporation as required in the following circumstance:


 


(a)                                  disclosure required
by duly organized stock
exchanges or securities regulatory bodies with jurisdiction over the
Shareholder;


 


(b)                                 disclosure required
by governments, their agencies or other regulatory authorities having or
purporting to have jurisdiction over the Shareholder;


 


(c)                                  disclosure required
by any financial institution or investment dealer with whom an Shareholder is
attempting to obtain financing or raise capital, provided that such financial
institution or investment dealer shall first agree to be bound by the
provisions of this Section 4.7; or


 


(d)                                 disclosure required
by applicable law.


 


Any Shareholder which is being required to
make disclosure in accordance with the exceptions set forth in this Section 4.7
shall promptly give notice to the Corporation of such disclosure requirement.


 


The Shareholders shall take all reasonable
steps to ensure the observance of the restrictions set forth in this Section 4.7
by the Shareholders, and by their employees, officers and directors, and shall
take all reasonable steps to minimize the risk of disclosure.


 


ARTICLE 5

TERMINATION


 


5.1                                                                               Article 3 Termination Events


 


Article 3 of this Agreement will terminate upon
the occurrence of any one of the following events:


 


(a)                                  the written agreement of all the Shareholders and the Corporation to
that effect; and


 


(b)                                 Surge US beneficially owns less than twenty percent of Shares of the
Corporation on a fully diluted basis.


 


5.2                                                                               Termination Events


 


This Agreement
will terminate upon the occurrence of any one of the following events:


 


(a)                                  the written agreement of all the Shareholders and the Corporation to
that effect;


 


(b)                                 the Corporation makes an assignment or petitions itself into
bankruptcy, makes any filing under the Bankruptcy
and Insolvency Act (Canada) (the “BIA”)
or under the Companies Creditors’
Arrangement Act (Canada) (the “CCAA”)
or any other legislation for the composition or arrangement of indebtedness or
claims, including applicable corporate legislation or consents or does not
object within the time required by applicable law to the making of any such
filing or petition or to the appointment of a receiver or receiver and manager
in respect of the substantial portion of its property; and


 


(c)                                  if any order is made or any stay of proceedings issued pursuant to
the BIA, the CCAA or any applicable corporate legislation for the compromise or
arrangement of indebtedness or claims or a


 


7





















 


receiver
or receiver and manager is appointed in respect of a substantial part of the
property or assets of the Corporation, and such order, stay or appointment
remains in effect at the earlier of (i) 30 days after the order is
entered, the stay becomes effective or the appointment is made, as applicable,
or (ii) the time for taking of any appeal from such order, stay or
appointment has expired.


 


5.3                                                                               No Termination Upon Going Public Transaction


 


For greater certainty, the parties hereto acknowledge
and agree that, subject to Sections 5.1 and 5.2, this Agreement will not
terminate upon the occurrence of a Going Public Transaction.


 


ARTICLE 6

MISCELLANEOUS


 


6.1                                                                               Assignment


 


This Agreement may not be assigned nor may any of the
rights acquired hereunder be assigned except with the unanimous consent of the
parties hereto expressed in writing, to the extent permitted by the terms of
this Agreement, which consent may be arbitrarily withheld.


 


6.2                                                                               Enurement


 


This Agreement will enure to the benefit of and will
be binding upon the respective heirs, executors, administrators, personal
representatives, successors and permitted assigns of the parties hereto.


 


6.3                                                                               Notice


 


(a)                                  Any notice, consent, waiver or other communication required or
permitted hereunder will be deemed to be sufficiently given or made if in
writing and hand delivered or transmitted via fax to the respective address of
the party to whom such notice is required or permitted to be given as disclosed
from time to time on the records of the Corporation or to such other address as
any party may from time to time designate by notice hereunder to the others.


 


(b)                                 Any such notice will be deemed to have been received by the party to
whom it was addressed upon actual receipt if delivered personally or if
transmitted by telecopier prior to 5:00 p.m. local time, and any time
thereafter, on the next Business Day.


 


6.4                                                                               Invalidity


 


If any
covenant, obligation and agreement of this Agreement or the application thereof
to any Person or circumstance will, to any extent, be invalid or unenforceable,
the remainder of this Agreement or the application of such covenant, obligation
and agreement to Persons or circumstances other than those as to which it is
held invalid or unenforceable, will not be affected thereby and each covenant,
obligation and agreement of this Agreement will be separately valid and
enforceable to the fullest extent permitted by law.


 


6.5                                                                               No Joint Venture or Partnership


 


This Agreement
does not constitute and will not be construed as constituting a partnership or
joint venture between or among any of the Corporation or the Shareholders.  Neither of the Shareholders will have any
right to obligate or bind the Corporation or each other in any manner


 


8





















 


whatsoever except as expressly
provided herein.  Nothing contained in
this Agreement will give or is intended to give any rights of any kind to
Persons not a party to this Agreement.


 


6.6                                                                               Proper Law; Attornment


 


This Agreement
will be interpreted in accordance with the laws of the Province of Alberta and
the parties do hereby irrevocably submit and attorn to the jurisdiction of the
courts of the Province of Alberta for all matters related to this Agreement,
including its validity and interpretation.


 


6.7                                                                               Amendment, Waiver, Variation


 


No waiver,
modification or cancellation of any term or condition or of any breach of any
term or condition of this Agreement will be effective unless executed in
writing.  No waiver will excuse the
performance of any act other than the act specifically referred to in such
waiver.  No assent to or waiver of any breach
of any one or more of the covenants and agreements herein contained, whether
such assent or waiver be expressed or implied, will be deemed to be taken to be
a waiver of any succeeding or other breach.


 


6.8                                                                               Counterpart Execution


 


This Agreement
may be executed in any number of counterparts and by fax, each of which will be
deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.


 


The parties
hereto have duly executed this Agreement as of the date and year first above
written.


 


 


	
   

  	
  SURGE GLOBAL ENERGY (CANADA), LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Fred W. Kelly

  
	
   

  	
   

  	
  Name:

  	
  Fred W. Kelly

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  SURGE GLOBAL ENERGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ David
  Perez

  
	
   

  	
   

  	
  Name:

  	
  David Perez

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer and

  
	
   

  	
   

  	
   

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
  Witness:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Illegible

  	
   

  	
  /s/ Leigh Cassidy

  
	
   

  	
   

  	
  LEIGH CASSIDY

  
	
  Witness:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Illegible

  	
   

  	
  /s/ Fred W. Kelly

  
	
   

  	
   

  	
  FRED KELLY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


9