TERMINATION, OPTION AND PUT AGREEMENT
This Agreement is made as of the _____ day of ________, 2005.
BETWEEN:
(the "Preferred Shareholder")
- and -
DEEP WELL OIL & GAS, INC.
( "Deep Well")
- and -
NORTHERN ALBERTA OIL LTD.
("Northern")
A. WHEREAS the Preferred Shareholder is the registered holder of Class R
non-voting preferred shares of Northern (the "Northern Preferred Shares");
B. AND WHEREAS the Preferred Shareholder, Deep Well, and Northern (then called
"Mikwec Energy Canada Ltd.") entered into a share exchange agreement (the
"Exchange Agreement") dated the 8th day of July, 2004;
C. AND WHEREAS subsections 3.04(c) and 3.04(h) of the Exchange Agreement
required the Preferred Shareholder to provide Deep Well with an executed option
agreement on the Closing Date (as defined in the Exchange Agreement) in the form
set forth in Schedule 3.04(c) to the Exchange Agreement;
D. AND WHEREAS the Preferred Shareholder and Deep Well entered into an option
agreement (the "Original Option Agreement") on the 8th day of July, 2004 rather
than on the Closing Date contrary to the terms of subsections 3.04(c) and
3.04(h) of the Exchange Agreement;
E. AND WHEREAS pursuant to subsection 3.01 of the Exchange Agreement, in
consideration of the Preferred Shareholder executing the Original Option
Agreement, Deep Well was required, on the Closing Date, to issue to the
Preferred Shareholder thirty (30) shares of its common stock (the "Deep Well
Common Shares") for every one (1) Northern Preferred Share owned by the
Preferred Shareholder;
F. AND WHEREAS the Preferred Shareholder, Deep Well and Northern entered into an
amending agreement (the "Amending Agreement") to the Exchange Agreement dated
the 25th day of April, 2005 whereby they agreed, among other things, to extend
the Closing Date (as defined in the Exchange Agreement);
G. AND WHEREAS the parties have agreed to waive the requirements in the Exchange
Agreement which relate to the Northern Preferred Shares, including but not
limited to the requirements in section 3.01 to enter into an option agreement in
the form of Schedule 3.04(c) of the Exchange Agreements;
H. AND WHEREAS the parties have agreed to waive the closing conditions in
subsections 3.04(c) and 3.04(h) of the Exchange Agreement and wish to terminate
the Original Option Agreement;
I. AND WHEREAS the parties wish to enter into a new option agreement on the
Closing Date pursuant to which the Preferred Shareholder will have a put option
to sell to Deep Well, all or any part of the Northern Preferred Shares owned by
the Preferred Shareholder and Deep Well shall have a call option ("Call Option")
to purchase all or any part of the Northern Preferred Shares owned by the
Preferred Shareholder, in accordance with the terms hereof;
NOW THEREFORE in consideration of the mutual promises of the
parties hereto and the mutual benefits to be gained by the performance thereof
and for other good and valuable condition, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
SECTION 1
TERMINATION OF ORIGINAL OPTION AGREEMENT
1.1 The Original Option Agreement shall terminate upon execution of this
Agreement and be of no further force and effect.
1.2 Northern, the Preferred Shareholder and Deep Well agree to waive the
requirements in the Exchange Agreement which relate to the Northern Preferred
Shares, including but not limited to the requirements in section 3.01 to enter
into an option agreement in the form of Schedule 3.04(c) of the Exchange
Agreements.
1.3 Northern, the Preferred Shareholder and Deep Well agree to waive the closing
conditions in subsections 3.04(c) and 3.04(h) of the Exchange Agreement.
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SECTION 2
GRANT OF PUT AND CALL OPTIONS
2.1 At any time and from time to time during the Term (as subsequently defined
herein) the Preferred Shareholder may, upon providing ten (10) days written
notice to Deep Well, require Deep Well to purchase all, or any number as may be
designated in the notice, of the Northern Preferred Shares held by the Preferred
Shareholder at that time (the "Put Option"). The purchase price for any Northern
Preferred Share that Deep Well is required to purchase under this Put Option
shall be satisfied by Deep Well issuing thirty (30) Deep Well Common Shares to
the Preferred Shareholder subject to the anti-dilution provisions in section 3
of this Agreement.
2.2 At any time during the final month of the Term (as defined herein), Deep
Well may, upon providing ten (10) days written notice to the Preferred
Shareholder, purchase all, or any number as may be designated in the notice, of
the Northern Preferred Shares held by the Preferred Shareholder at that time
(the "Call Option"). The purchase price payable by Deep Well for each Northern
Preferred Share that Deep Well purchases under this Call Option shall be
satisfied by Deep Well issuing thirty (30) Deep Well Common Shares to the
Preferred Shareholder subject to the anti-dilution provisions in section 3 of
this Agreement.
2.3 The term of the Put Option and the Call Option (collectively the "Options")
shall be thirty six (36) months commencing on the date of this Agreement (the
"Term") and the last day of the Term shall be referred to herein as the "Expiry
Date".
2.4 The Options shall expire and terminate on the Expiry Date and be of no
further force and effect.
2.5 Subject to the terms of this Agreement, the Options may be exercised in all
or any part of the Northern Preferred Shares with respect to which the Options
are exercisable.
SECTION 3
ANTI-DILUTION PROVISIONS
3.1 If and wherever at any time prior to the Expiry Date Deep Well shall:
3.1.1 subdivide the outstanding Deep Well Common Shares into a greater number of
Deep Well Common Shares;
3.1.2 consolidate or combine the outstanding Deep Well Common Shares into a
small number of Deep Well Common Shares;
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3.1.3 issue any Deep Well Common Shares to any of its holders of outstanding
Deep Well Common Shares by way of a stock dividend; or
3.1.4 issue for less than fair market value any rights, options or warrants to
subscribe for or purchase any Deep Well Common Shares or securities
convertible into or exchangeable for Deep Well Common Shares,
then the number of Deep Well Common Shares that Deep Well is required to issue
to a Preferred Shareholder as consideration for a Northern Preferred Share
acquired by Deep Well pursuant to the options shall be adjusted as of the
effective date of any of the events specified in subsections 3.1.1, 3.1.2,
3.1.3, or 3.1.4 above so that such event does not results in any dilutive
consequences for the Preferred Shareholder.
SECTION 4
RIGHTS PRIOR TO THE EXERCISE DATE
4.1 The Preferred Shareholder shall not, in that capacity, have any rights as a
shareholder of Deep Well with respect to any Deep Well Common Shares until it is
the registered holder of Deep Well Common Shares.
4.2 Deep Well shall not have any rights as a Northern Preferred Shareholder
until it is the registered holder of Northern Preferred Shares.
SECTION 5
RESERVATION OF SHARES
5.1 Deep Well shall at all times during the Term, keep available a sufficient
number of unissued Deep Well Common Shares in its authorized capital to satisfy
its obligations to the Preferred Shareholder pursuant to this Agreement.
SECTION 6
ASSIGNMENT OR ENUREMENT
6.1 The Preferred Shareholder shall not sell, transfer or otherwise dispose of
its Northern Preferred Shares during the Term without the prior written consent
of Deep Well, which consent will not be unreasonably withheld provided that the
proposed transferee has agreed to enter into an agreement containing
substantially similar terms as this Agreement.
6.2 This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their executors, administrators, heirs, legal representatives and
successors.
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SECTION 7
EXERCISE OF THE OPTION
7.1 The Options, or any portion thereof, may be exercised by delivering written
notice of the number of Northern Preferred Shares with respect to which the
Options are being exercised in accordance with this Agreement.
SECTION 8
ISSUANCE OF COMMON SHARE CERTIFICATES UPON EXERCISE
8.1 Within a reasonable time after exercise of the Options, Deep Well shall
issue the required number of Deep Well Common Shares in the name of the
Preferred Shareholder and deliver the certificate therefore bearing both the
Canadian Legend (defined below) and the U.S. Legend (defined below) to the
Preferred Shareholder.
8.2 The share certificates for the Deep Well Common Shares to be issued pursuant
to this Agreement must bear the following Canadian legend (the "Canadian
Legend"):
"AS THE CORPORATION IS NOT A REPORTING ISSUER IN ANY JURISDICTION OF
CANADA, UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN CANADA AND MAY
HAVE TO HOLD THE SECURITY FOR AN INDEFINITE PERIOD."
8.3 The share certificates for the Deep Well Common Shares to be issued pursuant
to this Agreement must bear the following U.S. legend (the "U.S. Legend"):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR
HYPOTHECATED WITHOUT EITHER i) REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR ii)
SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY TO
THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS."
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SECTION 9
NOTICES
9.1 All notices and other communications under this agreement shall be in
writing, and shall be deemed to have been duly given on the date of delivery if
delivered personally or when received to the party to whom notice is to be
given, by certified mail, return receipt requested, postage pre-paid, and
addressed as follows, until any such address is changed by notice duly given:
To Deep Well at:
Deep Well Oil & Gas, Inc.
Suite 2600 Sun Life Plaza
144 Forth Avenue S.W.
Calgary, AB T2P 3N4
To the Preferred Shareholder at:
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SECTION 10
GENERAL
10.1 Time shall be of the essence of this Agreement.
10.2 If any portion of this Agreement shall be determined to be invalid or
unenforceable, the remainder of this Agreement shall be valid and enforceable to
the extent possible.
10.3 This Agreement shall be governed by the laws of the Province of Alberta and
the parties hereto agree to exclusively and irrevocably attorn to the
jurisdiction of the Courts of Alberta and agree that any proceedings taken in
respect of this agreement shall be taken in such Courts and no other.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first above written.
per
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OR:
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WITNESS
DEEP WELL OIL & GAS, INC.
per
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NORTHERN ALBERTA OIL LTD.
per
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