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EXHIBIT 10.1
SETTLEMENT AGREEMENT
AND RELEASE OF ALL CLAIMS
This Settlement Agreement and Release of All
Claims (" Agreement ") is made and
entered into as of January 22, 2007 by and among Deep Well Oil
& Gas, Inc., a Nevada corporation (hereinafter sometimes
referred to as "Deep Well"), and Grey K Fund LP, Grey K Offshore
Fund Ltd., Provident Premier Master Fund Ltd., Atlas Master Fund
Ltd. and Gemini Master Fund, Ltd. (hereinafter sometimes referred
to collectively as the "Investors" and each an
"Investor").
RECITALS
1. WHEREAS,
Deep Well and the Investors have entered into a Stock Purchase
Agreement, dated effective March 10, 2005 (hereinafter referred to
as the "SPA"), with respect to the issuance and sale to the
Investors by Deep Well of certain securities, the provision to the
Investors of certain registration rights, and certain other
matters;
2. WHEREAS,
Deep Well and the Investors have entered into a Registration Rights
Agreement, dated effective March 10, 2005 (hereinafter referred to
as the "RRA"), with respect to the provision to the Investors by
Deep Well of certain registration rights contemplated by the
SPA;
3. WHEREAS,
the Investors claim that Deep Well has breached certain provisions
of the SPA and RRA;
4. WHEREAS,
Deep Well does not admit the Investors’ allegations of breach
of the SPA and RRA; and
5. WHEREAS,
Deep Well and the Investors desire to settle fully and finally all
differences between them, including, but in no way limited to,
those differences described above.
AGREEMENTS
In consideration of the mutual covenants and
promises contained in this Agreement, the parties agree as
follows:
1. No
Admission of Liability . The parties hereto acknowledge and
agree that this Agreement reflects a settlement of disputed claims
and that it does not constitute and shall not be construed as an
admission of liability on the part of any party, its officers,
agents, directors, securityholders, affiliates, subsidiaries,
supervisors, employees, attorneys or representatives, or
acknowledgement of any wrongdoing whatsoever.
2. Advice
of Counsel . Each party hereto acknowledges that it has had
adequate time to consult with an attorney of such party’s
choice and to consider the terms of this Agreement.
3. Amendment of Agreements .
(a) The SPA is hereby
amended by deleting Section 4.2(g) and Section 4.11 thereof, which
Sections, effective immediately, shall be of no further force or
effect.
(b) The RRA is hereby
terminated effective immediately, and shall be of no further force
or effect.
(c) Except as amended by
the terms of this Agreement, all other provisions of the SPA shall
remain in full force and effect.
4. Issuance
of Shares . Within 10 days following Deep Well’s
receipt from each of the Investors of a fully signed and executed
original of this Agreement, and as a condition to the obligations
and release of the Investors under this Agreement, Deep Well shall
issue, and cause to be delivered certificates representing a total
of 1,600,000 (one million six hundred thousand) shares of common
stock of Deep Well, registered in the names and amounts included on
Schedule A hereto (the "Shares").
5. Investor
Representations . Each of the Investors represents that (a)
it is an institutional "accredited investor" within the meaning of
Rule 501(a)(1),(2),(3) or (7) under the U.S. Securities Act of
1933, as amended (the "1933 Act"); (b) it is acquiring the Shares
for its own account for investment purposes and not with a view to
resale or distribution of the Shares in violation of United States
federal or state securities laws; (c) it is not acquiring the
Shares as a result of any "general solicitation" or "general
advertising" as those terms are used in Regulation D under the 1933
Act; (d) it is aware that the Shares have not been registered under
the 1933 Act or any state securities laws and therefore are, and
will be, "restricted securities" within the meaning of Rule 144
under the 1933 Act ("Rule 144"), certificates representing all
Shares will bear a restrictive legend to such effect, and the
Shares may be resold or otherwise transferred only pursuant to an
effective registration statement under the 1933 Act or an available
exemption from the registration requirements of the 1933 Act and
applicable state securities laws (and Deep Well may require a
satisfactory legal opinion or other evidence to the effect that any
transfer does not require registration under the 1933 Act of
applicable state securities laws) (it being understood that the
provisions relating to the removal of restrictive legends from the
Securities (as defined in the SPA) contained in Section 2.5 of the
SPA shall apply to the removal of any such restrictive legend from
the Shares); (e) it has all necessary corporate or LLC power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions
contemplated hereby; (f) it is authorized to execute this Agreement
and consummate the transactions contemplated hereby, and the
execution, delivery and performance of this Agreement by it has
been duly authorized by all necessary corporate or LLC action on
its part; (g) this Agreement constitutes the valid and binding
obligation of it, enforceable against it in accordance with this
Agreement’s terms, except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent conveyance) or similar
laws affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether
enforcement is considered in a proceeding in equity or at law); (h)
the execution, delivery and performance by it
of this Agreement
, will not (i)
conflict with, or constitute
a breach of, as applicable, its certificate of incorporation,
operating agreement or by-laws, (ii) conflict with, or constitute a
breach of, any agreement or other instrument to which it is a
party, except such conflict, breach or default as would not have,
singly or in the aggregate, a Material Adverse Effect (as defined
below), or (iii) violate any applicable law or any rule,
regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over it, except
such violations or conflicts as would not have, singly or in the
aggregate, a Material Adverse Effect; and (h) except as would not
have a Material Adverse Effect, there are no pending or (to its
knowledge) threatened legal or governmental proceedings to which it
is or could be a party; and (i) it has had the opportunity to ask
questions and receive answers concerning the Shares and to obtain
any additional information that Deep Well possesses or can acquire
without unreasonable effort or expense that it has deemed necessary
in connection with its decision to acquire the Shares.
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6. Deep
Well Representations and Warranties . Deep Well represents
and warrants that (a) Deep Well has all necessary corporate power
and authority to execute and deliver this Agreement and to perform
its obligations hereunder and to consummate the transactions
contemplated hereby; (b) the execution, delivery and performance of
this Agreement by Deep Well has been duly authorized by all
necessary corporate action on the part of Deep Well; (c) this
Agreement constitutes the valid and binding obligation of Deep
Well, enforceable against Deep Well in accordance with its terms,
except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent conveyance) or similar laws affecting
creditors' rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general
applicability (regardless of whether enforcement is considered in a
proceeding in equity or at law); (c) the execution, delivery and
performance by Deep Well of this Agreement , will
not (i) conflict
with, or constitute a breach of, Deep Well’s certificate of
incorporation or by-laws, (ii) conflict with, or constitute a
breach of, any agreement or other instrument to which Deep Well is
a party or by which Deep Well is bound, except such conflict,
breach or default as would not have, singly or in the aggregate, a
Material Adverse Effect, or (iii) violate any applicable law or any
rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over Deep Well,
except such violations or conflicts as would not have, singly or in
the aggregate, a Material Adverse Effect; and (c) except as would
not have a Material Adverse Effect, there are no pending or (to
Deep Well’s knowledge) threatened legal or governmental
proceedings to which Deep Well is or could be a party.
7. For
purposes of this Agreement, the term "Material Adverse Effect"
means a material adverse effect on the business, properties,
prospects, financial condition or results of operations of either
(i) Deep Well and its subsidiaries, taken as a whole, or (ii) any
Investor and its subsidiaries, taken as a whole.
8. Indemnification . (a) Deep Well shall indemnify, defend
and hold harmless each Investor, and its affiliates, members,
partners, shareholders, officers and directors, from and against
any losses, liabilities, claims (including those made by a
governmental entity), demands, third party claims, tax levies or
assessments, executions, contingencies, damages, costs and
expenses, judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and expenses incurred: (a) in
enforcing this Agreement against Deep Well and (b) in connection
with, related to or arising out of (i) the untruth, inaccuracy or
breach of any representation or warranty given or made by Deep Well
in this Agreement or (ii) any nonfulfillment of, failure to comply
with or breach of any obligation, covenant or agreement on the part
of Deep Well in this Agreement.
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(b) Each Investor shall indemnify, defend and
hold harmless Deep Well, and its affiliates, shareholders, officers
and directors, from and against any losses, liabilities, claims
(including those made by a governmental entity), demands, third
party claims, tax levies or assessments, executions, contingencies,
damages, costs and expenses, judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and
expenses incurred: (a) in enforcing this Agreement against such
Investor and (b) in connection with, related to or arising out of
(i) the untruth, inaccuracy or breach of any representation or
warranty given or made by such Investor in this Agreement or (ii)
any nonfulfillment of, failure to comply with or breach of any
obligation, covenant or agreement on the part of such Investor in
this Agreement.
9. Tax
Implications . Each Investor acknowledges and agrees that
Deep Well has made no representations to it regarding the tax
consequences associated with receiving securities pursuant to this
Agreement. Each Investor agrees to pay federal or state taxes, if
any, which are required by law to be paid by it with respect to
this Agreement.
10. No
Other Claims Filed or Pending . (a) Each Investor represents
that it has not filed any complaints, claims, or actions against
Deep Well, its officers, agents, directors, securityholders,
affiliates, subsidiaries, supervisors, employees, attorneys or
representatives, with any state, federal, or local agency or court
and that it will not do so at any time hereafter with regard to
events that have occurred as of the date of this Agreement.
(b) Deep Well
represents that it has not filed any complaints, claims, or actions
against any Investor, its officers, agents, members, partners,
directors, securityholders, affiliates, subsidiaries, supervisors,
employees, attorneys or representatives, with any state, federal,
or local agency or court and that Deep Well will not do so at any
time hereafter with regard to events that have occurred as of the
date of this Agreement.
11. Settlement of All Claims . The parties agree and
acknowledge that this Agreement shall constitute the full and final
settlement of all claims or potential claims between them at law or
in equity, for damages or attorneys fees in connection with or
arising from the SPA or RRA, from the beginning of time to the date
of this Agreement; provided, however, that nothing herein shall
constitute a waiver or release of any claims or causes of action
arising out of or in connection with (i) any breach of this
Agreement or (ii) circumstances or events occurring after the
effective date of this Agreement. Each party further agrees that it
shall pay its own attorneys’ fees incurred in connection with
negotiating and drafting this Agreement.
12. Mutual
Release . Notwithstanding the provisions of any law stating
that a general release does not extend to claims which a party does
not know of or suspect to exist in its favor at the time of
executing the release, and in consideration of the mutual releases
set forth herein, the issuance of the Shares pursuant to this
Agreement and other good and valuable consideration:
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(a) Each of the
Investors hereby irrevocably and unconditionally releases and
forever discharges Deep Well and each and all of Deep Well’s
officers, agents, directors, securityholders, affiliates,
subsidiaries, supervisors, employees, attorneys or
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