PREFERRED STOCK AND WARRANT

CANCELLATION AGREEMENT

Dala Petroleum Corp.

328 Barry Av. S #210

Wayzata, MN  55391

Re:

Preferred Stock and Warrant Cancellation Agreement pursuant to the Common Stock
Purchase Agreement (the “Agreement”) by and among Dala Petroleum Corp., a
Minnesota corporation (the “Company”), M2 Equity Partners LLC, a Minnesota
limited liability company (the “Purchaser”)

Gentlemen:

In consideration of the completion and closing of the Agreement, and the payment
to the undersigned of the sum of $________, the receipt of which is hereby
acknowledged, the undersigned hereby conveys to the Company and hereby
authorizes the Company, and/or American Registrar & Transfer Co., the Company’s
transfer agent, to cancel ______ shares of Preferred Stock and _____________
Warrants to acquire __________ shares of Common Stock of the Company. which
Preferred Stock and Warrants the undersigned hereby represents and warrants are
owned by the undersigned, free and clear of any liens and encumbrances
whatsoever, and that the undersigned has full and uncontested authority to
convey to the Company for cancellation.

Releases.  The undersigned, jointly and severally, for themselves and each of
their present and former, direct and/or indirect, parents, subsidiaries,
affiliates, attorneys, agents, representatives, employees, consultants, brokers,
officers, directors, equity and/or debt holders, managers, members, successors,
predecessors, heirs and assigns (collectively the “Releasors”), hereby expressly
and irrevocably release, waive and forever discharge and hold harmless each of
the Company, the Purchaser, each of the undersigned and each of all of their
respective present and former, direct and/or indirect, parents, subsidiaries,
affiliates, attorneys, agents, representatives, employees, consultants, brokers,
officers, directors, equity and/or debt holders, managers, members, successors,
predecessors, and assigns (collectively, the “Released Parties”) from any and
all actions, causes of action, suits, losses, liabilities, rights, debts, dues,
sums of money, accounts, reckonings, obligations, costs, expenses, liens, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands, of every kind and nature whatsoever, whether now known or unknown,
suspected or unsuspected, foreseen or unforeseen, matured or unmatured,
suspected or unsuspected, in law, admiralty or equity, which any of the Holder
Releasors ever had, now have, or hereafter can, shall, or may have against any
of the Holder Released Parties from the beginning of time through and including
the date hereof, respecting the matters covered hereby or in any way related to
the Agreement or the Company, assuming the closing of the Agreement.

 

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Governing Law.  This Agreement and the terms and conditions set forth herein,
shall be governed by and construed solely and exclusively in accordance with the
internal laws of the State of Minnesota without regard to the conflicts of laws
principles thereof. The parties hereto hereby expressly and irrevocably agree
that any suit or proceeding arising directly and/or indirectly pursuant to or
under this Agreement shall be brought solely in a federal or state court located
in Hennepin County, Minnesota. By its execution hereof, the parties hereto
covenant and irrevocably submit to the in personam jurisdiction of the federal
and state courts located in Hennepin County and the State of Minnesota and agree
that any process in any such action may be served upon any of them personally,
or by certified mail or registered mail upon them or their agent, return receipt
requested, with the same full force and effect as if personally served upon them
in Minnesota. The parties hereto expressly and irrevocably waive any claim that
any such jurisdiction is not a convenient forum for any such suit or proceeding
and any defense or lack of in personam jurisdiction with respect thereto. In the
event of any such action or proceeding, the party prevailing therein shall be
entitled to payment from the other parties hereto of all of its reasonable
counsel fees and disbursements.

Acknowledgement.  The undersigned acknowledges that it has been advised that
there is a potential merger or acquisition candidate for the Company (the
“Acquisition Candidate”) following the cancellation of the shares of Preferred
Stock and Warrants of the undersigned hereunder, and the undersigned, having
determined not to sign a Confidentiality Agreement, represents and warrants that
the undersigned has the necessary business acumen to evaluate the limited
information received and assumes all risks of any kind or nature whatsoever or
otherwise that any such merger or acquisition with the Acquisition Candidate may
have on the value of such Common Stock or the Company, without qualification.

_______________

Dated: ___________________.

By: ________________________________

Print Name:__________________________

Title: _______________________________

DALA PETROLEUM CORP.

Dated: ___________________.

By: ________________________________

       

Print Name: __________________________

       

Title: ________________________________

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