Exhibit 10.3

 

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STOCK OPTION PLAN

 

SECTION 1. GENERAL PROVISION

 

1.1 Purpose

 

The purpose of the Stock Option Plan (the Plan") of Deep Well Oil & Gas, Inc.
(herein called the "Corporation") is to advance the interests of the Corporation
by:

 

(A) providing Eligible Persons with additional incentive;

(B) encouraging stock ownership by such Eligible Persons;

(C) increasing their proprietary interest in the success of the Corporation;

(D) encouraging them to remain with the Corporation or its Subsidiaries; and

(E) attracting new employees, officers and directors.

 

Options issued under this Plan will not be Incentive Stock Options under
Internal Revenue Code Section 422.

 

1.2 Administration

 

(A) The Plan shall be administered by the Board of Directors of the Corporation
(the “Board”)

 

(B) Subject to the limitations of the Plan, the Board shall have the authority:

 

(i)to grant Options to acquire shares of common stock of the Corporation (the
"Common Shares") to Eligible Persons;

 

(ii)to determine the terms, limitations, restrictions and conditions upon such
grants;

 

(iii)to interpret the Plan and to adopt, amend and rescind such administrative
guidelines and other rules and regulations relating to the Plan as it shall from
time to time deem advisable; and

 

(iv)to make all other determinations and to take all other actions in connection
with the implementation and administration of the Plan as it may deem necessary
or advisable. The Board's guidelines, rules, regulations, interpretations and
determinations shall be conclusive and binding upon the Corporation and all
other persons.

 

(C) No Option shall be granted under the Plan unless recommended and approved by
the Board.

 

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1.3 Interpretation

 

For the purposes of the Plan, the following terms shall have the following
meanings:

 

(A)"Code" means the United States Internal Revenue Code of 1986, as amended;

 

(B)"Eligible Person" means a director, senior officer or employee of, or a
consultant (or their corporation) or any other person or corporation providing
services to, the Corporation or of any Subsidiary pursuant to a written
contract;

 

(C)"Fair Market Value" means, subject to applicable exchange requirements, the
last closing price for Common Shares on the date of reference on wherever the
Corporation is listed, (presently the “OTCQB Marketplace”), or if the Common
Shares are not listed or admitted to trading on any exchange, as determined by
any other appropriate method selected by the Board.

 

(D)“Insider” if used in relation to the Corporation, means:

 

(i)a director or senior officer of the Corporation,

 

(ii)a director or senior officer of of a company that is an Insider or
subsidiary of the Corproation,

 

(iii)a person that beneficially owns or controls, directly or indirectly, voting
shares carrying more than 10% of the voting rights attached to all outstanding
voting shares of the Corporation, or

 

(iv)the Corporation itself if it holds any of its own securities.

 

(E)"Option" means an option to acquire Common Shares granted under the Plan;

 

(F)"Participant" means an Eligible Person to whom Options have been granted;

 

(G)"Subsidiary" means any company that is a subsidiary of the Corporation as
defined in section 424(f) of the Code;

 

(H)"Underlying Share" means a Common Share issuable upon the exercise of an
Option; and

 

  (I)"Year" with respect to any Option granted under the Plan means the period
of 12 months commencing on the date of the granting of such Option or on any
anniversary thereof.

 

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Words importing the singular number only shall include the plural and vice versa
and words importing the masculine shall include the feminine.

 

The Plan and all matters to which reference is made herein shall be governed by
and interpreted in accordance with the laws of the State of Nevada.

 

1.4 Shares Reserved

 

All shares of the Corporation issued under the Plan shall be Common Shares in
the capital stock of the Corporation. Options may be granted in respect of
authorized and unissued Common Shares.

 

The maximum number of Common Shares which may be reserved for issuance under the
Plan shall be no more than 10% of the Company’s issued and outstanding Common
Shares, which number is subject to adjustment in accordance with the provisions
of the Plan.

 

The aggregate number of Common Shares with respect to which Options may be
vested to any one person (together with their associates) under this Plan,
together with all other incentive plans of the Corporation in:

 

(A)any one Year shall not exceed 2% of the total number of common shares
outstanding, and

 

(B)in total shall not exceed 6% of the total number of common shares
outstanding.

 

Any Common Shares subject to an Option that for any reason expires without
having been exercised, shall again be available for grants under the Plan. No
fractional shares shall be issued, and the Board may determine the manner in
which fractional share value shall be treated.

 

In the event of any change in the outstanding Common Shares by reason of any
stock dividend or split, recapitalization, merger, arrangement, consolidation,
combination or exchange of shares, or other corporate change, or in the event of
any issue of rights pursuant to a shareholder rights plan or other similar plan,
the Board shall make, subject to the prior approval of any relevant stock
exchange, appropriate substitution or adjustment in:

 

(A)the number or kind of shares or other securities reserved for issuance
pursuant to the Plan; and

 

(B)the number and kind of shares subject to unexercised Options theretofore
granted and in the Exercise Price of such Options; provided, however, that no
substitution or adjustment shall obligate the Corporation to issue or sell
fractional shares. In the event of the reorganization of the Corporation or the
amalgamation, merger or consolidation of the Corporation with another
corporation, or the payment of a special or extraordinary dividend, the Board
may make such provision for the protection of the rights of Participants as the
Board in its sole discretion deems appropriate.

 

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1.5 Non-Exclusivity

 

Nothing contained herein shall prevent the Corporation from adopting other or
additional compensation arrangements, subject to any required approval.

 

1.6 Amendment and Termination

 

No Option shall be granted hereunder after October 31, 2019; provided, however,
that the Board of Directors may at any time prior to that date amend, suspend or
terminate the Plan or any portion thereof. No such amendments, suspension or
termination shall alter or impair any Options or any rights pursuant thereto
granted previously to any Participant without the consent of such Participant.
Any reduction in the exercise price of Options held by Insiders at the time of
the proposed amendment requires disinterested shareholder approval. In the event
of termination of the Plan, the provisions of the Plan and any administrative
guidelines, and other rules and regulations adopted by the Board and in force at
the time of the Plan termination shall continue in effect during such time as an
Option or any rights pursuant thereto remain outstanding.

 

1.7 Compliance with Legislation

 

The Board may postpone the exercise of any Option or the issue of any Underlying
Shares pursuant to the Plan for such time as the Board in its discretion may
deem necessary in order to permit the Corporation to effect or maintain
registration of the Plan or the Common Shares issuable pursuant thereto under
the securities laws of any applicable jurisdiction, or to determine that such
shares and the Plan are exempt from such registration. The Corporation shall not
be obligated by any provision of the Plan or grant thereunder to sell or issue
Common Shares in violation of the law of any government or exchange having
jurisdiction therein. In addition, the Corporation shall have no obligation to
issue any Common Shares pursuant to the Plan unless such Common Shares shall
have been duly listed, upon official notice of issuance, with a stock exchange
on which such Common Shares are listed for trading.

 

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1.8 Acceleration of Exercisability of Options Upon Occurrence of Certain Events.

 

The Board may, in its discretion, provide in the case of any Option granted
under the Plan that, in connection with any merger, arrangment or consolidation
which results in the holders of the outstanding voting securities of the
Corporation (determined immediately prior to such merger or consolidation)
owning, directly or indirectly, less than a majority of the outstanding voting
securities of the surviving corporation (determined immediately following such
merger or consolidation), or any sale or transfer by the Corporation of all or
substantially all its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of all or a majority
of the then outstanding voting securities of the Corporation, such Option shall
become exercisable in full or part, notwithstanding any other provision of the
Plan or of any outstanding Options granted thereunder, on and after

 

(A) the fifteenth day prior to the effective date of such merger, arrangement,
consolidation, sale, transfer or acquisition or

 

(B) the date of commencement of such tender offer or exchange offer, as the case
may be.

 

SECTION 2. OPTIONS

 

2.1 Grants

 

Subject to the provisions of the Plan, the Board shall have the authority to
determine the limitations, restrictions and conditions, if any, in addition to
those set forth in Section 2.3 hereof, applicable to the exercise of an Option,
including, without limitation, the nature and duration of the restrictions, if
any, to be imposed upon the sale or other disposition of the Underlying Shares,
and the nature of the events, if any, and the duration of the period in which
any Participant's rights in respect of the Underlying Shares may be forfeited.
An Eligible Person may receive Options on more than one occasion under the Plan
and may receive separate Options on any one occasion. At the date of grant of
any option hereunder, the Eligible Person must be a bona fide director, officer,
employee, consultant (or other person providing services) of the Corporation or
its Subsidaries.

 

2.2 Option Exercise Price

 

The Board shall establish the exercise price ("Exercise Price") of each Option
at the time such Option is granted, which shall not be less than the Fair Market
Value of a Common Share on the date of grant of such Option.

 

The Exercise Price shall be subject to adjustment in accordance with the
provisions of Section 1.4 hereof.

 

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2.3 Exercise of Options

 

(A) The Board shall determine the time or times at which an Option may be
exercised in whole or in part, and the method or methods by which, and the form
or forms (including, without limitation, cash, Common Shares, or other property,
or any combination thereof, having a value on the exercise date equal to the
relevant Exercise Price) in which payment of the Exercise Price may be made or
deemed to have been made. The Board may provide for the receipt, without payment
by the Participant, of an amount per Option (the "Growth Amount") equal to the
difference between the Exercise Price of the Option and the Fair Market Value of
the Common Shares, which Growth Amount, at the election of the Participant, will
be payable either in cash or by the issuance by the Corporation to the
Participant of that number of Common Shares calculated by dividing the Growth
Amount by the Fair Market Value of a Common Share.

 

(B) Options shall not be exercisable later than 5 years after the date of grant.

 

(C) The Board may determine when any Option shall become exercisable and may
determine that the Option can be exercisable in installments.

 

(D) Except as otherwise determined by the Board:

 

  (i) If a Participant ceases to be an Eligible Person as a result of
termination for cause (as such term is defined at common law), no Option held by
such Participant may be exercised following the date on which such Participant
ceased to be an Eligible Person;

 

  (ii) If a Participant ceases to be an Eligible Person for any reason other
than termination for cause or death, any vested Option held by such Participant
may continue be exercised by the Participant to and until the earlier of:

 

  (a) the applicable expiration of the Option Period in respect of such Option;
and

 

  (b) the period after the date on which such Participant ceases to be an
Eligible Person that is permitted by the applicable laws, policies, rules and
regulations of any stock exchange upon which the Underlying Shares are then
listed, posted and/or quoted for trading.; and

 

(iii) in the event of death, the heirs, administrators or legal representatives
of a Participant may exercise the Participant's Options within twelve months
after the date of the Participant's death to the extent such Options were by
their terms exercisable prior to his death or within the period of twelve months
following his death; but for greater certainty no Option shall be exercisable
after its stated termination date. In the event that the heirs, administrators
or legal representatives of a Participant who has died exercises the
Participant's Option in accordance with the terms of the Plan, the Corporation
shall have no obligation to issue the Common Shares until evidence satisfactory
to the Corporation has been provided by such heirs, administrators or legal
representatives that such heirs, administrators or legal representatives are
entitled to acquire the Common Shares under the Plan.

 

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(E) Except as provided in Section 2.3(d), or as otherwise provided in the
applicable Option Agreement, during the lifetime of a Participant, Options held
by such Participant shall be exercisable only by him and no Option shall be
transferable other than by will or the laws of descent and distribution.

 

(F) Each Option shall be confirmed by an agreement (an "Option Agreement")
executed by the Corporation and by the Participant.

 

(G) If, as and when any Common Shares have been duly issued upon the exercise of
an Option and in accordance with the terms of such Option and the Plan, such
Underlying Shares shall be conclusively deemed allotted as fully paid and
non-assessable shares of the Corporation.

 

(H) Options may not be exercised for fewer than 1000 Common Shares at any one
time, unless the Participant holds Options for less than 1000 Underlying Shares.

 

SECTION 3. APPROVAL

 

3.1 Approval

 

The Plan was approved by the Board of Directors on November 28, 2005, and was
approved by the stockholders of the Corporation at its February 24, 2010
Meeting. The Plan was subsequently amended in accordance with provisions in the
Plan by the Board on December 4, 2013.

 

SECTION 4. MISCELLANEOUS

 

4.1 Withholding

 

It shall be a condition to the obligation of the Corporation to issue Common
Shares upon exercise of an Option that the Participant (or any beneficiary,
transferee or person entitled to act under Sections 2.3(d) or 2.3(e) hereof) pay
to the Corporation, upon its demand, such amount as may be requested by the
Corporation for the purpose of satisfying any liability to withhold federal,
state or local income or other taxes. If the amount requested is not paid, the
Corporation may refuse to issue such Common Shares.

 

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4.2 Issuance of Certificates; Legends

 

Common Shares duly acquired under the terms of an Option shall be registered in
the name of the Participant and a share certificate representing the number of
such Common Shares shall be issued in the name of the Participant, his or her
legal representatives or as he, she or they may direct. The Corporation may
endorse such legend or legends upon the certificates for Common Shares issued
upon the exercise of an Option granted hereunder and may issue such "stop
transfer" instructions to its transfer agent in respect of such shares as, in
its absolute discretion, it determines to be necessary or appropriate.

 

4.3 Correction of Defects, Omissions, and Inconsistencies

 

The Board may correct any defect, supply any omission, or reconcile any
inconsistency in this Plan in the manner and to the extent it shall deem
desirable to carry this Plan into effect, subject to applicable regulatory
approval if any.

 

4.4 Other Actions

 

Nothing contained in this Plan shall be construed to limit the authority of the
Corporation to exercise its corporate rights and powers, including but not by
way of limitation, the right of the Corporation to grant Options for proper
corporate purposes other than under the Plan with respect to any other person,
firm, corporation or association.

 

The Plan was adopted by the Board on November 28, 2005 and then amended on
December 4, 2013.

 

 

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