EXHIBIT 1
FORM OF LOCK-UP AGREEMENT
July __, 2005
[Name]
[Address]
Dear Sir:
RE: ARRANGEMENT AGREEMENT DATED JULY 20, 2005 BETWEEN DYNAMIC OIL & GAS,
INC., SEQUOIA OIL & GAS TRUST, SHELLBRIDGE OIL & GAS, INC. AND 0730008
B.C. LTD. (THE "ARRANGEMENT AGREEMENT")
Reference is made to the Arrangement Agreement between Dynamic Oil &
Gas, Inc. ("DYNAMIC"), Sequoia Oil & Gas Trust (the "TRUST"), Shellbridge Oil &
Gas, Inc. and 0730008 B.C. Ltd., contemplating a plan of arrangement (the
"ARRANGEMENT") under the Business Corporations Act (British Columbia). Unless
otherwise defined herein, all capitalized terms referred to herein shall have
the meanings attributed thereto in the Arrangement Agreement.
We understand that you (the "SELLING SECURITYHOLDER") or your
affiliates beneficially own, directly or indirectly, or exercise control or
direction over, the number of Dynamic Shares and Dynamic Options set forth in
your acceptance at the end of this agreement.
Any references in this agreement to Dynamic Shares owned or controlled
by the Selling Securityholder shall mean such number of Dynamic Shares and,
where the context requires, shall include all Dynamic Shares issued to the
Selling Securityholder after the date hereof pursuant to the exercise of Dynamic
Options.
This agreement sets out the terms and conditions upon which the Selling
Securityholder has agreed, among other things, to support the Arrangement and to
vote, or cause to be voted in favour of the Arrangement, all of the Dynamic
Shares (including Dynamic Shares issuable upon the exercise of Dynamic Options)
held by the Selling Securityholder that are, or will be, beneficially owned or
controlled by the Selling Securityholder.
This agreement is conditional on and shall only be effective on the
execution of the Arrangement Agreement.
1. REPRESENTATIONS OF SELLING SECURITYHOLDER
The Selling Securityholder represents and warrants to the Trust that:
(a) it is the sole beneficial owner of the number of Dynamic
Shares and the number of Dynamic Options (collectively, the
"SELLING SECURITYHOLDER'S SECURITIES") set forth opposite the
name of the Selling Securityholder below and the Selling
Securityholder's
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Securities are all of the Dynamic Shares and Dynamic Options
beneficially owned, directly or indirectly, by the Selling
Securityholder;
(b) if the Selling Securityholder is a corporation, it is duly
incorporated or created and validly existing under the laws of
its jurisdiction of incorporation, and it has corporate power
and authority to enter into this agreement and perform its
obligations hereunder;
(c) the Selling Securityholder is duly authorized to execute and
deliver this agreement and this agreement is a valid and
binding agreement enforceable against the Selling
Securityholder in accordance with its terms; neither the
execution of this agreement by the Selling Securityholder nor
the completion by the Selling Securityholder of the
transactions contemplated hereby will constitute a violation
of or default under, or conflict with, any contract,
commitment, agreement, understanding, arrangement or
restriction of any kind to which the Selling Securityholder
will be a party or by which it will be bound at the time of
such completion or, if the Selling Shareholder is a
corporation, its constating documents;
(d) as of the record date for the Meeting, the Selling
Securityholder will have (without exception) valid and
marketable title to the Selling Securityholder's Securities
free and clear of all claims, liens, charges, encumbrances and
security interests, except for the Selling Securityholder's
obligations under this agreement;
(e) except as contemplated by this agreement, the Selling
Securityholder has not previously granted or agreed to grant
any proxy in respect of the Dynamic Shares or entered into any
voting trust, vote pooling or other agreement with respect to
the right to vote; and
(f) other than the Dynamic Options and options to purchase shares
that may be issued pursuant to Dynamic's existing stock option
plan, the Selling Securityholder has no agreement, option,
right or privilege capable of becoming an agreement, option,
right or privilege, for the purchase, subscription or issuance
of any of the unissued shares in the capital of Dynamic or for
the issue of any other securities of any nature or kind of
Dynamic.
2. COVENANTS OF SELLING SECURITYHOLDER
By the acceptance of this agreement, the Selling Securityholder hereby
agrees, subject to the terms of SECTION 6 of this agreement, from the date
hereof until the earlier of the termination of this agreement and the Effective
Time, to:
(a) not withdraw any proxy (if any) delivered to Dynamic pursuant
to the Arrangement, except in accordance with the provisions
of SECTION 6 hereof;
(b) vote all of the Selling Securityholder's Dynamic Shares and
any other Dynamic Shares (collectively, the "DYNAMIC
SECURITIES") acquired by the Selling Securityholder prior to
the Meeting and any other Dynamic Securities over which
control or direction is exercised by the Selling
Securityholder, in approval of the Arrangement and any
resolutions or matters relating thereto at any meeting of the
securityholders of Dynamic called to consider the same and,
with respect to any other matter relating to the Arrangement
that may be put before the securityholders of Dynamic, as the
Trust may direct;
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(c) not exercise any statutory rights of dissent or appraisal in
respect of any resolution approving the Arrangement, or any
aspect thereof, and not exercise any other securityholder
rights or remedies available at common law, pursuant to the
Business Corporations Act (British Columbia) or otherwise to
delay, hinder, upset or challenge the Arrangement;
(d) other than in connection with the exercise of the Selling
Securityholder's Dynamic Options and the sale of the Dynamic
Shares acquired on exercise of the Dynamic Options, not
(without the prior consent of the Trust) sell, assign,
transfer or otherwise convey or dispose of any of the
Selling Securityholder's Securities or any other Dynamic
Securities acquired by the Selling Securityholder prior to the
Effective Time (except to an affiliate of the Selling
Securityholder provided that such affiliate agrees to be bound
by the terms of this agreement and provided that the Selling
Securityholder remains liable for the performance by such
affiliate of all terms and obligations of the Selling
Securityholder hereunder);
(e) not (without the prior consent of the Trust), directly or
indirectly, initiate, solicit or cause any offer, proposal or
expression of interest (confidential or otherwise) to
acquire any assets of Dynamic outside of the ordinary course
of business of Dynamic or any of Dynamic's issued or
unissued securities, whether directly or indirectly; induce,
directly or indirectly, or attempt to induce any other person
to initiate any securityholder proposal; provide any
information concerning securities, assets or the business or
operations of Dynamic to any third person out of the ordinary
course of business (except (i) to the Selling Securityholder's
advisors, including Xxxxxx & Co. Limited, (ii) upon compulsion
of a regulatory authority or a court of competent jurisdiction
and (iii) as contemplated by the Arrangement Agreement);
pursue any other material corporate acquisition or
disposition, amalgamation, merger, arrangement,
recapitalization, liquidation, dissolution, reorganization
into a royalty trust or income fund or purchase or sale of
assets or make any other material change to the business,
capital or affairs of Dynamic (other than as contemplated by
the Arrangement Agreement); or conduct any activity otherwise
detrimental to the Arrangement; provided that the foregoing
shall not prevent the board of directors or officers of
Dynamic from responding as required by law to any
unsolicited bona fide submission or proposal regarding any
acquisition or disposition of assets or any unsolicited
proposal to amalgamate, merge or effect an arrangement or any
unsolicited acquisition proposal generally or make any
disclosure with respect thereto which in the judgment of the
board of directors, in good faith, or upon advice of counsel
is required or advisable under applicable law;
(f) vote as a securityholder of Dynamic against any proposal
submitted to the securityholders of Dynamic involving any
person other than the Trust concerning any merger, sale of
substantial assets, business combination, sale or purchase of
shares or similar transaction involving Dynamic or any of its
subsidiaries; and
(g) vote as a securityholder of Dynamic against any proposal
submitted to the securityholders of Dynamic which may reduce
the likelihood of the Arrangement being successfully
completed.
3. DYNAMIC OPTIONS
The Selling Securityholder acknowledges and agrees that pursuant to
the Arrangement, all outstanding Dynamic Options shall be exercised, cancelled
or otherwise terminated. The Selling
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Securityholder agrees to take all such steps and execute all such agreements as
are deemed necessary by the Trust so that the Dynamic Options held by the
Selling Securityholder are either exercised, cancelled or terminated as
contemplated by the Arrangement Agreement.
4. FIDUCIARY DUTIES
Nothing herein shall restrict or limit the actions of any director or
officer required to be taken in the discharge of his fiduciary duties as a
director or officer of Dynamic.
5. EXPENSES
The Trust and the Selling Securityholder agree to pay their own
respective expenses incurred in connection with this agreement.
6. TERMINATION
It is understood and agreed that the respective rights and obligations
hereunder of the Trust and the Selling Securityholder shall cease and this
agreement shall terminate if the Arrangement Agreement is terminated by Dynamic
or the Trust in accordance with its terms.
In the event of termination of this agreement, this agreement shall
forthwith be of no further force and effect and there shall be no continuing
obligation or liability on the part of either the Selling Securityholder or the
Trust, except as set forth in SECTION 5 which provision shall survive the
termination of this agreement. Nothing herein shall relieve any party from
liability for any breach of this agreement.
7. AMENDMENT
Except as expressly set forth herein, this agreement constitutes the
whole of the agreement between the parties pertaining to the subject matter
hereof and may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
8. ASSIGNMENT
Except as expressly set forth herein, no party to this agreement may
assign any of its rights or obligations under this agreement without the prior
written consent of the other party.
9. DISCLOSURE
Prior to first public disclosure of the existence and terms and
conditions of this agreement, none of the parties hereto shall disclose the
existence of this agreement, or any details hereof, to any person other than the
Trust, its directors and officers or other Dynamic Securityholders executing
substantially similar agreements, without the prior written consent of the other
parties hereto, except to the extent required by law or pursuant to a request
from a stock exchange. The existence and terms and conditions of this agreement
may be disclosed by Dynamic and the Trust in the press release issued in
connection with the execution of the Arrangement Agreement.
10. ENUREMENT
This agreement will be binding upon and enure to the benefit of the
Trust, the Selling Securityholder and their respective executors,
administrators, successors and permitted assigns.
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11. APPLICABLE LAW
This agreement shall be governed and construed in accordance with the
laws of the Province of Alberta and the federal laws of Canada applicable
therein and each of the parties hereto irrevocably attorns to the jurisdictions
of the courts of the Province of Alberta.
12. COUNTERPARTS
This agreement may be signed in counterparts which together shall be
deemed to constitute one valid and binding agreement and delivery of such
counterparts may be effected by means of telecopier.
Yours truly,
SEQUOIA OIL & GAS TRUST BY ITS ADMINISTRATOR,
SEQUOIA OIL & GAS LTD.
Per:
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ACCEPTANCE
The foregoing is hereby accepted as of and with effect from the date
first above written and the Selling Securityholder hereby confirms that the
Selling Securityholder beneficially owns ____________ Dynamic Shares and
____________ Dynamic Options to acquire a further ___________ Dynamic Shares.
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Witness: Name:
