EXHIBIT 10.2
THIS AGREEMENT made as of 1 January 1996
BETWEEN:
PINNACLE OIL INC.
-----------------
a corporation incorporated under
the laws of the State of Nevada
1820 - 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
("Company")
OF THE FIRST PART
AND:
XXXXXX XXXXXXXXX
----------------
0000 Xx. Xxxxxx Xxxxxx
Xxxxxxxxx, X. X.
X0X 0X0
("Liszicasz")
OF THE SECOND PART
WHEREAS:
A. Liszicasz has a device, referred to herein as the "SFD Device". Among
other things, the SFD Device can locate underground geological formations which
indicate the presence of Hydrocarbons.
B. Liszicasz has been instrumental in establishing the Company with the
intention that the Company will be a vehicle through which the SFD Device's
potential to locate promising drilling sites may be exploited.
NOW THIS AGREEMENT WITNESSES that in consideration of the premises the parties
covenant and agree as follows:
1. IDENTIFYING & EXPLOITING PROSPECTS
1.1 Identifying Prospects
Using the SFD Device, Liszicasz will identify areas respecting which he
determines there is a good likelihood that Hydrocarbons will be found
thereunder. From time to time Liszicasz will give the Company evaluation
reports setting out particulars of such areas ("Prospects").
-2-
1.2 Dealing with Prospects
(1) Within 180 days of Liszicasz identifying a Prospect to the Company,
the Company will conduct a three-dimensional seismic survey over the
Prospect. Such surveys will be conducted according to Liszicasz's
instructions and, generally, in accordance with normal standards in
the oil and gas industry.
(2) The Company will acquire a leasehold or similar interest respecting
each Prospect unless it is not commercially reasonable to make such an
acquisition. The Company will diligently pursue such acquisitions
until the Company decides it is not commercially reasonable to
complete the acquisition and that the Prospect should be abandoned.
(3) If the Company decides to abandon a Prospect, it will so inform
Liszicasz promptly and deliver up to Liszicasz all SFD Data and
Secondary Data relating to the abandoned Prospect. Liszicasz will be
free thereafter to acquire a leasehold or other interest in the
abandoned Prospect or to sell or otherwise deal with such SFD Data and
Secondary Data. Prospects abandoned by the Company will not be counted
in calculating identified reserves for the purpose of subsection
1.4(1).
(4) At the time the Company acquires a leasehold or other interest in a
Prospect, it will transfer, or cause to be transferred, to Liszicasz
an overriding royalty interest of one percent (1%) in the leasehold or
other interest, will cause such interest to be duly registered in
Liszicasz's name and will provide evidence of such registration to
Liszicasz.
(5) The Company will not sell, assign, transfer or otherwise dispose of
any interest in a Prospect unless:
(a) the purchaser, assignee, transferee or other recipient ("Joint
Venture Co-Owner") gives to Liszicasz a deed acknowledging that
Liszicasz owns an overriding royalty interest of one percent (1%)
in the Prospect, acknowledging that any interest in the Prospect
which the Joint Venture Co-Owner acquires is subject to
Liszicasz's said royalty interest and agreeing to observe
Liszicasz's rights in respect of Liszicasz's said royalty
interest and Liszicasz's rights under this agreement; and
(b) as consideration for such sale, assignment, transfer or other
disposition, the Joint Venture Co-Owner gives the Company
covenants and agreements to the effect that the Prospect will be
exploited and the Company will be entitled to a portion of the
revenue generated by the Prospect.
-3-
1.3 PERFORMANCE CRITERIA
As of the end of any Year, Liszicasz will have satisfied at least one of
the following two tests:
(1) Over the term elapsed to that time, Liszicasz will have identified
Prospects in respect of which the reserves verified by engineers'
reports will be not less than 10 million barrels of oil or
Hydrocarbons which have a value equivalent to 10 million barrels of
oil in total, per Year of the term then elapsed. For example, this
test will have been met at the end of the third Year if the total
value of reserves verified at that time exceeds the value of 30
million barrels of oil.
(2) Liszicasz will have devoted 90 full days of work under this agreement
per Year of the term then elapsed. For example, this test will have
been met at the end of the third Year if Liszicasz has worked 270 full
days in providing services hereunder.
1.4 COMPANY'S RIGHT TO EXCLUSIVITY
Liszicasz will not, during the term of this agreement, use the SFD Device
for the purpose of locating Hydrocarbons except to provide data generated
by the SFD Device to the Company. That is, the Company will, during the
term of the agreement, have the exclusive right to data about Hydrocarbons
generated by the SFD Device.
1.5 COMPANY'S OBLIGATION AS TO EXCLUSIVITY
Except with the express approval of Liszicasz, the Company will not become
involved in any business except acquiring and exploiting Prospects in
accordance with this agreement.
1.6 COMPANY HAS NO INTEREST IN THE SFD DEVICE
Liszicasz is not transferring any interest in the SFD Device to the
Company. Subject only to his obligations hereunder, Liszicasz will remain
free to deal with his property in the SFD Device and with the data produced
by the SFD Device without interference from the Company. The Company will
at no time claim any interest in the SFD Device. Whenever requested by
Liszicasz, the Company will promptly provide to Liszicasz a certificate in
writing and in such form as Liszicasz, acting reasonably, will require
confirming that the Company makes no claim to any interest in the SFD
Device.
-4-
1.7 CONFIDENTIALITY
The Company acknowledges that the value of the SFD Device depends upon
secrecy. If others learn how it works, its value will be lost or
significantly diminished. The Company will not disclose to any person any
information about the SFD Device. Whenever the Company uses or releases any
SFD Data or Secondary Data, the Company will observe all reasonable
requests made by Liszicasz for the purpose of frustrating others' attempts
to determine how the SFD Device works.
2. LISZICASZ'S RENUMERATION
2.1 ROYALTY
In consideration for Liszicasz's services hereunder, the Company will
ensure that Liszicasz receives an overriding royalty interest of one
percent (1%) in all Prospects. It is intended that Liszicasz will receive
one percent (1%) of the gross revenue generated by any Prospect.
2.2 ADDITIONAL TO RENUMERATION FOR OTHER SERVICES
It is expected that the Company will engage Liszicasz's services in other
capacities from time to time, whether as an officer, a director, an
employee, an independent contractor or otherwise. The Company will pay
Liszicasz for such other services separately. The royalty to be received by
Liszicasz hereunder will be treated as consideration only for the services
expressly provided for in this agreement.
3. TERM
3.1 INITIAL TERM
Subject to any extension under section 3.2, the term of this agreement will
be five (5) Years commencing 1 January 1996 and ending 31 December 2000.
3.2 EXTENSION
Approximately 90 days before expiry of the term of this agreement
(including the expiry of an extension under this section 3.2), the parties
will negotiate in good faith for the extension of the term of this
agreement. If an agreement to extend the term is reached:
(1) where the extension is for one Year (or, in the case of a second or
subsequent extension, a further one Year) and no other term or
condition of the agreement is altered, such agreement to renew may be
oral or written; but
(2) where the extension is for any period other than one Year or any
material term or condition of this agreement is varied, the renewal
agreement will be made in writing and signed by both parties.
4. INTERPRETATION/GENERAL
4.1 GOOD FAITH
The Company will exercise the utmost good faith in its dealings with
Liszicasz hereunder. Without limitation:
(1) The Company will faithfully observe its obligation to keep all
information about the SFD Device confidential.
(2) The Company will faithfully report to Liszicasz, fully and accurately,
all information which relates to or which may affect any Prospect or
Liszicasz's royalties arising hereunder.
(3) The Company will not, by any means, attempt to circumvent the parties'
intentions herein. For example, the Company will not give to any
Person any SFD Data or any Secondary Data except with Liszicasz's
written consent.
4.2 LIBERAL INTERPRETATION
This agreement will be construed so as to give effect to the parties'
intention that Liszicasz should receive one percent (1%) of all revenues
which may result, in the widest sense, from the services he provides to the
Company under this agreement.
4.3 DEFINITIONS
In this agreement, where the context permits:
(1) "Hydrocarbons" means all petroleum, natural gas and related
hydrocarbons and includes any other substances of value, whether
gases, fluids or solids and whether hydrocarbons or not, rights to
which are customarily included in oil and gas leases.
(2) "Person" includes an individual, partnership, corporation,
unincorporated association, society, government or any agency or
department thereof, trust, and the successors, assigns, personal
representatives or other legal representatives of such person or other
entity to which, according to the context, the provision in question
should reasonably apply.
(3) "Secondary Data" means any information acquired by the Company about
the location of Hydrocarbons where the Company uses SFD Data in
acquiring such information including, without limitation, results of
seismic surveys and evaluations, geological/geophysical reports, well
logs, etc.
(4) "SFD Data" means information which Liszicasz gives to the Company
under this Agreement.
(5) "SFD Device" means a device, invented by Liszicasz, known as a `stress
field detector'.
(6) "Year" means a calendar year.
4.4 LAW OF B.C.
This agreement will be governed by and construed in accordance with the
laws of British Columbia. Any dispute hereunder will be resolved in the
Courts of the Province of British Columbia and the parties will, for such
purposes, attorn to the jurisdiction of those Courts.
4.5 LAYOUT OF THIS AGREEMENT
The division of this agreement into separate parts, sections, subsections,
paragraphs, and schedules, and the insertion of headings are for
convenience only and will not affect the interpretation of this agreement.
4.6 SEVERABILITY
If any provision of this agreement or the application to any Person or
circumstances to any extent is held to be invalid or unenforceable, the
remainder of this agreement or the application of such provision or portion
thereof to any other Person or circumstances will not be affected thereby.
Each provision of this agreement will be valid and enforceable to the
fullest extent permitted by law.
4.7 NO IMPLIED WAIVERS
This agreement may be amended or modified from time to time only by written
agreement of the Company and Liszicasz. For greater certainty, because of
the close connection between them, the parties may not always insist on
strict observance of the terms of this agreement. Either party may, at any
time, insist upon the other strictly performing that other party's
obligations hereunder notwithstanding any such pattern of relaxation in
previous dealings between them.
4.8 Enurement
This Agreement will enure to the benefit of and be binding on the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and assigns.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of
the time and date first above written.
The CORPORATE SEAL of )
PINNACLE OIL INC. )
hereunto affixed in the )
presence of: )
)
) c/s
[SIGNATURE ILLEGIBLE] )
--------------------------- )
authorized signatory )
)
___________________________ )
authorized signatory )
SIGNED, SEALED and DELIVERED )
by XXXXXX XXXXXXXXX )
in the presence of: )
)
/s/ X. Xxxxxxxx )
--------------------------- )
witness )
XXX XXXXXXXX/OFFICE MANAGER ) /s/ Xxxxxx Xxxxxxxxx
--------------------------- ) -----------------------------
print name/occupation ) Xxxxxx Xxxxxxxxx
2 - 000 X. 00XX XXX )
--------------------------- )
address )
VANCOUVER, BC VSY 153 )
--------------------------- )
address )
