EXHIBIT 10.2 - MATERIAL CONTRACT - OPTION AGREEMENT
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OPTION AGREEMENT
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This AGREEMENT dated this 1st day of April 2003, between Production Specialties
Co., Inc., a California Corporation (the "Optionor") and Barola Oil & Gas Co.
Inc., a Nevada Corporation (the "Optionee").
WHEREAS:
1. The Optionor currently owns a 5.3% working interest, in the prospect
area known as Triangle T Ranch, the referenced Producing Xxxxx being known as
the Triangle T 1-28; 1-29; 1-33; 2-33, located in Madera County in the State of
California (the "Prospect Xxxxx");
2. The Optionor has estimated that the Producing xxxxx are likely to be
valued at $3,392,700.00 (see attached) and deemed commercial. Also included
are rights to participate for it's proportionate share of all lands and seismic
for future development of this project.
3. The Optionee desires to acquire an option to acquire a working interest
in the Prospect Xxxxx and future lands of not less than 5% and not more than 50%
of the Grantor's working interest (the "Subject Interest") on the terms and
subject to the conditions set forth in this Agreement;
4. The Optionor desires to grant the Optionee the Subject Interest on the
terms and subject to the conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and covenants contained in this
agreement and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Effective Date and Option Period
1.01. This Agreement is effective from the date written above to the date on
which the Prospect Xxxxx are ready for drilling or 18 months, whichever occurs
first (the "Option Period")
2. Grant of Option
2.01. For and in consideration of the sum of twenty five thousand ($25,000)
dollars, non refundable (the "Initial Option Payment") payable to NANCO, the
Optionor hereby grants the Optionee the exclusive right to acquire the Subject
Interest in the Prospect Xxxxx in an amount of not less than 5% and not more
than 50% of the Optionor's working interest in the Prospect Xxxxx; and suture
seismic and lands.
3. Purchase Price and Related Items
3.01. Purchase Price. The purchase price (the "Purchase Price") for the
Subject Interest shall be determined prior to or upon the expiry of the Option
Period in accordance with the percentage interest that the Optionee elects to
purchase. The purchase price shall be thirty four thousand ($34,000.00) dollars
per percentage point.
3.02. Upon exercising the option, the Optionee shall become liable for its
proportionate share of the all costs associated with drilling, completion,
facilities, lands, leasing, and seismic as declared and estimated by the
authority for expenditure (the "AFE"), and any and all additional costs relating
to said Prospect Xxxxx which are joint
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interest billed ("JIB'd") proportionately
to all working interest owners, which shall correspond to the interest
percentage acquired by the Optionee hereunder. Once option has been exercised,
optionee shall have the benefit of accepting its acquired proportionate share
relating to proceeds from the sale of hydrocarbons from said prospect. All
payments shall be distributed from Optionor to Optionee.
3.03. In the event the Optionor receives a bonified offer of greater value
which Optionor shall grant Optionee 30 days the right to accept or refuse those
terms given by third party. If the offer is not accepted by Optionee this
agreement shall be null and void.
4. Exercise of Option
4.01. The Option shall be exercised, if at all, by the giving of written
notice (the "Exercise Notice") by the Optionee to the Optionor stating of the
Optionee's election to acquire the Subject Interest , including the actual
interest percentage to be purchased at any time during the Option Period and for
a period ending ten business days following receipt by the Optionee of written
notice from the Optionor stating that the xxxxx are ready for drilling or ten
business days following the expiry of 12 months from the date of this agreement
(collectively the "Termination Date");
4.02. The Exercise Notice shall set forth the date on which the closing
shall occur (the "Closing Date"), provided that in no event shall the Closing
Date be later than thirty (30) days after the Termination Date;
5. Closing
5.01. The Closing ("Closing") of the sale and purchase provided herein shall
be consummated through the execution by the parties of a purchase and sale
agreement on or before 1:00 p.m. Pacific Time on the Closing Date.
6. Representation and Warranties of the Optionor
6.01. The Optionor shall use its best commercially reasonable efforts to
prepare or have prepared the Prospect Well for drilling;
7. Representations and Warranties of the Optionee
7.01. The Optionee represents and warrants that each of the statements
contained in this paragraph are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then as though the Closing Date were substituted for the date of this
Agreement);
8. Closing Documents
8.01. Optionor's Closing Documents. At the Closing, the Optionor shall
provide the Optionee with the following documents or instruments (the
"Optionor's Closing Documents"):
(a) Such assignments or other appropriate instruments assigning and
transferring the Subject Interest to the Optionee;
(b) Such other documents as may be required by this Agreement or as may be
reasonably required by counsel to the Optionee.
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8.02. Optionor's Closing Documents. At the Closing, the Optionee shall
provide the Optionor with the following documents or instruments (the
"Optionee's Closing Documents"):
(a) The Purchase Price required to be paid by the Optionee pursuant hereto
in the form required hereby;
(b) Such assignment or other appropriate instruments assigning and
transferring the Subject Interest to the Optionee;
(c) Such documents as may be necessary to reflect the good standing and
authority of the Optionee as may be reasonably required by the Optionor; and
(d) Such other documents as may be required by this Agreement or as may be
reasonably required by counsel to the Optionor.
9. Relationship of the Parties
9.01. Except as specifically provided in this Agreement, the Optionee shall
not be authorized, empowered or constituted as the agent of the Optionor in any
manner; nor is the Optionee authorized or empowered to assume or create any
obligation or responsibility whatsoever, expressed or implied, on behalf of or
in the name of the Optionor; or is the Optionee authorized or empowered to bind
the Optionor in any manner; or authorized or empowered to make any
representation, warranty, covenant, agreement or commitment on behalf of the
Optionor.
10. Non-Disclosure
10.01. The Optionor and the Optionee each hereby agree, on behalf of itself
and its Affiliates as follows:
(a) Neither the Optionor not the Optionee shall at any time or in any manner
or fashion, either directly or indirectly, without the prior agreement of the
other party divulge, disclose or communicate to any third party or entity
whomsoever and of the Confidential Information (as hereinafter defined), except
as may be required by a court of competent jurisdiction in order to comply with
the requirements of any law, governmental order or regulation;
(b) The Optionor and the Optionee shall take all reasonable action, which
shall be necessary or appropriate, to prevent the unauthorized use and
disclosure of any Confidential Information, and to protect the interests of each
other in and to the Confidential Information;
(c) The Optionor and the Optionee shall each require their affiliates to
abide by the terms of this Agreement and retain all Confidential Information in
strict confidence;
(d) For the purposes of this Agreement, Confidential Information shall be
defined as any and all communications, documents and all other information,
documents, items or communication related to the Optionor or the Optionee and
disclosed by or to the Optionor or the Optionee;
(e) In the event information becomes available to the Optionor or the
Optionee, on a non-confidential basis from a source other than the Optionor, or
the Optionee provided that to the best knowledge of the Optionor or the
Optionee, such party is not bound by a confidentiality agreement with respect
to such information.
11. Miscellaneous Provisions
11.01. This Agreement may not be modified except in writing signed by the
parties hereto;
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11.02. This Agreement shall be considered unique and personal to the parties
hereto. Therefore, neither the Optionee nor the Optionor may assign all or any
part of the obligations undertaken pursuant to this Agreement without first
having obtained the prior written consent of the other party hereto;
11.03. The parties signing this Agreement represent and warrant that they
have the full authority to do so;
11.04. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same Agreement;
11.05. Facsimile signatures on counterparts of this Agreement are hereby
authorized and shall be acknowledged as if such facsimile signatures were an
original execution;
11.06. This Agreement shall be interpreted in accordance with and be
governed by laws of the State of California, irrespective of the fact that one
or more parties hereto is now or may hereafter be a resident of a different
state, jurisdiction or country;
11.07. All notices to be given under this Agreement shall be in writing, and
may be given, served or made by depositing the same with a recognized overnight
delivery service or by delivering the same in person to such party as follows:
If to the Optionor:
Production Specialites Co., Inc.
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xx 00000
000-000-0000
If to the Optionee:
Barola Oil & Gas Co. Inc.
0000 000xx Xxxxxx X.X.
Xxxxxxxxx, Xxxxxxxxxx
XXX, 00000
Ph: 206.333.5262
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
OPTIONOR: PRODUCTION SPECIALTIES CO., INC.:
Per:
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Xxxxxxxx Xxxxx, Witness Xxxx Xxxxxx
Per:
Witness:
OPTIONEE: BAROLA OIL & GAS CO. INC.
Per:
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Witness: Xxxxx Xxxxxx
