PROPERTY OPTION PURCHASE AGREEMENT
This agreement entered into as of the date set forth below is between
Cotton Valley Energy Corporation, a Nevada Corporation (hereinafter referred to
as "Purchaser"), with its address at 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx,
00000 and South Alabama Exploration Limited Partnership (hereinafter referred to
as "Seller"), represented by its general partner, Hibernia Management Company,
located at 0000 Xxxxxxxx Xx., Xxxxx 000, Xxxxxx, Xxxxx 00000
W I T N E S S E T H
WHEREAS, Seller represents that it owns an unrecorded option (the "Option")
to purchase a 25% working interest in 640 acres of Oil, Gas, and Mineral leases
owned by Xxxxxx Exploration, Inc. and Xxxxxx Energy Corporation (the "Owners")
within the boundaries of the Movico Field, Mobile County, Alabama, as outlined
in Exhibit A attached hereto (the "Property"), and to participate in the area of
mutual interest with the Owners as outlined on Exhibit B attached hereto; and
WHEREAS, Seller is willing to sell, assign and transfer to Purchaser all of
its rights, title and interest in the Option, and have Purchaser substituted in
its place and stead;
NOW THEREFORE, for and in consideration of the delivery of certain
securities of Purchaser as set forth below and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, Seller hereby
grants, sells, assigns and transfers to Purchaser all its right title and
interest in the Option according to the following terms and conditions:
1. The securities (which shall be delivered to Seller on or before March
15, 1995) shall consist of: (a) 1,558,560 shares of the Common Stock
of Purchaser, $0.001 par value (the "Common Stock"); (b) a warrant to
purchase 389,640 shares of Common Stock at Three Canadian Dollars
(C$3.00) per share on or before March 15, 1996 (the "C$3.00 Warrant");
(c) a warrant to purchase 389,640 shares of Common Stock at Four
Canadian Dollars (C$4.00) per share on or before March 15, 1997 (the
"C$4.00 Warrant"); and (d) a warrant to purchase 389,640 shares of
Common Stock at Five Canadian Dollars (C$5.00) per share on or before
March 15, 1998 (the "C$5.00 Warrant"). Seller shall execute a
securities acquisition agreement with respect to the securities being
acquired in the form of Exhibit C attached hereto. The warrants to be
delivered shall be in the form of Exhibit D attached hereto.
2. On the date Purchaser acquires title to the Property, Purchaser shall
pay Seller $117,500 in immediately available funds.
3. In the event Purchaser acquires less than 25% working interest in the
640 acres (160 net acres) having good and merchantable title, Seller
shall return to Purchaser shares of Common Stock, C$3.00 Warrants,
C$4.00 Warrants and C$5.00 Warrants proportional to the amount of net
acres not so acquired. In the event Purchase does not exercise any
portion of its option hereunder, for any reason, Seller, upon written
demand, shall return 50% of amounts it previously received of Common
Stock, C$3.00 Warrants, C$4.00 Warrants and C$5.00 Warrants. 3. This
agreement shall be governed by the laws of the State of Texas.
4. Should any additional instruments need to be executed, certified, or
delivered by one Party to the other, to any third party and/or filed
with or delivered to any public officer in order to carry our the
purpose and intent of this Agreement, each Party hereto agrees to
promptly execute and deliver
Property Option Agreement........Page 1
any and all such instruments reasonable necessary to carry out the
purpose and intent of this Agreement.
5. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and each of which alone, and
all of which together, shall constitute one and the same
instrument. It is agreed to that a facsimile transmission signed
copy of this Agreement shall be treated and considered an
original for all intended purposes.
6. It is expressly agreed that this Agreement embodies the entire
agreement of the parties with regard to the subject matter
herein, and that there is no other oral or written agreement or
understanding between the parties at the time of execution
hereunder. In addition, this Agreement may be amended or modified
only by written agreement signed by all of the parties hereto.
7. The terms and provisions hereof shall be binding upon and inure
to the benefit of the parties hereto and their successors,
transferees, sub-licensees and assigns.
Executed as of this ____ Day of February, 1995.
COTTON VALLEY ENERGY CORPORATION
By______________________Title:___________
SOUTH ALABAMA EXPLORATION LIMITED PARTNERSHIP
HIBERNIA MANAGEMENT COMPANY, General Partner
By: ______________________Title__________
Property Option Agreement........Page 2
