Exhibit 10.5
OPTION
AGREEMENT
This OPTION AGREEMENT ("
Agreement ") is made as of August 31, 2005 (the "
Agreement Date ") by and among SNRG Corporation, a Nevada
corporation (“ Optionee ”), Bay City Partners,
LLC, a Nevada limited liability company (" Bay City "), and
Port Assets, LLC, a Texas limited liability company (“
Port Assets ”).
RECITALS
WHEREAS , Bay City owns 51% and Optionee owns 49% of the
outstanding membership interests of Port Assets and Bay City is the
Chief Executive Manager of Port Assets; and
WHEREAS , the Optionee has agreed to operate and manage
the day to day affairs of the Port Assets gasification facility,
pursuant to a facility operating and lease agreement dated of even
date herewith, in exchange for, among other things, an
unconditional option to purchase all of Bay City’s membership
interests of Port Assets on the terms and conditions set forth in
this Agreement.
AGREEMENT
NOW THEREFORE
, in consideration of the promises
and the mutual covenants contained in this Agreement, the parties
agree as follows:
ARTICLE 1
OPTION
1.1
Option Grant . Bay City hereby grants to Optionee an
unconditional right to purchase all membership interests currently
owned by Bay City, which membership interests constitute 51% of the
outstanding membership interests of Port Assets (the “
Option ”), on the terms set forth in this
Agreement.
1.2
Option Term . The Option granted under this Agreement
will expire, unless otherwise exercised, on or before November 30,
2005 (the “ Expiration Date ”).
1.3
Option Exercise Price . The price for which Optionee
shall be entitled to purchase the membership interests covered by
the Option shall be as follows (the “ Exercise Price
”):
(a) If
the Option is exercised on or before September 30, 2005, then the
exercise price shall be $4,415,000.
(b) If
the Option is exercised after September 30, 2005 and on or before
October 31, 2005, then the exercise price shall be
$4,715,000.
(c) If
the Option is exercised after October 31, 2005 and on or before
November 30, 2005, then the exercise price shall be
$5,015,000.
1.4
Exercise of Option . Optionee may exercise the Option
at any time on or before the Expiration Date by delivery of the
Exercise Price to Bay City at the address listed on the signature
page of this Agreement, or at such other address as is provided to
Optionee by at least 15 days prior
written notice. For purposes of
determining the Exercise Price, the Option shall be deemed to have
been exercised as of the date set forth on the face of such
promissory note.
1.5
No Obligation . Optionee shall have no obligation to
exercise the Option granted by this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
BAY CITY
2.1
Authority . Bay City has the full legal right, power
and authority to execute and deliver this Agreement and to perform
its obligations under this Agreement.
2.2
Due Execution . This Agreement has been duly executed
and delivered by Bay City and constitutes the legal, valid and
binding obligation of Bay City, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’
rights generally, and by laws relating to the availability of
specific performance, injunctive relief or other equitable
re
