EXHIBIT 10.1
OPTION AGREEMENT
(OPTION TO ACQUIRE OIL AND GAS LEASES IN CURRY COUNTY, NEW
MEXICO)
MORGAN CREEK ENERGY CORP., (herein called "MORGAN") or its nominee,
a Nevada
Registered Corporation
with it business
offices located at
5050 Quorum Drive,
Suite 700, Dallas, Texas, USA 75254
(PARTY of the First Part)
AND
WESTROCK LAND CORP., (herein called "WESTROCK"), a Texas Registered Corporation
with its registered
offices located at 720 Brazos Street, Suite 1115, Austin,
Texas, USA 78701 ;
(PARTY of the Second Part)
WHEREAS:
A. Morgan
or its nominee. and/or its affiliates (in combination called
"MORGAN") desires to
acquire a One Hundred (100%) percent Working Interest
in
approximately
7,763 Net Acres in oil
and gas leases (herein called the
"LEASES") in the lands located in Curry County, in the State of New
Mexico,
(hereinafter referred to as the "ACQUIRED PROPERTIES") from
Westrock.
B. This
Option Agreement (the "AGREEMENT") is binding on both Parties as
provided herein.
C. Morgan has
utilized information provided by Westrock for purposes of
entering in to this Agreement.
D. This
Agreement is based on the representation by Westrock that it
owns all
rights to all
depths pursuant to the Leases comprising a total of
approximately 7,763
Net Acres (sometimes
also referred to as
net mineral
acres herein called "NET ACRES") comprising the Acquired
Properties.
E. The Acquired
Properties encompasses
approximately 5,746
Net Acres (herein
called the "A PORTION
LEASES") with an 81.5% net revenue interest (herein
called "NRI")
and approximately 2,017 Net Acres (herein called the "B
PORTION LEASES") with a 78.5% NRI.
F. Westrock has
disclosed and Morgan
acknowledges that it understands that on
the
approximately
2,017 Net Acres
forming the B Portion Leases, Westrock
has
an option until June 23, 2009 to exercise a FIVE (5) YEAR LEASE for
ONE
HUNDRED (USD$100) DOLLARS per Net Acres.
G. For more
particularity the
Acquired Properties
are set out and located in
the
Map attached hereto as Schedule "A", which the Parties acknowledge,
is
sufficiently particular for the purposes of this Agreement.
The Parties
hereby acknowledge, promise and agree, for good and valuable
consideration the
sufficiency of which is mutually acknowledged by the Parties
hereto, to the following:
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1.
INTERPRETATION.
THE
RECITALS - are formally relied upon by the Parties as an
integral part
of
the body of this Agreement.
THE
HEADINGS - The division of this Agreement into Articles, Sections and
Subsections and the
insertion of headings is for reference only and does
not
affect the construction or interpretation of this Agreement.
References
herein to Articles
and Sections are to Articles and Sections of this
Agreement.
INTENDED MEANING - The terms "this Agreement", "hereof", "hereunder" and
similar expressions
refer to this Agreement and not to any particular
Article, Section or
other portion hereof, unless expressly stated to apply
to a
particular Article,
Section or other portion hereof and this includes
any
agreement, schedule or
instrument which is
supplemental or
ancillary
hereto, unless
something in the subject matter or the context is
inconsistent therewith.
GENDER, NUMBER ENTITY
- In this Agreement,
words importing the singular
number include the
plural and vice versa;
words importing the
masculine,
feminine or neuter
genders includes
the masculine, feminine and neuter
genders; and
words importing persons will include individuals,
partnerships,
associations,
trusts, unincorporated
organizations
and
corporations; where
such importing is reasonably consistent with language,
meaning, character and context herein.
CURRENCY - In this
Agreement all
references
to currency are in United
States Dollars (USD$) unless expressly stated to the contrary
herein.
2. PURCHASE
PRICE. Morgan agrees to pay Westrock FIFTY (USD$50.00) DOLLARS
per
Net
Acre. The total purchase price (the "PURCHASE PRICE") for the Acquired
Property is
calculated
as [(7,763 Net Acres)
X (USD$50.00/Net
Acres) =
THREE HUNDRED AND
EIGHTY-EIGHT
THOUSAND ONE HUNDRED AND FIFTY DOLLARS
(USD$388,150) DOLLARS.
3. OPTION
PERIOD. Westrock hereby grants Morgan the time
period between the
date
of execution of this
Agreement and November
20, 2008 to complete its
due
diligence (herein called the "OPTION PERIOD").
4. ASSIGNMENT.
At the date and time
of Closing,
Westrock will convey the
Acquired Properties to Morgan by a mutually acceptable assignment and bill
of
sale, which will include a special warranty of title, whereby Westrock
expressly limits its
obligation to defending and saving harmless Morgan's
right, title and
interest in and to the
Acquired Properties solely and
exclusively against
any third party claim made, through or under Westrock,
but
not otherwise.
5. LIENS AND
ENCUMBRANCES.
The Acquired
Properties will be
transferred from
Westrock to
Morgan free and clear of all liens, mortgages, rights,
assignments or
reassignment,
reversionary
rights, calls on production,
preferential rights,
consents to assign,
taxes (other than
those for the
current year),
obligations
(including
delinquent
operating expenses),
claims, suits, or any other encumbrances.
6. EFFECTIVE
DATE OF CLOSING.
The effective date of the conveyance of the
Acquired Properties
will be at 12:30 P.M.
(PST) on November 21, 2008 (the
"EFFECTIVE CLOSING DATE"). Parties will use their best
efforts to complete
the
transactions
contemplated in this
Agreement and thereby "close" on or
before November 21, 2008.
7. CONFIRMING
DUE DILIGENCE. Morgan
will conduct due diligence (herein called
"Due
Diligence") to confirm
the title, ownership
and area comprising
the
Acquired Property, together with any other matters Morgan deems
material to
its
decision to exercise the Option and purchase the Acquired Property.
Due
Diligence will include, but is not limited to, the following:
2
<PAGE>
7.1 Confirmation of
the marketability of
title (including
verification of the
"held by production" or "HBP" Leases, as being in full force and
effect).
7.2 If Morgan
provides documentary evidence to Westrock during the Option
Period, in support of
its reasonable
opinion that
Westrock does not
own
marketable title to:
7.2.1 At least a 78.5%
N.R.I. in at least
2,018 Net Acres and at least an
81.5% N.R.I in at
least 5,745
Net Acres comprising the Acquired
Properties, then
Morgan will be deemed to have established that there
is a "MARKETABLE TITLE DEFICIENCY" in the Acquired Properties.
7.3 If Morgan can
establish with documented evidence there is a Marketable
Title Deficiency
in the Acquired
Properties;
then, at its discretion,
Morgan may ter
