EXHIBIT 10.7
OPTION AGREEMENT
(OPTION TO ACQUIRE OIL AND GAS LEASES IN LAMAR/FORREST COUNTY, MISSISSIPPI)
Mainland Resources, Inc.
17314 State Highway 249, Suite 306
Houston, Texas 77064
AND
Westrock Land Corp.
5050 Quorum Drive
Suite 700
Dallas, Texas 75254
It is understood that Mainland Resources, Inc., and/or its affiliates,
(hereinafter referred to as "Mainland") wish to acquire 5,000 net acres in
mineral oil and gas leases in the lands located in Lamar and Forrest Counties,
in the State of Mississippi, (hereinafter referred to as the "Acquired
Properties") from Westrock Land Corp., (hereinafter referred to as "Westrock").
It is the intent that this Option Agreement (the "Agreement") shall be binding
on both parties to the extent set forth herein.
Mainland has utilized information provided by Westrock for purposes of entering
in to this Agreement. This is Option Agreement is based on the representation
that it owns all rights to all depths (which shall include the Haynesville Shale
Formation) pursuant to the oil and gas leases (totaling approximately 5,000 net
acres with a 75% net revenue interest).
Mainland and Westrock have agreed to the following:
1. PAYMENT. Mainland agrees to pay Westrock USD$625.00 per net mineral
acre. Mainland also agrees to pay a deposit of USD$500,000 to secure
this Option Agreement. The balance of the acquisition cost are due and
payable upon completion of due diligence by Mira and appropriate
assignments being prepared and executed on the oil and gas leases.
2. OPTION PERIOD. Westrock grants Mainland until October 15, 2008 to
complete its due diligence.
3. ASSIGNMENT. Westrock, at Closing, shall convey the Acquired Properties
to Mainland by a mutually acceptable assignment and bill of sale,
which shall include a special warranty of title, defending against any
person claiming by, through or under Westrock, but not otherwise.
4. LIENS AND ENCUMBRANCES. The Acquired Properties shall be transferred
from Westrock to Mainland free and clear of all liens, mortgages,
rights 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.
5. EFFECTIVE DATE, CLOSING. The effective date of the conveyance of the
Acquired Properties shall be at 4:00 P.M. local time on the Closing
Date (the "Effective Date"). The parties will use their best efforts
to close no later than October 15, 2008.
6. CONFIRMING DUE DILIGENCE. Mainland will conduct confirming due
diligence ("Due Diligence") which shall include, but not limited to
the following:
A. Confirmation of the marketability of title (including
verification of HBP leases being in full force and effect). If,
in the reasonable opinion of Mainland , Westrock does not own
marketable title to at least a 75% net revenue interest in at
least 5,000 net acres which are included in the Acquired
Properties, Mainland, at its direction may terminate this Option
Agreement and neither party shall have any further obligations to
the other hereunder and Westrock will return the UDS$500,000
deposit.
B. Review of all lease agreements (including lease expirations,
surface access restrictions and drilling commitments, if any),
unit agreements, and other contracts applicable to the Acquired
Properties. Mainland's obligations hereunder shall be subject to
its reasonable approval of the lease agreements and other
material agreements affecting the Acquired Properties.
C. Other acts of Due Diligence appropriate to the transaction as
mutually agreed between the parties.
7. COOPERATION AND EXCLUSIVITY. Mainland and Westrock will cooperate in
good faith and proceed expeditiously in the preparation of all
documents necessary to consummate the transaction contemplated hereby.
Westrock agrees that after execution of this Option Agreement, and for
sol long as it is in effect, it will not directly or indirectly
solicit or entertain any other offer to acquire the Acquire Properties
or enter into any negotiations or agreement that provides for the
acquisition of the Acquired Properties.
8. ACCESS TO DATA. Westrock agrees to provide Mainland reasonable access
in Westrock's office to the books and records of Westrock pertaining
to the Acquired Properties promptly after execution of this Option
Agreement.
9. CONFIDENTIALITY. It is understood and agreed that this Option
Agreement and its substance shall remain confidential by and between
Westrock and Mainland and shall not be disclosed to any third parties,
other than those persons who have a confidential relations with
Westrock or Mainland, all of who shall agree to be bound by this
confidentiality obligation. Any public announcement of the proposed
transaction by either party shall be approved in advance by the other
party.
10. COUNTERPARTS. This Option Agreement may be executed in any number of
counterparts each of which will be deemed to be an original but all of
which shall be deemed one and the same document.
11. GOVERNING LAW. This Option Agreement shall be governed by and
construed and enforced in accordance with the laws of the state of
Texas.
12. EXPENSES. Each party will pay its own expenses and costs incidental to
the negotiation and completion of the transaction, including legal and
accounting fees.
Both parties agree to the terms and provisions set forth is this Option
Agreement;
AGREED TO AND ACCEPTED THIS 3RD DAY OF SEPTEMBER, 2008
MAINLAND RESOURCES, INC.
By: /s/ MICHAEL NEWPORT
_________________________________
Michael Newport, President
WESTROCK LAND CORP.
By: /s/ GARY POWERS
________________________________
Gary Powers, President