Document:

Exhibit 10.11

 

 

 

 

 

 

 

SUB-CONTRACT AGREEMENT

 

 

 

FOR

 

 

 

Remediation of oily
sludge material In KOC SEK Fields (Lot - C)

 

 

 

BETWEEN

 

 

 

THE ENERGY AND RESOURCES
INSTITUTE (TERI)

 

AND

  

VIVAKOR MIDDLE EAST (VIVIKME)

 

 

 

 

SUB-CONTRACT No. 01-2018

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

SUB-CONTRACT AGREEMENT

 

 

 

This
SUB-CONTRACT AGREEMENT (“AGREEMENT”) for oily sludge material remediation services is made and entered into as on February 6th, 2018
(the  “Effective Date”), by and between:

 

	(a)	The
                                         Energy and Resources Institute, having its registered address at Darbari Seth Block,
                                         IHC Complex , Lodhi Road, New Delhi -110 003, hereinafter referred to as "TERI"
                                         (the "CONTRACTOR"); and
	(b)	VIVAKOR
                                         MIDDLE EAST, a company organized and existing under the laws of the State of Qatar
                                         and having its registered address at Al Mana Twin Towers, CR Number 74308
                                         hereinafter referred to as “VIVAKOR MIDDLE EAST” (the "SUB-CONTRACTOR"
                                         ).

 

(Hereinafter referred singly as 'Party' and collectively
'Parties')

 

WITNESSETH:

 

WHEREAS, TERI has
been awarded a Project by Kuwait Oil Company (K.O.C), Kuwait (hereinafter the 'Client') vide contract no. 12050840,
for undertaking soil remediation activities in Kuwait; and

WHEREAS, the SUB-CONTRACTOR has submitted,
and the CONTRACTOR has accepted, a proposal to perform oily sludge material remediation services forming part of the Project,
upon the terms and conditions hereinafter contained. 

NOW,
THEREFORE, In consideration of the premises and of the mutual covenants and the agreement of the parties herein expressed
, the Parties hereto agree as follows:

 

		l.	Scope
                                         of Work:

 

The SUB-CONTRACTOR's scope of work includes the
following:

 

		a)	Design of the sludge treatment plant and equipment suitable for remediation of the sludge material.
		b)	Preparing
                                         and getting approved by KOC all documents and drawings as
                                         per the requirements of KOC. This Includes but is not limited to project
                                         execution plan, technology write-up, work method statements for various activities,
                                         procedures for installation, commissioning and demobilization of the plant and equipment,
                                         lifting plans, site plans,commissioning plans, wiring diagrams and other drawings
                                         etc . that may be demanded by KOC.
	 	c)	All work related to preparation of the site for
                          installation of the treatment plant and equipment, including any foundation, temporary structures, lighting
                          arrangement, water supply, sewage
                          disposal facility etc.
		d)	Installation, commissioning, operation and maintenance of the plant and equipment required
for sludge
treatment work. All machinery like cranes, fork lift, loaders, excavators, trucks etc. required for this as well as manpower required for this will be arranged by VIVAKOR MIDDLE EAST.
		e)	Performing
                                         remediation and related services for the entire quantity of oily sludge material as shown
                                         in Annexure 1
                                         such that remediated material meets the KOC Primary Ecotoxicity standards as given
                                         in Annexure 2
		f)	Any waste water generated must be treated to meet KOC Irrigation water
standards as given in Annexure 3. Any other waste or by-product that is generated by the treatment process must also be treated
to meet KOC standards All of these must be disposed of as directed by KOC and in accordance with KOC procedures
		g)	All
fuel, water, electricity, lighting etc. required for the treatment process will be arranged by VIVAKOR MIDDLE EAST at their
own cost All material, labour, equipment and tools required by the company for installation, commissioning, operation, maintenance and demobilization of their Plant(s) will be arranged for by VIVAKOR MIDDLE EAST

 

 

 

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		h)	Any recovered
oil may be recycled back by VIVAKOR MIDDLE EAST for using in
their treatment process. However any oil finally left over after the treatment is over, must have a BS&W less than 20% and
disposed of as directed by KOC, and in accordance with KOC procedures.
	 	i)	The residual solids remaining after treatment must meet KOC Primary
                          Ecotoxicity standards.
		j)	There should
                                         not be any waste by-product(s) or toxic air released from the treatment process into
                                         the atmosphere or ground. Air quality monitoring will have to be done if any gases
                                         are released into the atmosphere as a result
of the treatment process and the required environment standards will have to be met
		k)	Demobilization of the plant and equipment setup for sludge treatment work. After
                                                                 demobilization, the
site should be clean and in the same condition as when it was taken over for installation of the equipment. Any machinery
like cranes, fork lift loaders, excavators, trucks etc. required for this will be arranged by VIVAKOR MIDDLE EAST
		l)	Adhere to the deadlines/timelines set forth in Annexure 4 - Schedule for completion of Sludge Treatment Work.

 

 

	2.	SUB·CONTRACTOR's responsibilities:

 

		a)	SUB-CONTRACTOR shall provide all labour, material, equipment and services
necessary to perform the work as specified in Clause 1 above and
shall undertake such work in accordance with the requirements of the KOC tender document (as specified in Annexure 5).
		b)	SUB-CONTRACTOR shall initially undertake a trial for treatment of 1000 cubic
                                                                  meters of sludge material free of cost within a period of Hundred and twenty (120) days from the date of signing of this
                                                                  Agreement, such time frame may adjust due to overseas shipping, permits, clearances from KOC, and is subject to change. The
                                                                  trial will be done for representative types of sludge like dry
                                                                  sludge, wet sludge etc taken from different locations in the sludge piles. If the trial is completed within the treatment
                                                                  deadlines specified In this Agreement and is declared successful by TERI and KOC, the sub-contractor will be paid for the
                                                                  trial and then only will the SUB-CONTRACTOR be permitted to treat the remaining quantity of sludge material. In such case,
                                                                  the SUB-CONTRACTOR agrees to undertake treatment of the remaining quantity of sludge material. In such case, the
                                                                  SUB-CONTRACTOR agrees to undertake treatment of the remaining quantity of sludge material at the same price and under the
                                                                  same terms and conditions as are contained in this Agreement.
		c)	All people engaged by VIVAKOR MIDDLE EAST whether from Kuwait or from
                                                                 abroad, must have a visa or Kuwaiti Civil ID of the local agent of VIVAKOR MIDDLE EAST.
		d)	SUB-CONTRACTOR, with TERI assistance, shall obtain necessary Kuwai t EPA
clearance for any chemicals that are to be imported and used in Kuwait
		e)	SUB-CONTRACTOR shall set up the following facilities at site in addition to
their Plant if needed, and if not will use TERI existing facilities

 

	 	 	·	Porta Cabins and other facilities for staff like
lunch room, pantry, washroom, shower room
	 	 	·	General lighting of
the area with Tower Lights if night working is involved 
	 	 	·	Electricity supply through DG sets
	 	 	·	Any other item that may be necessary as per treatment procedure and KOC Instructions

		f)	SUB-CONTRACTOR shall arrange for customs clearance of any equipment imported into Kuwait and arrange visas for the personnel of VIVAKOR MIDDLE EAST.
		g)	SUB-CONTRACTOR shall be responsible for obtaining all necessary permissions
for executing the work, and TERI will assist if requested, including but not limited to:

	 	 	i	Gate passes for employees and vehicles
	 	 	ii	Work permits from KOC for their personnel,
	 	 	iii	Safety and third party inspection certificates for equipment and vehicles entering KOC
	 	 	iv	Temporary
Construction Permits;
	 	 	v	Environmental permits
	 	 	vi	Loading notes for taking out items from KOC site

 

 

 

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	 	h)	SUB-CONTRACTOR shall provide all personnel required for safe and
    efficient installation, commissioning, working and demobilization of the company equipment. The staffing pattern will have to
    take into account the statutory personnel required by KOC. This will include as a minimum provision of a safety officer and
    work site supervisor in each shift,in addition to any supervisory and operation/maintenance staff that may be required. The
    CVs of some key personnel may have to be approved by KOC. These key persons shall not be withdrawan or replaced by the company
    without the prior approval ot TERI/KOC.
	 	i)	SUB-CONTRACTOR shall provide any telephone, internet connection,
    computers etc. required when undertaking the work.
	 	j)	Conduct any Hazop/Hazid study if so required by KOC.
	 	k)	Conduct Environment monitoring activities if so required by KOC.
	 	l)	Maintain a daily log of work done and submit weekly as well as monthly
    progress reports as per format to be decided between TERI and the subcontractor
	 	m)	Engage a local agent who will carry out all formalities for import of
    items, customs clearance, visas for staff of VIVAKOR MIDDLE EAST, EPA clearance etc.
	 	n)	Follow all procedures and instructions laid down by KOC for day to day working.
	 	o)	Skill and Ability. SUB-CONTRACTOR agrees to provide and furnish
    skill and judgment in the performance of the Work in a manner consistent with that degree of skill and care ordinarily exercised
    by similarly situated members of SUB-CONTRACTOR’S profession.
	 	p)	SUB-CONTRACTOR agrees to perform in a timely manner of all its Work
    efficiently and with the requisite expertise, skill, competence, and ability, to satisfy the requirements of the Contract
    Documents and Project schedule requirements, and to cooperate with TERI so that TERI may fulfill its obligations to its Cliients.
	 	q)	SUB-CONTRACTOR shall comply with all applicable safety laws and
    regulations including, but not limited to, federal and state occupational, safety and health acts, in particular the
    applicable provisions of OSHA. If required by TERIM SUB-CONTRACTOR shall comply with the more stringent of those safety
    programs and procedures.
	 	r)	SUB-CONTRACTOR agrees to abide by both its own internal Health and
    Safety and Quality Control Plans as well as by TERI’S Health and Safety and Quality Control Plans. SUB-CONTRACTOR
    warrants that the Work will be free from any defects in equipment, material, design, or workmanship performed by SUB-CONTRACTOR.
	 	s)	PPE. The SUB-CONTRACTOR shall provide its own Personal Protective
    Equipment (PPE)
	 	t)	Correction of Defective Work. SUB-CONTRACTOR agrees to correct any Work
    that is found not to be in conformance with the requirements of the Contract Documents within a period of one year from the
    date of delivery of SUB-CONTRACTOR’S final report.
	 	u)	Vivkor Middle East Reserves the rights to mix different materials
    for more efficient processing as needed.
	 	v)	Final Completion Date. SUB-CONTRACTOR is required to complete all of its
    work within the time requirements and prior to the date for final completion as give in Annnexure 4 - Schedule for completion
    of Sludge Treatment Work, time being of the essence.
	 	w)	All the works and related activities mentioned in clause 1 and 2 above
    will be undertaken by the SUB-CONTRACTOR at his/her own cost.

 

	3.	TERI’s responsibilities:

 

	 	a)	Provide space at site for installation of the equipment of VIVAKOR MIDDLE EAST
	 	b)	Provide one room in a porta-cabin at site of work, along with electricity
    and furniture
	 	c)	Provide one Project Manager, one Safety Engineer and one - Permit
    Applicant in day shift.
	 	d)	Assist VIVAKOR MIDDLE EAST in getting gate passes, loading notes, permits
    etc from KOC

 

 

 

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	 	e)	Testing of all treated material will be the responsibility of TERI, For
    all purposes, only the KOC approved laboratory test results will be considered for acceptance of the successful treatment.
    The testing will be done by the KOC approved laboratory based on samples taken by TERI according to a sampling plan approved
    by KOC. KOC may take independent samples of the treated material for testing. TERI as well as the KOC samples must pass the
    tests and the results of the tests must be accepted by KOC in order to declare the treatment as being successful. Billing can
    be done by VIVAKOR MIDDLE EAST only after the test results have been declared successful.
	 	f)	Teri will be responsible for demobilization for the site except Vivakor
    Middle East Assets.

 

	4.	Sub-Contract Price

 

	4.1	Upon successful completion of the trial for treatment of 1000 cubic meters of sludge material
    and receipt of fee from KOC for the same, TERI will pay to VIVAKOR MIDDLE EAST US$ Seventy-two (USD 72) per cubic meter of
    successfully treated sludge, such payment to be made within 15 (fifteen) days of receipt of fee from KOC for successfully
    treated sludge. However, Vivakor Middle East reserves the rights to penalize TERI for any late payments other than agreed.
    This fee is inclusive of all taxes, levies and charges etc. In case any quantify out of the 1000 cubic meters of the sludge
    treated in the above trial does not meet the remediation criteria set forth by KOC, then no payment will be made to VIVAKOR
    MIDDLE EAST. Passing of a partial quantity or passing of only some of the type of sludge will not be considered as a success
    of the treatment process. If a sample of treated sludge fails in testing during this trial then VIVKOR MIDDLE EAST will be
    given an opportunity to give another sample for testing from the same batch of treated material. If the second sample also
    fails, then the treatment process will be deemed as a failure and the trial will be abandoned. No further treatment of sludge
    will be done. In such a case VIVAKOR MIDDLE EAST agrees to demobilize its plant and equipment and this Agreement shall stand terminated.
	4.2	In case the trial is successful and 1000 cubic 
	4.3	TERI will deduct 5% of invoice amount as retaining Tax and same will be returned to VIVAKOR
    MIDDLE EAST after submission of Tax clearance issued by Kuwait government to Vivakor Middle East.

 

	5.	Commencement date of Works and Work Completion Deadline

 

	5.1	The parties agree that the date for commencement of work by SUB-CONTRACTOR is the Effective Date
                                 and the entire works shall be completed as per the timelines given in Annexure 4 - Schedule for completion of Sludge
                                 Treatment Work.

 

	6.	Liquidated Damages

 

	6.1	The Rate of the Liquidated Damages shall be KWD400/- per day of delay beyond the Date of
    Completion specified i.e. in Annexure 4. The SUB-CONTRACTOR understands and agrees to comply with timelines given in Annexure
    4 - Schedule for completion of Sludge Treatment Work. However, the subcontractor is not responsible for delays caused by TERI
    or KOC.
	6.2	The SUB-CONTRACTOR understands and agrees that the sludge treatment system has to be installed
    sufficiently in advance to comply with the schedule as outlined in Annexure 4.
	6.3	TERI has the right to pursue all available remedies in the event of any delays to the works
    caused in whole or in part by the acts of commission/omission of the SUB-CONTRACTOR.

 

	7.	Termination

 

	7.1	Each Party is entitled to terminate this Agreement by giving written notice to the other if that
    other Party commits a material breach of this Agreement and fails to remedy that breach within thirty (30) days of being
    required to do so following written notice served on the Party that has committed the breach.
	7.2	Notwithstanding the provisions of this Agreement, either party shall be entitled to terminate
    this Agreement immediately if the other Party is involved in any legal proceedings concerning its solvency, enters into
    liquidation, whether compulsory or voluntary, other than for the purposes of an amalgamation or reconstruction, makes an
    arrangement with its creditors, becomes subject to an administration order or has receiver or manager appointed over all or
    any part of its assets.

 

 

 

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	7.3	Upon termination for any reason, VIVAKOR MIDDLE EAST will be paid for the sludge quantity
    treated till the date of termination. No other payment will be due. VIVAKOR MIDDLE EAST must remove its equipment and clear
    the site within thirty (30) days of termination of this Agreement..

 

	8.	Indemnification

 

	8.1	SUB-CONTRACTOR agrees to indemnify, hold harmless, and defend CONTRACTOR, its officers,
    directors, members, agents, representatives employees from any and all liabilities, claims, damages, penalties, fines,
    forfeitures, suits and the cost incidents thereto caused by SUB-CONTRACTOR or its officers, directors, agents or employees,
    negligent or willful acts or omissions in the performance of work or by the breach of any term or provisors set forth in the agreement.
	8.2	CONTRACTOR agrees to indemnify, hold harmless, and defend SUB-CONTRACTOR, its officers,
    directors, members, agents, representatives employees form any and all liabilities, claims, damages, penalties, fines,
    forfeitures, suits and the cost incidents thereto caused by CONTRACTOR or its officers, directors, agents or employees,
    negligent or willful acts or omissions in the performance of work or by the breach of any term or provisors set forth in the
    Agreement.

 

	9.	Assignment

 

	9.1	SUB-CONTRACTOR shall not be entitled to assign all or any part of its obligations under this
    Agreement without the prior written consent of the CONTRACTOR

 

 

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	10.	Force Majeure

 

	10.1	No delay or failure in performance by either Party hereto shall constitute default hereunder or
    give rise to any claim for damages if, and to the extent, such delay or failure is caused by force majeure. Unless such force
    majeure substantially frustrates performance of the Agreement, force majeure shall not operate to excuse, but only to delay
    performance.
	10.2	In this Agreement, Force Mjeure shall mean any cause preventing a party (the “Affected
    Party”) from performing any or all of its obligations which arises from or is attributable to acts, events, omissions
    or accidents beyond the reasonable control of the Affected Party, including but not limited to acts of the public enemy;
    expropriation or confiscation of facilities; changes or compliance with any applicable law, government order, rule,
    regulation or direction; war, rebellion, civil disturbances, sabotoge, riots, floods, unusually severe weather that could not
    reasonably have been anticipated, fires or other catastrophes; strikes or other concerted acts of employees, lockouts; and
    other similar occurrences.
	10.3	If SUB-CONTRACTOR is delayed in performance of Work by force majeure, SUB-CONTRACTOR shall
    promptly notify CONTRACTOR about the existence of force majeure and shall have no liability in respect of any delay in
    performance or any non-performance of any obligation under this agreement.
	10.4	SUB-CONTRACTOR shall make reasonable efforts to minimize the effects of force majeure on the
    work schedule and completion.

 

	11.	Dispute Resolution

 

	11.1	The parties shall use their best efforts to negotiate in good faith and settle amicably any
    dispute that may arise out of, or relate to, this Agreement (or its construction, validity or termination (a “Dispute”).
	11.2	If a Dispute cannot be settled through negotiations between appropriate representatives from
    each of the parties, either Party may give to the other a notice in writing (a “Dispute Notice”). Within seven
    (7) days of the Dispute Notice being given, the parties shall each refer the Dispute to the senior representatives nominated
    by the chief executive officer of each Party, who shall meet in order to attempt to resolve the Dispute. If the Dispute is
    not settled by agreement in writing between the parties within fourteen (14) days of the Dispute Notice, it shall be resolved
    in accordance with the provisions given in Clause 12.

 

 

 

 

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	12.	Governing Law and Arbitration

 

	12.1	This Agreement is governed by, and shall be construed in accordance with, the laws of the State
    of Kuwait. All disputes, controversies, or differences which may arise between the parties, out of or in relation to or in
    connection with this agreement, or for the breach thereof, which cannot be resolved amicably shall be finally settled by
    a Court of competent jurisdiction in Kuwait.

 

	13.	Specific Terms and Conditions

 

	13.1	This Agreement and its Annexes shall together constitute the entire agreement between the Parties
    and shall supersede all communications, negotiations and agreements of the Parties made prior to the date of this Agreement.
	13.2	All documents forming part of this Agreement are intended to be correlative, complementary
    and mutually explanatory of one another.
	13.3	Address for Communication
	 	All important communications and contractual notices pursuant to or in connection with this
    Agreement shall be communicated in writing in the English Language as set forth below.

 

To TERI:

Ashok Kumar Saxena

CEO

TERI KOC PROJECT

c/o DELHAM General Trading Contracting Co.

AlAwaqafComplex, Tower 17

10th Floor, Office 32 and 33

P.O. Box 25375, Safat-13114 Kuwait

Email: ashok.saxana@teri-kocproj.org

 

To VIVAKOR MIDDLE EAST:

Garen Kolajian

General Manager

c/o Triu Valley Trading and Contracting W.I.I.

Al Mana Twin Towers, 5th Floor;

P.O. Box 36:20, Doha-Qatar;

Email: Garen@trivalleygatar.com

 

TERI and VIVAKOR MIDDLE EAST may notify the other of any change
to the address or any other details specified in this section provided that such notification shall only be effective from
the date specified in such notice.

 

 

 

 

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	14.	Translation

 

	14.1	This Agreement is executed in English. In the event this Agreement is translated into a language
    or languages other than English, this version in English shall be controlling on all questions or interpretations and performance.

 

 

IN WITNESS WHEREOF, the duly authorized representatives of the parties hereto
have executed this AGREEMENT as of the day and year first written above.

 

 

	For and on behalf of the CONTRACTOR	For and on behalf of the SUB-CONTRACTOR
	The Energy and Resources Institute	VIVAKOR MIDDLE EAST
	 	 
	/s/ Ashok Kumar Saxena	/s/ Matt Nicosia
	Name: Ashok Kumar Saxena	Name: Matt Nicosia
	Title: CEO TERI-KOC PROJECT	Title: Partner, CEO
	 	 
	 	 
	Witness: /s/ Puneet Chandra	 
	Puneet Chandra	Witness: /s/ 

 

 

 

Annexes:

 

Annexure 1: Material to be treated

Annexure 2: KOC Primary Ecotoxicity standards

Annexure 3: KOC Irrigation standards

Annexure 4: Schedule for Completion of Sludge Treatment Work

Annexure 5: Requirements as per KOC tender document

 

 

 

 

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Annexure 1: Material to be treated

 

The material to be remedied is oily sludge which has been lying
exposed to weather for several years. It is mostly in solid form but a small amount may turn into viscous liquid when the
ambient temperature is high. A few pictures of the sludge are attached. The material is lying in two heaps at the project
site inside KOC. It is to be treated within KOC premises and cannot be taken out for treatment. The matarial will be offered
by TERI for treatment on “as is where is basis”. Both Parties will jointly measure and agree upon the total
quantify of material (in cubic meters) to be treated before commencement of work.

 

Measurement

Measurement of the sludge material volume will be e done by stock
piling up and using survey equipment to calculate the volume. Where the sludge is too fluid to stack it into geometrical shape,
it will be collected in a holding pit made by restraining bund walls and survey will be done to calculate the volume.

 

 

 

 

 

 

 

 

 

 

  

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Annexure 2: Primary Ecotocity standards

 

 

 

 

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Annexure 4: Schedule for completion of Sludge Treatment Work

 

 

 

March 2017 - Commencement assembly and shipping of plant/unit
for sludge remediation

May 2017 - Site Prep- Arrival of Unit and clearance from Customs.

June 2017 - Mobilization

July 2018 - Commencement of sludge treatment work (first 1000)

Nov 2018 - Completion of remediation of entire amount of sludge

December 2018 - Unit removal/Demobilization (latest by 31st
December 2018)

 

Vivakor Middle East shall not be held responsible if
out of control and serious uncounted issues arise from Customs or mobilization processes.

 

In the event that local vendor condensate is not approved,
Vivakor Middle East reserves the right to change the timelines as required to get the approvals for the appropriate
condensate requirements stated by KOC.

 

Should KOC require extensive infrastructure improvements such as
concrete containment rings this will also require adjustments in the time line, hence Vivakor Middle East reserves the rights
to do so.

 

 

 

 

 

 

 

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Annexure 5: Requirements as per KOC tender document

 

 

 

 

 

 

 

 

 

 

 

    	 	14Exhibit 10.12

 

 

 

OPTION AGREEMENT

 

This
Option Agreement (this "Agreement"), dated as of July 9th, 2019 (the "Effective
Date"), is entered into between Tar Sands Holdings II, LLC, a Utah limited liability company ("Optionor''), and
Vivakor, Inc., a Nevada corporation ("Optionee").

 

RECITALS

 

WHEREAS,
Optionor is the owner of that certain real property particularly described in Exhibit A attached hereto (the "Property"),
including all appurtenances, rights and benefits pertaining to the Property, and any and all Permits (as defined below)
to which the Property is subject; and of the improvements and equipment located on the Property (the "Assets");
and

 

WHEREAS,
Optionor wishes to grant to Optionee, and Optionee wishes to obtain from Optionor, an irrevocable and exclusive option to purchase
the Property, the Permits (to the extent transferrable) and the Assets during the "Option Term" (as defined below), subject
to the terms and conditions set forth below, which terms and conditions shall include, among other things, the entitlement of Optionor
to enter into one or more back-up offers and to enter into a "Refinery Property Transaction" (as defined below).

 

NOW,
THEREFORE, in consideration of the Option Payment and the other mutual covenants and agreements hereinafter set forth and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.         
Grant of Option. Subject to Optionee's timely payment of
the Option Payment (as defined below), and on the terms and conditions set forth herein, Optionor hereby grants to Optionee an
option to purchase the Property, the Assets and all Permits, insofar as such Permits are transferable (the "Option").

 

2.        
Option Term. The term of the Option ("Option Term") shall
commence on the Effective Date and automatically expire on the date that is twelve (12) months after the Effective Date ("Option
Termination Date"), unless duly extended, exercised or sooner terminated as provided below in this Agreement.

 

3.         
Option Consideration.

 

		a.	Option Payment. The Option
is granted in consideration of Optionee's payment to Optionor of the amount of Two Hundred Thousand Dollars ($200,000.00) ("Option
Payment"), in the incremental payments described below, payable by Optionee's wire transfer of such Option Payment
to an account designated by Optionor. Such Option Payment shall be due and payable in the following increments: (i) simultaneous
with the execution and delivery of this Agreement, Optionee is paying to Optionor the amount of Ten Thousand and 00/100 Dollars
($10,000.00), which $10,000.00 amount shall be fully earned by Optionor upon delivery thereof and shall be non-refundable to Optionee
except upon the occurrence of an "Optionor Default" (as such term is hereinafter defined) or in accordance with Section
8 below, and (ii) the remaining One Hundred Ninety Thousand and 00/100 Dollars ($190,000.00) of the Option Payment shall be due
and payable by Optionee to
Optionor within one (1) business day after the occurrence of the last to occur of the following
events (collectively, the "Payment Conditions"): (aa) Optionee receiving, from the Utah Division Of Water Quality, a
groundwater discharge permit by rule, and (bb) Optionee receiving an exploratory permit from the Utah Division Of Oil Gas And Mining
("DOGM"). In the event that all of the Payment Conditions do not occur within sixty (60) calendar days of the date hereof,
then either party shall be entitled to immediately cancel and terminate this Agreement by providing written notice to the other
party.

 

 

 

    	 	1	 

     

    

 

		b.	Option Payment Earned Upon Delivery. Optionee acknowledges
and agrees that the Option Payment constitutes consideration to Optionor for Optionor's agreement to (i)
enter into this Agreement with Optionee, (ii) not sell the Property or the Assets,
or transfer the Permits, to another purchaser during the Option Term; Optionor shall, however, be entitled to seek and enter into
one or more back-up offers and to enter into a Refinery Property Transaction, and (iii) sell
the Property and the Assets, and transfer the Permits, insofar as such Permits are transferable, to Optionee on the mutually agreed
upon terms and conditions and for the Purchase Price set forth in the Purchase and Sale Agreement (as defined below), provided
that Optionee has fully and timely exercised the Option in the manner provided in Section 7 below, and further provided that Optionor
and Optionee enter into a mutually agreed upon Purchase and Sale Agreement, containing all of the material terms and conditions
set forth in Exhibit B attached hereto. The Option Payment shall be fully earned by Optionor upon delivery thereof and shall
be non-refundable to Optionee except upon the occurrence of an Optionor Default or in accordance with Section 8 below. As used
herein the term "Optionor Default" shall mean Optionor selling the Property and the Assets, and transferring the Permits,
to another purchaser during the Option Term. As more particularly set forth herein, Optionor entering into one or more back-up
offers and/or a Refinery Property Transaction shall expressly NOT constitute
an Optionor Default.

 

4.        
Extension Options. Provided that Optionee is not then in material default under this Agreement, Optionee shall
have the right to extend the Option Term for two (2) successive periods of ninety (90) days each (each an "Extension"
or, collectively, the "Extensions") by providing written notice to Optionor of Optionee's intention to extend the
term of the Option, and paying to Optionor: (A) One Hundred Thousand Dollars ($100,000) with
respect to the first Extension, and (B) an additional Two Hundred Thousand Dollars ($200,000)
with respect to the second Extension (collectively, the "Extension Payments" or, individually, an "Extension
Payment") on or before the date that is thirty (30) days prior to the then current Option Termination Date. Each Extension
Payment, when made, shall be fully earned by Optionor upon delivery thereof, and shall be non refundable to Optionee, except in
the event of the occurrence of an Optionor Default or in accordance with Section 8 below. Provided that Optionee timely exercises
the applicable Extension, and timely and fully pays the associated Extension Payment, Optionee's exercise of such Extension shall
expressly NOT constitute an Optionee Default.

 

5.         
Access to the Property. During the Option Term, Optionor shall provide to Optionee complete access to all facilities,
books and records relating to the Property, and any and all equipment located on the Property, the Assets, and the Permits; and
provide to Optionee copies of such books and records and shall cause the managers, directors, employees, attorneys, accountants
and other agents and representatives (collectively, "Representatives") of Optionor to fully cooperate with Optionee
and Optionee's Representatives in connection with Optionee's due diligence investigation of Optionor and the Property (collectively,
"Due Diligence"). Optionee will not have any obligation to continue with its Due Diligence investigation or to exercise
the Option if, at any time during the Option Term, the results of Optionee's Due Diligence investigation are not satisfactory
for any reason in Optionee's sole discretion or for no reason. All disturbance and damage to the Property or the Assets caused
as a consequence of Optionee's Due Diligence investigation and related activities (including, but in no event limited to, all
disturbance and damage to the Property or the Assets caused in connection with the performance of the "Geological Surveys"
described below) shall be promptly, reclaimed, restored, and repaired by Optionee at Optionee's sole cost and expense, as may
be required by DOGM.

 

6.        
Geological Surveys; Title Matters.

 

		a.	Geological Surveys. As part
of its Due Diligence investigation, Optionee may, at Optionee's sole cost and expense, conduct extensive geological, seismic or
other surveys of the Property (the "Geological Surveys") to establish with
greater accuracy the reserves on the Property and other characteristics of the tar sands deposits. Optionor acknowledges and agrees
that Optionee may conduct the Geological Surveys; provided, however, in the event that Optionee determines for any reason not to
exercise the Option or close the purchase and sale transaction described herein, then Optionee shall provide to Optionor copies
of all reports produced or generated by or in connection with the Geological Surveys. All Geological Surveys and other activities
performed by Optionee during the Option Term shall be performed and conducted in accordance with the terms and conditions set forth
herein and all applicable federal, state, and local laws, rules, and regulations (collectively, "Applicable Law").

 

 

 

    	 	2	 

     

    

 

		b.	Title Matters. As part of its
Due Diligence investigation, Optionee may, at its sole cost and expense, obtain a title commitment for title insurance or an Attorney's
Title Opinion ("Title Documentation") from either a reputable title insurance
company licensed to do business in the State of Utah or an attorney chosen by Optionee ("Title Insurer"), and
shall deliver a copy of the Title Documentation to Optionor and Optionee at least three (3) months prior to the end of the Option
Term ("Title Period"); the parties agree that the Title Period shall automatically
expire at the end of the Option Term.

 

	 	 	i.	In the event the Title Insurer shall report to Optionee any defects in title, other than the
Permitted Exceptions (as defined below) ("Title Objections"), Optionee shall
notify Optionor of such Title Objections ("Objection Notice") prior to the
expiration of the Title Period. Any title exceptions or conditions not included in the Objection Notice, as provided herein, shall
be deemed to be Permitted Exceptions. The term "Permitted Exceptions" shall
mean (i) easements, rights of way, encumbrances, conditions, covenants, restrictions, reservations and other matters of record,
other than monetary liens, encumbrances, judgments and other exceptions which are in liquidated amounts and which are caused/ created
by Optionor or its predecessors-in interest, and may be remedied by the payment of an ascertainable sum, (ii) applicable building
and zoning ordinances, laws, regulations and restrictions by governmental authorities, and (iii) all
title matters either accepted or waived by Optionee pursuant to the operation of Section 6.b.ii. below.
	 	 	 	 
	 	 	ii	If Optionee notifies Optionor pursuant to Section 6.b.i. of any
Title Objections, Optionor shall elect whether or not to cure the Title Objections and shall deliver written notice of such election
to Optionee within ten (10) days after receipt of the Objection Notice. In the event Optionor
does not timely respond to the Objection Notice as provided above, Optionor shall be deemed to have elected not to cure the Title
Objections. If Optionor does not elect to cure the Title Objections
within such time, Optionee shall have the right, as its sole and exclusive remedy, to either (i) accept title to the Property subject
to the Title Objections without abatement of the Purchase Price in which case such Title Objections shall be deemed Permitted Exceptions
or (ii) not exercise the Option. If Optionor elects to cure the
Title Objections, then Optionor's obligation to cure the Title Objections shall be included as a condition to Closing under the
Purchase and Sale Agreement and shall be governed by the terms thereof. If
the Option is exercised, the terms of this paragraph shall survive the expiration of this Agreement.

 

7.        
Exercise of Option. At any time during the Option Term, as such Option
Term may be extended in connection with one or both of the Extensions described in Section 4 hereof, if Optionee is not then in
material default under this Agreement, Optionee may exercise the Option by timely sending Optionor a written notice of Optionee's
intention to exercise the Option ("Exercise Notice"). If
Optionee elects to exercise the Option, Optionee shall use commercially reasonable efforts
to send the Exercise Notice at least sixty (60) days prior to the end of the Option Term, but Optionee's failure to do so shall
not be deemed a default by Optionee under this Agreement; notwithstanding the foregoing, Optionee's failure to either: (A) send
the Exercise Notice to Optionor at least fifty (50) days prior to the end of the Option Term, or (B) exercise the applicable Extension
and pay the applicable Extension Payment on or before the date that is thirty (30) days prior to the then current Option Termination
Date, then Optionee shall be deemed to be in default under this Agreement. Within ten (10) business days of Optionor's receipt
of the Option Notice, Optionor shall deliver to Optionee a draft of the Purchase and Sale Agreement, containing all of the material
terms and conditions set forth in Exhibit B attached hereto; and such other terms, conditions, covenants, representations
and warranties as are mutually acceptable to Optionor and Optionee (the "Purchase and Sale Agreement");
among other things, the Purchase and Sale Agreement shall provide that the purchase and sale transaction
contemplated therein will close within thirty (30) days of the expiration of the Option Term. Optionee acknowledges and agrees
that, in the Purchase and Sale Agreement, Optionor will expressly NOT be making
any representations or warranties relating to the condition, repair, value, or fitness for a particular purpose of the Property,
the Assets, or the Permits, the quantity or quality of the resources or reserves located on the Property, any royalty obligations
associated with the Property, types or marketability of products that might be produced using the resources or reserves located
at the Property, the potential for Optionee to be able to operate a successful business, or any similar representations or warranties.
As a consequence, Optionee expressly acknowledges and agrees that, in the event Optionee acquires the Property, the Assets, and
the Permits, insofar as such Permits are transferable, such acquisition shall be on an 'As-is,' 'Where-is,' 'With-all-faults'
basis, with Optionee making its decision to purchase or not purchase solely based upon Optionee's Due Diligence investigations.
Optionor and Optionee shall use their best efforts and collaborate in good faith to negotiate the full terms of the Purchase and
Sale Agreement, which Purchase and Sale Agreement must be executed not later than the Option Termination Date, except that, in
the event one or both of the Extensions become effective, the Option Termination Date shall be extended by the length of the applicable
Extension(s). If Optionee does not timely exercise the Option
in the manner described herein on or before the Option Termination Date, or in the event that the Purchase and Sale Agreement
is not executed by both parties hereto by the Option Termination Date (except that the Option Termination Date may be extended
by the length of any properly exercised Extension(s)), then Optionor shall have the right to terminate this Agreement and retain
the Option Payment and any Extension Payment(s) which, as described herein, are deemed to be fully earned by Optionor upon delivery,
and are non-refundable, except upon the occurrence of an Optionor Default or in accordance with Section 8 below. Thereafter, neither
party shall have any further obligations hereunder except for those that expressly survive termination of this Agreement.

 

 

 

    	 	3	 

     

    

 

8.        
Damage or Destruction. If, prior to the exercise of
the Option and through no fault of Optionee, a substantial part of the Property is destroyed by earthquake, accident or other
casualty which renders extracting the tar sands resources located at the Property to be materially more difficult than as of the
Effective Date, Optionee may cancel this Agreement by giving written notice to Optionor and shall be entitled to the return of
the Option Payment and any Extension Payments then made. However, Optionee shall have no right to cancel this Agreement if, within
ten (10) business days after Optionee gives written notice of cancellation to Optionor, the
Property has been repaired or otherwise mitigated to the extent that extracting tar sands resources located on the Property is
not materially more difficult than as of the Effective Date. By way of clarification, destruction or damage to the "Refinery
Equipment" (as such term is hereinafter defined), other equipment, or other Assets located at the Property shall expressly
NOT grant to Optionee either the right to cancel this Agreement or the entitlement to have returned to Optionee any of the Option
Payment or any Extension Payments then made.

 

9.         Optionor's Obligation to Maintain.

 

		a.	Maintenance of Property and Assets. During the Option Term, Optionor
will maintain, repair and replace, as necessary, the Property and the Assets in their existing condition, reasonable wear and tear
excepted.

 

		b.	Maintenance of Permits. During the Option Term, Optionor will maintain
any and all permits and other operational authorizations, such as licenses or leases issued by any state or local agency, commission,
board or authority, including but not limited to all surface leases, all mining rights, all surface use permits, any groundwater
or other environmental permits existing as of the Effective Date, and as required for and/or connected in any way to the operation
of the Property (the "Permits") in full effect and good standing. Optionee expressly acknowledges and agrees to
the following matters with respect to the Permits:

 

	 	 	i.	That the Permits which Optionor currently possesses apply to specific mining plans, processes, and methods which prior
owners of the Property and the Assets proposed to utilize in connection with such prior owners' plans to mine, refine, and process
oil and tar sands at the Property. Since Optionee intends to utilize different processes and methods in connection with mining,
refining, and processing oil and tar sands at the Property, it is expected: (A) that some or all of the Permits will be inapplicable
to the specific operations contemplated by Optionee, and (B) that Optionee's Due Diligence
investigations, operations, and other activities on or at the Property during the Option Term, as
well as Optionee's long-term operations and activities after purchasing the Property and the Assets, is virtually certain to result
in Optionee being required to secure replacement or additional permits (collectively, "Additional Permits").
Such Additional Permits shall be secured by Optionee at its sole cost and expense and in full
compliance with Applicable Law. Optionor and Optionee also acknowledge and agree that, in the event a Refinery Property Transaction
occurs: (a) Optionee will be responsible for obtaining, at Optionee's cost and expense, amendments to various of the Permits which
become necessary as a consequence of the occurrence of the Refinery Property Transaction, and (b) Optionee will promptly and
fully cooperate with any subdivision proceedings which are associated with, and become necessary as a consequence of, the occurrence
of the Refinery Property Transaction.
	 	 	 	 
	 	 	ii.	That the ultimate approval of direct or indirect transfers of the Permits is under the jurisdiction of DOGM and other federal,
state, and local governmental or quasi-governmental agencies or entities. Consequently, Optionee shall be responsible for securing,
with Optionor's full collaboration, from DOGM and any other applicable agencies and entities, approvals for the transfer of the
Permits (as such Permits may be affected by the Refinery Property Transaction, in the event such Refinery Property Transaction
occurs), with Optionor making no representations or warranties that any or all of such Permits are transferable. Optionee is also
aware that, in the event Optionee chooses to purchase the Property, Assets, and Permits, insofar as such Permits are transferable,
in a so-called 'asset purchase' transaction it is likely that some or all of the Permits will not be transferable to Optionee,
and that Optionee will be required to secure new or replacement Permits.

 

 

 

    	 	4	 

     

    

 

10.      
Conduct of Business; Terms And Conditions Relating To Optionor's Rights With Respect To The Refinery And The Possible Sale
Of The Refinery Property.

 

		a.	Conduct of Business. During the
Option Term, Optionor shall conduct its business with respect to the Property and the Assets only in the ordinary course and consistent
with past practices, and Optionor shall not, without Optionee's prior consent, (a) mortgage, pledge or subject to encumbrance any
of its assets or properties, other than those encumbrances arising by operation of law in the ordinary and usual course of business
and those encumbrances incurred to secure existing credit lines and loan agreements; (b) except in the ordinary course of business,
modify or amend, or cancel, any existing contract, agreement or understanding involving the Property or the Assets; or (c) enter
into any contract, lease, license, agreement or other commitment that is material to Optionor's business, the Property, the Assets
or financial position. In connection with the foregoing, and as it has done in the past, Optionor
shall continue to be entitled to sell unprocessed tar sands on a periodic basis, provided that the aggregate amount of unprocessed
tar sands which may be sold by Optionor during the Option Term shall not exceed 20,000 tons.

 

		b.	Refinery Property. Optionor
                                                                  and Optionee acknowledge that a significant amount of refinery associated equipment is currently situated on the Property
                                                                  (collectively, the "Refinery Equipment").
As disclosed by Optionor to Optionee, Optionor has entered into a Purchase And Sale Agreement relating to a "Refinery Property
Transaction" (as such term is hereinafter defined), pursuant to which a third party may purchase all or a portion of the
following (collectively, the "Refinery Property"): the refinery, the associated Refinery Equipment, and the real property
upon which the Refinery Equipment is currently situated, as well as adjacent real property that would be used in connection with
Refinery operations (all of which real property is part of the Property described herein). Depending upon the results of its further
due diligence, such third party may desire to purchase all or a portion of the Refinery Property (the "Refinery Property
Transaction"). Notwithstanding that, pursuant to the terms and conditions of Section 3.b. of this Agreement, Optionor
has agreed that it will not sell the Property or the Assets, or transfer the Permits, to another purchaser during the Option Term
(or until Closing, if the Option is exercised), Optionor shall nevertheless be expressly entitled to pursue, and enter into, the
Refinery Property Transaction during the Option Term or at any other time during which Optionor owns the Property with such Refinery
Property Transaction expressly NOT constituting an Optionor Default hereunder.
In the event Optionor engages in the Refinery Property Transaction, (i) the Refinery Property
that is part of the Refinery Property Transaction shall not be considered to be part of the Assets hereunder, (ii)
one-half (1/2) of the total consideration paid for the Refinery Property by such third party purchaser in connection with the Refinery
Property Transaction, shall be deducted from the Purchase Price under the Purchase and Sale Agreement, (iii)
the amounts actually paid by Optionee in connection with the Option Payment and the Extension Payments, if any, shall be credited
towards the Purchase Price, and (iv) such Refinery Property Transaction shall expressly NOT
constitute an Optionor Default hereunder.

 

11.      
License.

 

		a.	During the Option Term, Optionor shall grant to Optionee a revocable license
(the "License"), which can only be revoked upon an Optionee Default or at the end of the Option Term (unless the
Option is exercised), pursuant to which Optionee shall have, subject to obtaining the necessary Additional Permits and other approvals
and otherwise acting in compliance with the standards and requirements of Applicable Law, and at the sole cost and expense of Optionor,
the right to (i) place its oil, tar sands, or any other extraction equipment on the Property, (ii)
mine or otherwise extract tar sands materials from the Property for processing using Optionee's equipment, and (iii)
store produced oil and other solvents, solutions or liquids produced by or necessary for use in connection with Optionee's
processes and equipment. Optionee shall maintain accurate records of the amount of tar sands material processed by Optionee and
shall provide monthly records to Optionor. In addition to the Option Payment, Optionee shall pay to Optionor an amount equal to
Two Dollars ($2.00) per ton of tar sands material processed by Optionee, with the applicable payments being made within ten (10)
days after the last day of each calendar month during the Option Term; provided, however, that all of the tar sands which Optionee
purchases and acquires from Optionor (x) must be solely used by Optionee in connection with Optionee's Due Diligence investigations
and/or Optionee's normal business operations and (y) may only be sold to third parties after
undergoing Optionee's proprietary extraction process, it being understood and agreed that Optionee shall not sell, convey or otherwise
transfer the raw
or unprocessed tar sands materials (without having undergone Optionee's proprietary process) to any third party. In the event
Optionee exercises the Option and purchases the Property, the Assets, and the Permits, insofar as such Permits are transferable,
Optionee shall not receive any credit of any kind against the Purchase Price for the amounts Optionee pays to purchase tar sands
from Optionor. Optionee agrees that the License to access the Property shall terminate immediately upon termination of the Option
Term and this Agreement for any reason other than the exercise of the Option contemplated herein, and Optionee shall be obligated
to remove, within thirty (30) days of the termination of the Option Term or this Agreement for any reason, and at Optionee's sole
cost and expense, all of its equipment, stored oil and other solvents, solutions or liquids, and to reclaim the Property to the
satisfaction of DOGM or to turn over the reclamation bond required by DOGM and provided by Optionee, except that if the amount
of the reclamation bond is insufficient to fully reclaim the Property, Optionee shall be solely responsible for paying all amounts
necessary to fully reclaim the Property as required by DOGM.

 

 

 

    	 	5	 

     

    

 

		b.	Optionee shall remain fully responsible for the performance of all persons
involved in or engaged for the purposes set forth in Section 11.a., and for their compliance with all of the terms and conditions
of this Agreement, as well as for all of such persons' compliance with all Applicable Law, as if each of such persons were Optionee's
own employees. Nothing contained in this Agreement shall create any contractual relationship between Optionor and any employee,
subcontractor or supplier of Optionee.

 

		c.	Optionee shall at its own cost and expense, and during the Option Term,
maintain and carry insurance in full force and effect which includes, but is not limited to: (i) commercial general liability insurance
at coverage levels reasonably acceptable to Optionor but in no event less than $2,000,000 per occurrence, and (ii)
workers' compensation insurance as required by Utah state law. The liability insurance obtained by Optionee under this Section
shall: (A) be primary and non-contributing; (B) provide "occurrence" based coverage;
and (C) not have a deductible or self-insured retention amount in excess of $5,000.00. All
liability insurance policies shall: (I) name Optionor as an additional
insured, and (II) provide that Optionor shall receive at least 30 days' written notice prior to cancellation of or change in coverage.
Upon Optionor's request, Optionee shall promptly provide Optionor with certificates of insurance or other evidence reasonably satisfactory
to Optionor of such insurance coverage. Optionee shall maintain all insurance required under this Agreement with companies duly
authorized to issue insurance policies in the State of Utah and holding a Financial Strength Rating of "A" or better,
and a Financial Size Category of "VIII" or larger, based on the most recent published ratings of the A.M. Best Company.

 

		d.	Optionee shall pay any and all incremental reclamation bond and other fees
assessed by DOGM for any additional reclamation that may result from Optionee's Due Diligence or other activities on the Property.
Optionee's Due Diligence and other activities will be performed on a mutually agreed portion of the Property and will not interfere
with any other portion of the Property (including, but not limited to, the Refinery Property) or Assets in any way.

 

		e.	Optionee agrees to fully and timely pay all subcontractors and other persons
and entities who or which perform work on or at the Property for or under Optionee or for or under any of Optionee's contractors,
agents, or representatives, and further agrees not to permit any mechanics,
materialmens, or other liens (collectively, "Liens") of any kind to be recorded
against or with respect to the Property. In connection with the foregoing, Optionee shall
be required to fully and finally resolve or bond any such Liens within thirty (30) days of such Liens being recorded, with appropriate
documentation being recorded and filed evidencing the removal, cancellation and/or bonding of such Liens. Furthermore, Optionee
agrees to indemnify, defend and hold Optionor harmless against any and all Liens, claims, damages, and liabilities, of any nature
or kind, arising from or relating to Optionee's access to and use of the Property during the Option Term, except to the extent
the foregoing results from the negligence or willful misconduct of Optionor or its agents, employees, licensees, or invitees. Such
indemnification shall survive any termination of this Agreement for a period of two (2) years.

 

12.
      Default by Optionee. In addition to Optionor's rights in the event that Optionee does not exercise the Option
in the manner described in Section 7 on or before the Option Termination Date, or if Optionee fails to timely and fully perform
or breaches any of its obligations under this Option Agreement, and such failure or breach has not been cured by Optionee within
ten (10) days of Optionee's receipt of written notice of such breach from Optionor (an "Optionee
Default"), then Optionor may terminate this Option Agreement immediately upon written notice to Optionee, and
retain the Option Payment and all Extension Payments paid by Optionee (which, as described herein, are deemed to be fully earned
by Optionor upon delivery, and are non-refundable, except upon the occurrence of an Optionor Default or in accordance with Section
8 hereof), as fully agreed upon liquidated damages for an Optionee Default.

 

13.      
Default by Optionor. If Optionor commits an Optionor's Default, Optionee shall have the right to terminate this
Option Agreement, obtain a refund of the Option Payment, and/or to seek such other relief Optionee may have hereunder, under Applicable
Law, or in equity, including, without limitation, seeking injunctive relief to prevent a sale of the Property to a party other
than Optionee and the filing of an action for specific performance.

 

 

 

    	 	6	 

     

    

 

14.     
Assignment of Option. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto
and their respective heirs or successors and permitted assigns. Without the prior written consent of Optionor, which may be withheld
by Optionor for any reason, in Optionor's discretion, Optionee may not assign its interest under this Agreement; provided, however,
Optionee shall have the right, without Optionor's consent (but shall provide notice to Optionor), to assign its interest in this
Agreement to an entity which is owned or controlled by Optionee or its principals.

 

15.      
Confidentiality. Without the prior written consent of the other party or as otherwise expressly set forth herein,
neither Optionee nor Optionor shall, and each shall direct its Representatives not to, directly or indirectly, make any public
comment, statement or communication with respect to, or otherwise disclose or permit the disclosure of any of the terms, conditions
or other aspects of the transactions contemplated by this Agreement. Each party understands and agrees that certain of the information
that will be furnished in connection with the Due Diligence investigation and exercise of the Option contemplated by this Agreement
is confidential and proprietary, and each party agrees that it will maintain the confidentiality of the other party's confidential
and proprietary information and will not disclose it to others (except that each party may make disclosures to such party's attorneys,
accountants, and other professionals; in addition, Optionee shall be entitled to disclose all information it is required to disclose
- but not more than the information it is required to disclose - as a consequence of being a publicly traded company) or use such
other party's confidential and proprietary information, except in connection with evaluating the transactions contemplated by
this Agreement, or, in the case of Optionee in Optionee's discretion, in connection with obtaining financing for the exercise
of the Option contemplated by this Agreement, without the written consent of the other party. Information that is generally known
or becomes known in the industry or that has been rightfully disclosed to the recipient party by third parties who have the legal
right to do so shall not be deemed to be confidential or proprietary information for purposes of this Agreement. In the event
that any party is at any time requested or required (by oral questions, interrogatories, request for information or documents,
subpoena or similar process) to disclose any confidential or proprietary information supplied to it in connection with the transactions
contemplated by this Agreement, such party agrees to provide the other party prompt notice of such request so that an appropriate
protective order may be sought and/or such other party may waive the first party's compliance with the terms of this paragraph.
In the event that the purchase and sale transaction contemplated by this Agreement is not consummated, each party agrees to promptly
return to the other all confidential materials (and all copies thereof) that have been furnished to it.

 

16.      
Notices. Unless specifically stated otherwise in this Agreement, all notices shall be
in writing and delivered to Optionor, at 6440 S. Wasatch Boulevard, Suite 105 Salt
Lake City, Utah 84121; and, if addressed to Optionee, at 2 Park
Plaza, Suite 1200, Irvine, California 92614, by one or more of the following methods: (a)
personal delivery, whereby delivery is deemed to have occurred at the time of delivery; (b) overnight delivery by a nationally
recognized overnight courier company, whereby delivery is deemed to have occurred the business day following deposit with the
courier; (c) registered or certified mail, postage prepaid, return receipt requested, whereby delivery is deemed to have occurred
on the third business day following deposit with the United States Postal Service; or (d) electronic transmission (facsimile or
electronic mail), if to Optionor at bandrewsen@kmclaw.com.
and srasmussen@scalleyreading.net,
and if to Optionee at matt@vivakor.com
and trent@vivakor.com,
provided that such transmission is completed no later than 5:00 pm
on a business day and the original is also sent by personal delivery, overnight delivery or by mail in the manner previously described,
whereby delivery is deemed to have occurred at the end of the business day on which the electronic transmission is complete.

 

17.      
Costs. Except as expressly agreed upon otherwise by the parties, Optionee and Optionor
shall each be responsible for and bear all of its own costs and expenses incurred in connection with the transactions contemplated
by this Agreement, and no party shall be responsible for any of such costs and expenses of the other party. Notwithstanding the
foregoing, should either party hereto employ an attorney or attorneys to enforce any of the terms and conditions hereof, or to
protect any right, title, or interest created or evidenced hereby, the non-prevailing party in any action pursued in courts of
competent jurisdiction shall pay to the prevailing party all costs, damages, and expenses, including reasonable attorneys' and
legal fees, expended or incurred by the prevailing party. The terms, provisions and obligations contained in this Section shall
survive the expiration or earlier termination of this Agreement.

 

 

 

    	 	7	 

     

    

 

18.     
Governing Law; Jurisdiction and Venue. This Agreement will be governed by and construed
in accordance with the substantive laws of the State of Utah applicable to contracts executed in and to be performed in the State
of Utah without regard to conflict of law provisions of the State of Utah. In any dispute
arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement: (a) each of the parties
irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of either the state courts located
in Salt Lake County, Utah or the United States District Court for the District of Utah, Central Division; (b) each of the parties
irrevocably consents to service of process by first class certified mail, return receipt requested, postage prepaid; and (c) each
of the parties irrevocably waives the right to a trial by jury.

 

19.      
Recording. Absent the prior written consent of both of such parties, neither Optionor nor Optionee shall have the right
to record this Agreement or any memorandum of this Agreement in the public records.

 

20.      
Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and
all of which when taken together shall constitute one and the same document.

 

21.      
Time of Essence. Optionor and Optionee hereby acknowledge and agree that time is strictly of the essence
with respect to each and every term, condition, obligation and provision hereof and that failure to timely perform any of the
terms, conditions, obligations or provisions hereof by either party shall constitute a material breach of and a non-curable (but
waivable) default under this Agreement by the party so failing to perform.

 

22.      
Obligations Surviving the Termination of this Option Agreement. Optionor and Optionee agree tl1.at the duties, obligations,
and responsibilities of the parties set forth in the following provisions of this Option Agreement shall survive the termination
of this Option Agreement for the periods expressly provided therein: 3, 4, 5, 6, 11.a, 11.b, 11.c, 11.d, 11.e, 15, 17, 18, and
19.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	8	 

     

    

 

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Option Agreement as of the Effective
Date.

 

	 	Tar Sands Holdings
II, LLC, a Utah 
	 	limited liability company
	 	 
	 	 
	 	By /s/ Jason Lee              
	 	Name: Jason Lee
	 	Title: Manager
	 	 
	 	 
	 	By /s/ Kevin Baugh          
	 	Name: Kevin Baugh
	 	Title: Manager
	 	 
	 	 
	 	Vivakor, Inc. a Nevada corporation
	 	 
	 	 
	 	By /s/ Matthew Nicosia           
	 	Name: Matthew Nicosia
	 	Title Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	9	 

     

    

 

EXHIBIT A

 

DESCRIPTION OF
THE PROPERTY

 

The Property is commonly
known as Asphalt Ridge, Tar Sand Mine, located in Uintah County, Utah. This definition includes all appurtenances, rights and privileges
pertaining to the Property.

 

Lands involved:

 

Township 4 South,
Range 20 East S.L.M. Section 23: S1⁄2NE1⁄4, N1⁄2SE1⁄4

Section 24: S1⁄2NW1⁄4, N1⁄2SW1⁄4

 

Township 4 South, Range 21 East S.L.M.

Section 30:
W1⁄2SE1⁄4, SE%SE1⁄4, less certain property described in a certain 'Debtor's Deed,' dated May 3, 2013, a
copy of which Debtor's Deed has been provided to Buyer.

Section 31: W1⁄2NE1⁄4, SE1⁄4
NE1⁄4 Section 31: NE1⁄4NE1⁄4

Section 32: SW1⁄4 (surface only)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT B

MATERIAL
TERMS OF THE PURCHASE AGREEMENT

 

This
Exhibit B to a certain Option Agreement between "Seller" and "Buyer" (as such terms are defined below),
sets forth the material terms relating to a proposed sale and purchase transaction (the "Proposed Transaction") whereby
Seller will sell, and Buyer will buy, either: (i), certain "Property," "Permits," and "Assets" (as
such terms are defined below) currently owned by Seller, or (ii) all of the membership interests
in Seller. Although this Exhibit B does not, and is not intended to, contractually bind Seller and Buyer to execute and
deliver the Purchase and Sale Agreement (as defined below), it, however, contains the material terms which Seller and Buyer have
mutually agreed to incorporate into a binding purchase and sale agreement (the "Purchase and Sale Agreement"). Unless
otherwise defined herein, all defined terms used in this Exhibit B shall have the same meanings as set forth in the Option
Agreement.

 

	Seller:	Tar Sands Holdings II, LLC, a Utah limited liability company
	Buyer:	Vivakor, Inc., a Nevada corporation
	Property:	
        Asphalt Ridge,
Tar Sand Mine, Uintah County, Utah (the "Property"); and any and all permits (the "Permits") and other operational
authorizations and all equipment currently located on the Property (the "Assets").
As set forth in the Option Agreement, in the event Optionor engages in a "Refinery Property Transaction"
(as such term is defined in the Option Agreement), then the associated "Refinery Property" (as such term is also defined
in  the Option Agreement), shall not be considered to be part of the Property.

	Assumed
    Liabilities:	
        Any
lease and/or royalty interest(s) to which the Property is subject as of the closing (the "Closing") of the Proposed
Transaction.

	Purchase
    Price; Credits Arising In The Event Of A Sale Of The Refinery Property:	
        $17,500,000.00,
        plus either: (i) all of the funds associated with reclamation bonds previously posted with DOGM by Seller being released to
        Seller, or (ii) Buyer keeping such
        reclamation bonds in place and reimbursing Seller, in full and by wire transfer, for all of such amounts at the Closing, and
        (y) less a credit towards the Purchase Price in an amount equal to one-half (1/2) of the
        total consideration paid by any third party for any Refinery Property in connection with a Refinery Property Transaction, if
        any. Additionally, in the event any Refinery Property Transaction occurs, the amounts actually paid by Buyer in connection
        with the Option Payment and the Extension Payments, if any, shall credited towards the Purchase Price. The Purchase Price
        shall be paid as follows: (a) the amount of $                by
        wire transfer at Closing, and (b) the amount of $                ,
        plus interest at the rate of _%, in equal monthly payments of $               
        over a period of                 
        months.

	Payment Method:	
        By wire transfer to an
account designated by Seller.

	Closing Date:	
        Thirty (30) days
after the end of the Option Term, as may be extended (or the mutual execution of the Purchase and Sale Agreement, whichever is
earlier)

	Closing Deliverables	
        1.    
        Bill of Sale;

        2.    Assignment and Assumption Agreement for any Unexpired Leases pertaining to the Property;

        3.   
        Assignment and Assumption of Executory Contracts pertaining to the Property;

        4.    Assignment
and Assumption Agreement for any Permits pertaining to the Property that are transferable.

 

 

 

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	Representations and Warranties of Seller:	
        Mutually
        agreed upon representations and warranties for the sale of the assets and equipment, including representations and warranties regarding:

        a)  
Title to the Property and Assets, except that, in the event Seller has engaged in a Refinery Property Transaction, the
Refinery Property shall not be transferred to Buyer;

        b)   
        Undisclosed Liabilities;

        c)   
        Assigned Contracts;

        d)   
        Absence of certain Changes, events and Conditions;

        e)   
        Material Contracts;

        f)    
        Compliance with law to the best of Seller's knowledge;

        g    
        Permits;

        h)   
        Legal Proceedings, Governmental Orders;

        i)    
        Taxes; and

        j)    
        Other mutually agreed upon representations and warranties.

        

        It
        is understood that all of the Assets relating to this transaction will be sold by Seller, and purchased by Buyer, in their
        'As-is,' 'Where-is,' 'With-all-faults' condition. As more particularly set forth in Section 7 of the Option Agreement, Seller
        will be making no representations or warranties relating to the condition, repair, value, fitness for a particular purpose,
        the quantity or quality of the equipment, resources, or reserves located on the Property, royalty obligations associated with
        the Property, types or marketability of products that might be produced using the equipment, resources, or reserves located
        at the Property, the potential for Optionee to be able to operate a successful business, or any similar representations
        or

	Representations
    and Warranties of Buyer:	
        Mutually
agreed upon representations and warranties for the purchase of the Property, the Permits, and the Assets.

	Closing Conditions:	
        a)  
        Completion of Buyer's full Due Diligence investigation to Buyer's complete satisfaction in Buyer's sole discretion;

        b)  
        receipt of all necessary consents and approvals of governmental bodies and regulatory authorities to the extent required
        by Buyer, including the Additional Permits;

        c)   
        receipt of all necessary consents and approval of Buyer's lenders (to the extent applicable);

        d)  
        receipt of all approvals, clearances and consents by third parties necessary or desirable for the consummation of the Proposed
        Transaction contemplated hereby, including, without limitation, all third-party consents required to assign or transfer any and
        all contracts and Assets of Seller to be assumed or purchased by Buyer;

        e)    
        release of all security interests, if any, encumbering the Assets;

        f)    
        absence of any material adverse change in the Property or the Assets, reasonable wear and tear
        excepted;

        g)    absence
of pending or threatened litigation regarding the Property, the Assets, Seller or any of Seller's members, except as expressly
disclosed by Seller to Buyer;

h)    Title
to the Property and Assets free and clear of any liens and encumbrances other than Permitted Exceptions;

i)     All
of Seller's members shall have approved the Proposed Transaction and executed appropriate documentation;

j)     Customary
covenants regarding Confidentiality; Governmental approvals and consents, and books and records;

k)    Buyer's
payment of the applicable portion of the Purchase Price which is due at Closing;

l)     Buyer
and Seller executing delivering all applicable Closing documents; and

m)   Other mutually agreed upon Closing Conditions.

 

 

 

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	Indemnifications:	
        Customary
        Indemnifications, including: Indemnification by Seller for any inaccuracy in or breach of any of the representations or warranties
        of Seller; any breach or non fulfillment of any covenant, agreement or obligation to be performed by Seller; any third party claim
        based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller or any of its
        affiliates conducted, existing or arising on or prior to the Closing Date.

         

        Indemnification
        by Buyer for any inaccuracy in or breach of any of the representations or warranties of Buyer; any breach or non fulfillment of
        any covenant, agreement or

        obligation to be performed by
        Buyer.

	Governing Law:	State of Utah.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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