ASSIGNMENT OF PRODUCTION PAYMENT
Exhibit 10.5
/s/ Xxxxx Xxxxx
ASSIGNMENT
OF PRODUCTION PAYMENT
THIS
ASSIGNMENT OF PRODUCTION PAYMENT
(the "Assignment"), dated this 9th day of November, 2007, is from South Xxxxx
LLC, a Delaware limited liability company ("Assignor"), whose
mailing address is 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX, Xxxxxx X0X 0X0,
to
Entek USA Inc., a Delaware corporation ("Assignee"), whose address is 0000
Xxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000.
WHEREAS,
pursuant to that Amended and
Restated Participation Agreement, dated as of December 8, 2006, by and between
Ridgelake Energy, Inc., a Louisiana corporation (“Ridgelake”), GulfX, LLC
(“GulfX”), a Delaware limited liability company, and Assignor (as amended, the
“Participation Agreement”), Assignor has the right to earn interests in the Oil
and Gas Leases described in Exhibit A attached hereto (the “Leases”), subject to
the terms and conditions of the Participation Agreement; and
WHEREAS,
Assignor desires to grant to
Assignee a production payment in and to production attributable to the interest,
if any, which Assignor may earn or acquire in and to the Leases.
NOW,
THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Assignor hereby ASSIGNS, TRANSFERS, GRANTS and
CONVEYS, effective as of 7:00 a.m., local time,
on the date
hereof (the "Effective Time"), unto Assignee, a production payment (the
“Production Payment”) equal to fifty percent (50%) of all oil, gas and other
minerals which may be produced from (or otherwise attributable to) Assignor’s
interest in and to the Leases (including any extensions or renewals thereof),
whether now owned or acquired by Assignor within five (5) years after the date
hereof, free of all exploration, development and operating costs but subject
to
(i) applicable taxes measured by production or value, including gross
production, severance and other taxes, and (ii) all presently valid and
subsisting royalties and other burdens on production which are of record and
burden the Leases as of the date hereof (the “Net Proceeds”).
The
Production Payment shall terminate
in full upon the receipt by Assignee, its successors and assigns, from the
Production Payment, of the full sum of US$1,072,258.22, being the sum of
US$193,280.66 (the “Discovery Share Amount”) plus US$878,987.56 (the “Sunk
Costs”) (the Discovery Share Amount and the Sunk Costs being collectively
referred to herein as the "Payment Amount"). The respective Sunk
Costs attributable to each Lease are set out in Exhibit A attached
hereto. Net Proceeds received by Assignee attributable to a
Lease shall be applied first to the Sunk Costs with respect to such Lease,
and
thereafter to the Discovery Share Amount. At such time as the Net
Proceeds paid to Assignee and applied toward the Discovery Share Amount are
equal to the Discovery Share Amount, all further payments of Net Proceeds
attributable to a Lease shall be applied to any remaining Sunk Costs with
respect to such Lease until payments of Net Proceeds attributable to such Lease
and applied to Sunk Costs for such Lease equal the Sunk Costs for such Lease
as
set out in Exhibit A. At that time, the Production Payment shall
automatically terminate as to such Lease only. Upon termination of
this Production
Payment, in full or in part, Assignee shall, upon request, deliver to Assignor
a
release, executed and acknowledged by Assignee, evidencing such
termination.
TO
HAVE AND TO HOLD
the Production Payment herein assigned unto Assignee, its successors and
assigns, until termination as herein provided; and Assignor hereby binds itself,
its successors and assigns, to WARRANT and FOREVER
DEFEND the Production Payment against every person whomsoever lawfully
claiming or to claim the same or any part thereof by, through, or under
Assignor, but not otherwise. Assignor further gives and grants unto
Assignee, insofar as it affects the Production Payment, full power and right
of
substitution and subrogation in and to all covenants and warranties by others
given or made in respect of the Lease.
Assignor
will do, execute, acknowledge
and deliver all and every such further acts and such other instruments as may
be
necessary or appropriate more fully to assure to Assignee, its successors and
assigns, all of the properties, rights, titles, interests, estates, remedies,
powers and privileges by this instrument transferred, assigned and conveyed
or
intended so to be.
All
of the terms, provisions, covenants
and agreements herein contained shall extend to and be binding upon the parties
hereto, their respective successors and assigns.
IN
WITNESS WHEREOF,
Xxxxxxxx has executed this Assignment before the undersigned witnesses on this
9th day of November 2007.
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Witnesses:
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South
Xxxxx LLC
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|
Printed
Name: /s/ Xxxxx
Xxxxx
Printed
Name: /s/ Xxxxx
Xxxxxx
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By: Velocity
Oil & Gas Inc., its sole member
By: /s/
Xxxxx X.
Xxxxxx
Xxxxx
X. Xxxxxx
President
& CEO
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CITY
OF Vancouver
PROVINCE
OF BRITISH
COLUMBIA
This
instrument was acknowledged before
me on this 9th day of November, 2007, by Xxxxx X. Xxxxxx, as
President & CEO of Velocity Oil & Gas Inc., a Nevada corporation, as
sole member of South Xxxxx LLC, a Delaware limited liability company, on behalf
of the limited liability company.
/s/ Xxxxx Xxxxx
Notary
Public
Province
of British Columbia
My
Commission Expires:
Does
Not
Expire
(SEAL)
Exhibit
A
To
Assignment of Production Payment, dated as of November __,
2007,
From
South Xxxxx LLC, as Assignor, to Entek USA Inc., as Assignee
LEASES
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1.
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OCS-G
26190, being that certain Oil and Gas Lease of Submerged Lands Under
the
Outer Continental Shelf Lands Act dated June 1, 2004, by and between
the
United States as Lessor and Ridgelake Energy, Inc., as Lessee, covering
all of Block 79, Viosca Xxxxx Area, OCS Official Protraction Diagram,
NH
16-07, and covering approximately 5,760 acres of submerged lands
within
the Outer Continental Shelf.
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|
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Sunk
Costs: US $
65,292.54
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2.
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OCS-G
26560, being that certain Oil and Gas Lease of Submerged Lands Under
the
Outer Continental Shelf Lands Act dated October 1, 2004, by and between
the United States as Lessor and Ridgelake Energy, Inc., as Lessee,
covering all of Block A 307, High Island Area, East Addition, South
Extension, OCS Leasing Map, Texas Map No. 7C, and covering approximately
5,760 acres of submerged lands within the Outer Continental
Shelf.
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Sunk
Costs: US $ 62,838.98
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3.
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OCS-G
27078, being that certain Oil and Gas Lease of Submerged Lands Under
the
Outer Continental Shelf Lands Act dated May 1, 2005, by and between
the
United States as Lessor and Ridgelake Energy, Inc., as Lessee, covering
all of Block 317, Vermilion Area, South Addition, OCS Leasing Map,
Louisiana Map No. 3B, and covering approximately 5,000 acres of submerged
lands within the Outer Continental
Shelf.
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Sunk
Costs: US $ 127,478.91
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4.
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OCS-G
27089, being that certain Oil and Gas Lease of Submerged Lands Under
the
Outer Continental Shelf Lands Act dated June 1, 2005, by and between
the
United States as Lessor and Ridgelake Energy, Inc., as Lessee, covering
all of Block 138, South Xxxxx Island Area, South Addition, OCS Leasing
Map
No. 3C, and covering approximately 5,000 acres of submerged lands
within
the Outer Continental Shelf.
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Sunk
Costs: US $ 299,425.08
5.
OCS-G 27091, being that certain Oil and Gas Lease of Submerged Lands Under
the Outer Continental Shelf Lands Act dated July 1, 2005, by and between the
United States as Lessor and Ridgelake Energy, Inc., as Lessee, covering all
of
Block 152, South Xxxxx Island Area, South Addition, OCS Leasing Map, Louisiana
Map No. 3C, and covering approximately 2,500 acres of submerged lands within
the
Outer Continental Shelf.
Sunk
Costs: US $ 323,952.05
