TRINITY ENERGY RESOURCES, INC.
AGREEMENT
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This Agreement, made and entered into and becoming effective this ____ day of
December 1999, by and between Trinity Energy Resources, Inc., with offices
located at 00000 Xxxx Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, XXX, hereinafter
referred to as "Assignor", and Cliveden Petroleum Co. Ltd. (Cliveden), with
offices located at 17 XXXI Decembre, Xxxxxx 0000, Xxxxxxxxxxx, hereinafter
referred to as "Assignee", sets for the terms and conditions under which the
Assignors have agreed to transfer and convey to Assignee all interest in and to
the rights held by the Assignor under the Convention established between the
Assignors and the Republic of Xxxx, as provided in Exhibit 'A' (the
"Convention"). This Convention allows for exploration and development in an
approximate 108 million acre concession, confined by three work areas in the
northern, west-central and southern regions of the Republic of Xxxx, as provided
in Exhibit "B". All references to monetary exchanges in this Agreement relate
to the currency of the United States of America.
WITNESSETH
I.
Assignor represents that pursuant to said Convention and the Permit "H" issued
thereunder, Assignor retains rights to a minimum of seventy percent (70%) of the
working interest in said Convention, up to a maximum of one hundred percent
(100%) working interest, dependent upon the Government of the Republic of Chad's
acceptance or rejection of the royalty provisions in that certain agreement
dated November 15, 1998 between Carlton Energy Group ("Carlton"), Oriental
Energy Resources, Limited "(Oriental") and Assignor. In any event, regardless
of the working interest percentage, Assignor is currently designated as Operator
of the Convention.
II.
ASSIGNMENT OF WORKING INTEREST
For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Assignor agrees to assign, and does hereby transfer and
assign to Assignee, or its nominee, subject to any requisite approval of the
Minister of Mines and Energy of the Republic of Xxxx, all of its rights and
interest in and to the Convention, including the right of Assignor to be
designated as Operator of the convention (the "Assignment"); subject, however,
to the reservation and retention by Assignor of a working interest after Payout
(as hereinafter defined) equal to five percent (5%) of the total working
interest or any other interest then held and retained by Assignee, including
cash or property received by Assignee following recovery of all direct costs
heretofore or hereafter incurred by Assignee. Assignor shall assign to Assignee
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all data, technical information, maps, know-how, rights, contracts, claims, and
other assets and property, tangible or intangible, of Assignor or under its
possession or control related to, used or useful in connection with the
Convention. "Payout" shall mean the recovery from sales of production, net of
royalties, all severance taxes, production taxes, and similar burdens, and all
costs heretofore or hereafter incurred by Assignee, including third-party costs,
with respect to the Convention and production therefrom.
III.
PERFORMANCE OBLIGATIONS
In consideration of the Assignment, Assignee agrees to the following:
- Assignee shall assume and pay or arrange for payment and fulfillment
of all obligations of Assignor under the Convention, including without
limitation (i) an acreage rental payment in the approximate amount of
four hundred forty thousand dollars ($440,000) due January 1, 2000,
and annually thereafter, (ii) infrastructure development in the
Republic of Xxxx ("Chad") requiring a five hundred thousand dollar
($500,000) commitment due on or before June 30, 2000, and (iii)
training of Chadian officials, gathering, processing, and interpreting
geological and geophysical data, reporting requirements and the
drilling of exploratory xxxxx, all at an estimated cost in excess o
twenty-six million dollars ($26,000,000) over the initial five (5)
year exploration period of the Convention.
- Assignee shall accept this Assignment subject to, but without recourse
to Assignee for, all costs incurred by Assignor to date in the workup
and presentation of the project, including past acreage rental
payments, startup and continuing operations of the Chad Office of
Assignor, currently located in N'Djamena, Chad (the "Chad Office"),
all properly attributed costs associated with Assignor's home office
efforts in the forwarding of concession assets, and other such costs
which relate to the protection of the concession, which the parties
agree is in the aggregate amount of one million five hundred thousand
dollars ($1,500,000) (the "Assignor Costs"). The Assignor Costs shall
be paid and reimbursed to Assignor only out of net proceeds and
receipts by Assignee or to its interest from development, assignment,
farmout, or other exploitation of the Convention ("Assignee Proceeds")
in pari passu with recovery by Assignee of its direct expenses and
costs incurred in connection with the Convention, including amounts
paid with respect to the Oriental Obligation hereinafter described
("Assignee Costs"). Assignee shall, no less frequently than annually,
provide Assignor with an accounting and report of the Assignee Costs
and any Assignee Proceeds.
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- Assignee agrees to the immediate conversion of the previously provided
amount of three hundred and fifty thousand dollars ($350,000),
together with accrued interest thereon, as more fully described in the
Agreement between the parties dated May 5, 1999, into shares of
preferred stock of Assignor which bears a preferred, cumulative
dividend and liquidation preference, price per share, conversion rate,
mandatory redemption and other terms no less favorable than the most
favorable terms now or heretofore offered by Assignor. Assignor will
be relieved of any and all obligations associated with the loan by
Assignee to Assignor in the amount of three hundred and fifty dollars
($350,000), pursuant to that certain agreement between Assignor and
Assignee dated May 5, 1999, and Assignee shall release all collateral
securing its loan.
- Assignee assumes all liability associated with outstanding and
unresolved claims against Assignor made by Oriental related to the
"Sunk Costs" as defined in the agreement amount Oriental, Carlton, and
Assignor dated November 15, 1998, up to a maximum of two million
dollars ($2,000,000) (the Oriental Obligation"), conditioned upon
Oriental's production of all appropriate documentation and
substantiation of expenses acceptable to Assignee. As a condition to
such assumption of liability by Assignee, Assignor agrees to continue
its legal efforts to recover three hundred and forty thousand dollars
($340,000) previously provided to Alhaji Indimi intended for payment
of the Chad surface rental in 1999. Should Assignor be successful in
recovering any or all of the said funds, such recovery will be
retained by Assignor and credited against the Oriental Obligation.
- Assignee agrees to reimburse Assignor for immediate future xxxxxxxx
anticipated as a result of seismic and geologic data copying underway
at Exxon headquarters, as provided in the relinquishment of data per
demand of the Republic of Xxxx. The invoiced costs associated with
this data reproduction and transfer activities is fifty thousand
dollars ($50,000), due and payable upon receipt of said data. All such
information and data shall be promptly assigned and delivered to
Assignee. Assignor may, at its option and expense, make a copy of the
tapes, support information, logs, core studies, and all such
information transferred by Exxon to Assignor for the benefit of
Assignor.
- Effective as of the date hereof, Assignee agrees to assume all costs
associated with ongoing operations of the Chad Office previously
established by Assignor. Current minimum staffing and support services
amount to approximately twenty-six thousand dollars ($26,000) per
month. Details related to wire transfer advice and timing of payments
will be made available by Assignor upon execution of this Agreement.
Assignor shall indemnify and hold Assignee harmless from and with respect to any
liabilities, obligations or claims, by or through Assignor, other than the
liabilities, obligations, and claims expressly assumed by Assignee or to be paid
to Assignor pursuant to this Agreement.
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IV.
CONDITIONS
- The government of Xxxx shall have approved the Assignment, if required
by the Convention.
- Assignor shall have made arrangements with Carlton to be discharged
from the obligation to pay a five hundred thousand dollar ($500,000)
success fee to Carlton related to the acquisition of the Convention by
Assignor.
V.
OPERATIONS
Prior to commencement of operations on the acreage covered by the Concession,
Assignor, Assignee, Carlton, and Oriental will make all reasonable efforts to
execute a Joint Operating Agreement (JOA) among parties with Assignee as
Operator. Until such time as a comprehensive JOA has been signed by all
parties, an Operating Committee shall be established by Assignee with at least
one (1) representative from Assignor that shall meet on a monthly basis to
establish concession strategies for dealing with obligations of the Convention.
VI.
APPLICABLE LAW
This Agreement is made subject to and shall be governed by and enforced in
accordance with the laws of the State of Texas and applicable federal laws of
the United States. This Agreement is fully enforceable in Xxxxxx County, Texas.
VII.
SUCCESSORS AND ASSIGNS
The terms of this Agreement shall inure to the benefit of, and be binding upon
the parties hereto, their successors, assigns, and legal representatives.
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VIII.
PREVIOUS AGREEMENTS
It is agreed that the terms of this Agreement are final and supercede any
previous agreement between the parties. No other representations made by and
between the parties respecting the subject matter hereof are contained in this
Agreement. However, the parties agree to execute such other instruments which
may be necessary to carry out or make effective the terms and conditions of this
Agreement.
IX.
TERM OF THE AGREEMENT
This Agreement shall remain in full force and effect so long as the Convention
is in effect, whether by virtue of the exploration phase of the Convention or in
the development or production phase of the Convention.
X.
NOTICES
Notices required by this Agreement shall be written and delivered by certified
U.S. Mail, other typical couriers, or by telegram to the parties at the
addresses set forth on page one of this Agreement, or at such address as the
parties subsequently designate in writing. Such notice shall be effective when
received either by the addressee, by a duly noted representative of the
addressee, or if no one is so appointed, then when corporate receipt is verified
by typical delivery services.
In addition to any other notice permitted or required to be given pursuant to
this Agreement, Assignee shall give at least ninety (90) days prior notice to
Assignor in the event that Assignee shall determine to abandon or relinquish its
interest in the Convention or withdraw as a member of participant in the
Convention, and Assignor shall have opportunity during such period to make an
offer or proposal to Assignee for acquisition of such interest prior to any such
withdrawal, abandonment or relinquishment; provided that (i) Assignee shall not
have any notice obligation hereunder with respect to any contemplated assignment
or other disposition of its interest for value or in connection with any
commercial transaction, (ii) Assignee shall have no obligation to accept any
proposal by Assignor, and (iii) this provision does not entitle Assignor to a
right of first refusal or other preemptive right with respect to any interest of
Assignee in the Convention. This provision is personal between Assignor and
Assignee, is not binding upon the assigns of Assignee, and does not run with or
otherwise burden the interest of Assignee in the Convention.
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XI.
ARBITRATION
All claims, disputes or controversies arising out of, or in relation to the
interpretation, application or enforcement of this Agreement shall be decided by
resort of either party to arbitration in accordance with the Rules of the
American Arbitration Association. The arbitration shall be held in Xxxxxx
County, Texas. The proceedings will be held by a panel of three (3)
arbitrators, with each party having the right to select one (1) arbitrator and
with the third arbitrator being selected by the two (2) arbitrators appointed by
the parties. The decision of the panel shall be final, binding and enforceable
in any court of competent jurisdiction. The arbitration panel may award
attorney's fees, costs and expenses to the prevailing party.
XII.
AMENDMENTS TO BE IN WRITING
No amendments or changes to this Agreement shall be valid unless in writing and
signed by both parties.
XIII.
ENFORCEABILITY OF AGREEMENT
Should a court of competent jurisdiction or an arbitration panel hold any
provision of this Agreement to be unenforceable, invalid or illegal, then the
Agreement shall be interpreted, construed and enforced as if such unenforceable,
invalid or illegal provision were not contained herein.
Accepted and Agreed by:
Trinity Energy Resources, Inc. Cliveden Petroleum Co. Ltd.
(SIGNED) (SIGNED)
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T. C. O'Dell Xxxx X. Xxxxxxx
Chief Executive Officer President
Attest:
(SIGNED)
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Xxxx X. Xxxxxxx, Secretary
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