GUARANTEE
EXHIBIT
10.11
GUARANTEE
(the
“Guarantee”), dated as of November 26, 2004 of MEDCO
INTERNATIONAL VENTURES LIMITED, an
Indonesian corporation, (“Medco”)
in favour of INDO-PACIFIC
RESOURCES (JAVA) LTD.,
a body
corporate incorporated under the laws of Barbados, (the
“Vendor”).
WHEREAS,
the
Vendor and CAMAR RESOURCES CANADA INC., a body corporate incorporated under
the
laws of the Province of Alberta, Canada (the “Purchaser”) have entered into that
certain Asset Purchase and Sale Agreement (the “Purchase Agreement”), dated of
even date herewith, whereby Purchaser has agreed to purchase from Vendor the
Assets (as defined in the Purchase Agreement), as set forth in, and on the
term
and conditions of, the Purchase Agreement;
WHEREAS,
Vendor
and Purchaser have entered into that certain Joint Operating Agreement (“Joint
Operating Agreement”), dated of even date herewith;
WHEREAS,
the
Vendor has requested Medco, as the beneficial owner of the Purchaser, to provide
a guarantee to the Vendor on the terms and conditions hereinafter provided;
and
WHEREAS,
Medco is
willing to enter into this Guarantee to induce the Vendor to enter into the
Purchase Agreement and the Joint Operating Agreement;
NOW,
THEREFORE,
Medco
hereby agrees:
Section
1. Guarantee
by Medco.
(a) From
and
after the Closing Date (as defined in the Purchase Agreement), Medco hereby
irrevocably and unconditionally guarantees the obligations of Purchaser under
the Purchase Agreement and the Joint Operating Agreement when the same shall
become due and payable according to the terms and conditions of the Purchase
Agreement; provided, however, that Medco shall not be liable to make any payment
until five (5) Business Days (as used herein, a “Business Day” shall refer to a
day other than a Saturday or a Sunday on which commercial banks are open for
business in the Province of Alberta, Canada) following receipt by Medco of
written notice from the Vendor. Medco hereby agrees that its obligations
hereunder are in no way conditioned upon the requirement that Vendor first
attempt to collect any of the obligations under this Guarantee from the
Purchaser or resort to any other means of obtaining payment or performance
and
shall be unconditional, subject only to the validity and enforceability of
the
Purchase Agreement and the Joint Operating Agreement against the Purchaser
including any change therein or amendment thereto and further subject to
defenses available to the Purchaser, other than bankruptcy or insolvency of
the
Purchaser. Medco covenants that this Guarantee will not be discharged except
by
complete performance of the obligations contained in the Purchase Agreement,
Joint Operating Agreement and in this Guarantee.
(b) This
Guarantee shall continue to be effective or be reinstated, as the case may
be,
if at any time any payment under the Purchase Agreement or any other amount
owed
to the Vendor hereunder or thereunder is rescinded or must otherwise be returned
by the Vendor upon the insolvency, bankruptcy or reorganization of Medco, the
Purchaser or otherwise, all as though such payment had not been
made.
Section
2. Waivers
by Medco.
Medco
waives promptness, diligence, presentment, demand, protest, notice of
acceptance, notice of any obligations under the Purchase Agreement or the Joint
Operating Agreement and all other notices of any kind except as provided in
Section 1 of this Guarantee.
Section
3. Medco’s
Agreement to Pay Enforcement Costs, etc.
Medco
further agrees, as the principal obligor and not as a guarantor only, to pay
to
Vendor, on demand, all reasonable costs and expenses (including court costs
and
legal expenses) incurred or expended by Vendor in connection with the
enforcement of this Guarantee, together with interest on amounts recoverable
under this Section 3 from the time when such amounts become due until payment;
provided that Medco shall not be liable for any costs or expenses of Vendor
if
no payment under this Guarantee is due.
Section
4. Governing
Law.
This
Guarantee shall, in all respects, be governed by, subject to and be interpreted
and construed in accordance with the laws in effect within the Province of
Alberta, Canada, excluding any conflict of laws principles or rules embodied
therein.
Section
5. Interpretation.
The
headings of the sections and other subdivisions of this Guarantee are inserted
for convenience only and shall not be deemed to constitute a part
hereof.
Section
6. Currency
of Payment.
Any
payment to be made by Medco shall be made in the same currency as designated
for
payment in the Purchase Agreement and such designation of the currency of
payment is of the essence.
Section
7. Trade
Debts.
Once
all Trade Debts (as defined in the Purchase Agreement) have been settled
pursuant the terms and conditions of the Purchase Agreement, Medco shall acquire
all of the Participating Interests (as defined in the Joint Operating Agreement)
held by Purchaser, so that Medco becomes the direct owner of the Assets (as
defined in the Purchase Agreement). Notwithstanding any provision in this
Guarantee to the contrary, this Guarantee shall be deemed to have been fully
discharged and shall cease to be valid or of any force or effect immediately
following acquisition by Medco of the Participating Interests and Vendor shall
forthwith thereafter cancel and return the original of this Guarantee to
Medco.
Section
8. Broker
Fee.
Medco
shall use its best efforts to re-negotiate certain fees (the “Broker Fees”) that
are payable pursuant to that certain Consultation Fee Agreement between Fortune
Oil & Gas, Inc., a Nevada corporation, Xxxxx X. Xxxxxxxxxx and Xxxxxxxx
Xxxxxxxxxxx. Once a settlement of the Broker Fees is obtained, Medco shall
pay
fifty percent of the Broker Fees, up to an amount of $125,000.
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Section
9. Successors
and Assigns.
This
Guarantee shall be binding upon Medco and its permitted successors and assigns,
and shall inure to the benefit of and be enforceable by Vendor and its permitted
successors, transferees and assigns. Neither party may assign this Guarantee
nor
delegate its duties or rights hereunder without the prior express written
consent of the other, which consent may not be unreasonably withheld or delayed.
Section
10. Amendments
and Waivers.
No
amendment or waiver of any provision of this Guarantee nor consent to any
departure therefrom shall be effective unless the same shall be in writing
and
signed by Vendor and Medco. No failure on the part of Vendor to exercise, and
no
delay in exercising, any right hereunder shall operate as a waiver thereof;
nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.
Section
11. Notices.
All
notices and other communications called for hereunder shall be made in writing
and, unless otherwise specifically provided herein, shall be deemed to have
been
duly made or given when delivered by hand, sent by facsimile transmission or
mailed first class, postage prepaid, addressed as follows: if to Medco, at
the
address for notices to Purchaser set forth in the Purchase Agreement, and if
to
Vendor, at the address for notices to Vendor set forth in the Purchase
Agreement, or at such address as either party may designate in writing to the
other.
Section
12. Severability.
If
any
provision of this Guarantee shall be invalid, illegal or unenforceable in any
jurisdiction, the parties hereto agree to the fullest extent they may
effectively do so that (a) the validity, legality and enforceability in every
other jurisdiction of such provision shall not in any way be affected or
impaired thereby and (b) the validity, legality and enforceability in such
jurisdiction of the remaining provisions shall not in any way be affected or
impaired thereby.
MEDCO
INTERNATIONAL VENTURES LIMITED
By:
/s/
Xxxxxxx Xxxxxxxx
Name: Xxxxxxx
Xxxxxxxx
Title: Assistant
to CEO
ACKNOWLEDGMENT
AND AGREEMENT
Indo-Pacific
Resources (Java) Ltd hereby acknowledges and consents to the provisions of
the
foregoing Guarantee.
INDO-PACIFIC
RESOURCES (JAVA) LTD
By:
/s/
Xxxxx
Xxxx
Name: Xxxxx
Xxxx
Title:
President
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