CLIVEDEN PETROLEUM CO. LTD.
17 XXXI DECEMBRE
GENEVA 1207
SWITZERLAND
May 5, 1999
Trinity Energy Resources, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
RE: Oriental Energy Resources Limited-Carlton Energy Group LLC - Trinity Energy
Resources, Inc. Consortium Concession signed on February 23, 1999 by the
Republic of ▇▇▇▇ (the "Concession").
Gentlemen:
When accepted by you in the manner provided below, this letter will evidence the
agreement ("Agreement") between Cliveden Petroleum Co., a British Virgin Islands
business corporation
("Cliveden"), and Trinity Energy Resources, Inc., a Nevada corporation
("Trinity") with respect to bridge financing of certain activities related to
acquisition of the Concession and the farming out of an undivided fifty percent
(50%) interest in the Concession to Cliveden.
I.
OWNERSHIP
Trinity represents and warrants to Cliveden that it owns, or has the right to
commit to this Agreement by contract, one hundred percent (100%) of the working
interest in the Concession awarded to the Oriental Energy Resources
Limited-Carlton Energy Group LLC-Trinity Energy Resources, Inc. Consortium (the
"Consortium") pursuant to the Concession.
II.
BRIDGE FINANCING
Cliveden agrees to provide to Trinity the following financing (the "bridge
financing") for the purpose of meeting ▇▇▇▇▇▇▇'s commitments in connection with
the Concession:
The sum of Three Hundred Fifty Thousand Dollars ($350,000.00) to be
funded concurrently with the execution of this Agreement, and which
shall bear an interest rate of twelve percent (12%) per annum,
interest payable semi-annually, with all principal and accrued but
unpaid interest due on or before May 5, 2000, with no prepayment
penalty. The loan shall be represented by a promissory note in the
form attached hereto as Exhibit "A" executed by ▇▇▇▇▇▇▇ and payable to
the order of Cliveden and secured by certain collateral hereinafter
described. At Cliveden's option, all funded amounts may be
converted at any time prior to principal repayment into shares of
Trinity Energy Resources, Inc. common stock at a conversion price
equal to Twenty-Five Cents ($0.25) per share.
The collateral securing any loan made hereunder is as follows:
1. A first lien covering certain producing oil and gas
properties situated in Texas, Colorado and Wyoming more
particularly described on Exhibit "B" attached hereto.
2. A subordinated security interest in certain monetary
accounts more particularly described on Exhibit "C" attached
hereto.
Should Cliveden elect to exercise its rights under the farmout provisions below,
the loan provided to Trinity under this Agreement shall be immediately cancelled
and Trinity shall have no obligation to repay said monies to Cliveden. If
Trinity has prepaid any sums towards the loan balance, including interest, upon
cancellation of the note, all such sums paid by Trinity shall be refunded.
Until such time, if ever, as Cliveden elects to accept the Assignment provided
below, Cliveden shall have the first right, but not the obligation, to provide
such additional financing as Trinity requires to meet its obligations under the
Concession and to undertake such work to develop the Concession as it may deem
necessary. Such financing shall be subject to the same terms and conditions as
herein provided for the bridge financing including the right to convert the debt
into shares of Trinity's common stock.
III.
FARMOUT
In consideration of Cliveden's agreement to assume the costs associated with the
Concession, as hereinafter provided, Trinity, on behalf of itself and the
Consortium, does hereby agree to sell and transfer to Cliveden fifty percent
(50%) of the entire working interest in the Concession owned by ▇▇▇▇▇▇▇. This
assignment is subject to the following terms and conditions:
▇. ▇▇▇▇▇▇▇▇ must notify Trinity no later than November 30, 1999 that Cliveden
has elected to receive the Assignment and to assume its obligations hereunder.
B. Following such election, ▇▇▇▇▇▇▇ will promptly deliver to Cliveden an
assignment (the "Assignment"), in a form and substance satisfactory to Cliveden,
of fifty percent (50%) of 100% of the working interest in the Concession and
will seek all necessary authorizations from the Government of ▇▇▇▇ to assure
that the rights of Cliveden to such undivided interest are recognized by said
government.
C. Following receipt of the Assignment, and the approval of same by the
Government of ▇▇▇▇, Cliveden agrees to assume one hundred percent (100%) of
Trinity's actually and reasonably incurred and/or expended costs, from
inception, in acquiring, administering, exploring and developing the acreage
covered by the Concession until Payout (as hereinafter defined) occurs.
▇. ▇▇▇▇▇▇▇▇ shall receive ninety percent (90%) of all net revenue (with Trinity
receiving the remaining ten percent (10%) of such revenue) attributable to the
▇▇▇▇▇ drilled on the acreage covered by the Concession until such time that
Cliveden has recovered from all sales of production, net of all royalties,
severance taxes, production taxes or similar burdens, one hundred ten percent
(110%) of all sums paid in connection with the Concession obligations assumed
hereunder including but not limited to (i) all costs heretofore incurred by
Trinity for acquisition of the Concession and rental payments in connection
therewith and (ii) all costs for third party geological and geophysical
evaluations, site preparations, drilling, reworking, deepening, sidetracking,
plugging back, surveying, staking, surface damage, road construction, logging,
fracturing and other stimulation, pipelines and pipeline concessions, testing,
completing, equipping (including equipment costs), operating, plugging and
abandoning, and producing (including overhead charges) with respect to all ▇▇▇▇▇
drilled on the acreage covered by the Concession. Following Cliveden's recovery
of one hundred ten percent (110%) of such costs (herein referred to as
"Payout"), Cliveden shall be entitled to fifty percent (50%) of all net revenue
attributable to said ▇▇▇▇▇ and shall bear fifty percent (50%) of all costs,
risks, obligations and liabilities associated with the Concession. After
Payout, Trinity shall be entitled to fifty percent (50%) of all net revenue
attributable to said ▇▇▇▇▇ and shall bear fifty percent (50%) of all costs,
risks, obligations and liabilities associated with the Concession.
IV.
OPERATIONS
Prior to commencement of operations on the acreage covered by the Concession,
Cliveden, Trinity, Oriental Energy Resources Limited, and Carlton Energy Group
shall join in the formation of an operating company. All participants shall be
represented on the board of directors; provided however, that, until ▇▇▇▇▇▇,
Cliveden shall have exclusive control over all operating and financial decisions
in the event that the operating company's board of directors fails to reach a
unanimous decision. After Payout, each party shall have a proportionate vote on
the board of directors in the operating company in accordance with their
proportionate interest in the Concession at that time. Cliveden reserves the
right to assign to a third party any or all of its undivided interest in the
Concession and to designate a replacement operator. Such assignment and
replacement operator shall be subject to any the approval of Trinity with such
approval not to be unreasonably withheld as well as any required approval by the
government of the Republic of ▇▇▇▇.
V.
ADDITIONAL REPRESENTATIONS BY TRINITY
Trinity represents and warrants the following:
A. Trinity, on behalf of the Consortium, has obtained the Concession in
accordance with the laws of the Republic of ▇▇▇▇ and the applicable laws of
the United States.
B. Trinity has taken all necessary corporate action for the authorization,
execution, delivery, and performance of this Agreement and its obligations
hereunder, including, but not limited to the granting of the option to
convert the bridge financing loan into the common stock of Trinity, should
the financing be deemed a loan.
C. The proceeds of the Bridge Financing will be applied to costs directly
associated with the the Concession.
D. There is no fact which ▇▇▇▇▇▇▇ has not disclosed to Cliveden which
materially adversely affects, or insofar as Trinity can reasonably foresee
could materially adversely affect, the ability of Trinity to perform its
obligations under this Agreement.
VI.
RIGHT OF FIRST REFUSAL
During the term of this Agreement, Cliveden shall have a right of first refusal
with respect to all prospects, concessions and other exploratory arrangements
involving acreage in Africa marketed by Trinity to third party investors.
VII.
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 the applicable federal laws
of the United States. This agreement is fully performable in ▇▇▇▇▇▇ County,
Texas.
VIII.
SUCCESSORS AND ASSIGNS
The terms and provisions of this Agreement shall inure to the benefit of, and be
binding upon the parties hereto, their successors, assigns, and legal
representatives. The parties hereto agree to execute such other instruments
which may be necessary to carry out or make effective the terms and provisions
of this Agreement.
IX.
PREVIOUS AGREEMENTS
It is agreed that the terms of this Agreement are final and supercede any
previous agreement, either oral or in writing, between the parties with respect
to the subject matter of this Agreement. This Agreement contains the entire
understanding of the parties and all of the covenants and agreements between the
parties with respect to the subject matter of this Agreement. No other
representations, oral or written, shall survive the execution of this Agreement
and all representations made by and between the parties respecting the subject
matter hereof are contained in this Agreement.
X.
TERM OF AGREEMENT
This Agreement shall remain in full force and effect so long as the Concession
is in effect or until a fully detailed and definitive farmout agreement is
executed by the parties, unless this Agreement is terminated or extended in
writing by mutual agreement.
XI.
NOTICES
Notices required by this Agreement shall be written and delivered by certified
U. S. Mail, Federal Express or telegram to the parties at the addresses set
forth on page 1 of this Agreement, or at such address as the parties may
subsequently designate in writing. Such notice shall be effective when received
by the addressee.
XII.
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 the State of
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.
XIII.
AMENDMENTS TO BE IN WRITING
No amendments or changes to this Agreement shall be valid unless in writing and
signed by both parties.
If the terms and conditions of this Agreement are satisfactory and set forth
your understanding of our agreement, please so indicate by executing and
returning the enclosed copy of this Agreement.
Very truly yours,
CLIVEDEN PETROLEUM CO. LTD.
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
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by: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ACCEPTED AND AGREED BY:
TRINITY ENERGY RESOURCES, INC.
/S/ T. C. O'Dell
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by: T. C. O'Dell, Chairman and CEO
