Exhibit 99.1
INDEMNIFICATION AND RELEASE AGREEMENT
This INDEMNIFICATION AND RELEASE AGREEMENT (hereinafter called the
"AGREEMENT") is entered into on September 21 2006 between Avenue Energy Inc., a
corporation organized and existing under the laws of the State of Delaware in
the USA, having offices at 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000
XXX (hereinafter called "AVENUE"), and Aladdin Middle East Ltd, a corporation
organized and existing under the laws of the State of Delaware in the USA,
having offices in the city of Ankara and in the city of Wichita,
Kansas(hereinafter called "AME"), which is designated Operator of all Xxxxx
Group Consortium Exploration Licences and Production Leases in Turkey. Each of
AVENUE and AME shall hereinafter individually be referred to as a "Party", and
collectively as the "Parties."
RECITALS
WHEREAS, AVENUE and AME previously entered into a Revised and Restated
Participation Agremeent relating to Kahta Production Lease and Various
Exploration Licences in the Republic of Turkey" dated October 22, 2004
(hereinafter called the "PA").
WHEREAS, AVENUE has previously transferred an undivided 4.5 % (four
point five percent) interest, out of its 15% (fifteen percent) interest, in the
Exploration Licences AR/AME-EPS-AVE/2674, 2677 and 2678 in Petroleum District
XI, Diyarbakyr (hereinafter called the "Karakilise Licences"), in Turkey to JKX
Turkey Limited, a corporation organized and existing under the laws of England
(hereinafter called "JKX"), by the "Participation Agreement Relating to the
Karakilise Licences, Turkey" (hereinafter called the "Karakilise PA"), dated May
10, 2005 to which AME is a party, also.
WHEREAS, the Parties desire to set forth certain agreements regarding
mutual indemnification and release with respect to the termination of the PA and
in this regard, transfer of AVENUE's interest to AME.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the Parties hereto agree as follows:
1- TERMINATION OF THE PA
1.1 The PA shall terminate immediately upon and on the date of execution
hereof by authorized representatives of the Parties (hereinafter called
the "Effective Date") and thus, as of the Effective Date AVENUE shall
be deemed to waive of all of its rights and duties arising out of the
PA and the Exploration Licences listed in Schedule A of the PA,
including its undiveded remainder 10.5% (ten point five percent)
interest in the Karakilise Licences. Until such time, Avenue shall
continue to accrue its share of revenues under the Karakilise Licenses
and its liabilities thereunder as well as its obligations for all
administration fees and fees for Xx. Xxxxx Xxxxx. As of the Effective
Date and payment by Avenue of the amount set out in Paragraph 2.1
hereof, all further revenue interests, other than recoupment of back
costs from JKX, and obligations shall terminate and AME shall prepare a
Settlement Statement for Avenue to present to its auditors in order to
wind up its participation under the PA.
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1.2 AVENUE shall waive and transfer all of its rights, title and beneficial
interest, including its undivided 10.5% (ten point five percent) in the
Karakilise Licences, and in and under the PA, to AME as of the
Effective Date. AVENUE shall waive its right to claim with regard to
the PA and the Exploration Licences listed in Schedule A of the PA, and
agrees to indemnify and hold harmless AME from and against any related
claims of AVENUE. Nothing in this Agreement nor in Avenue's release of
its interests in the licenses contemplated by this Agreement shall be
deemed to limit or terminate Avenue's right to receive directly from
JKX its share of the "back costs" as provided in the participation
agreement dated May 10, 2005
1.3 AVENUE, with the full assistance and cooperation of AME shall do any
and all acts required to be done by applicable law or regulation in
order to render such transfer legally valid, including without
limitation, obtaining all governmental consents and approvals in
accordance with Article 3 hereof, without delay, and shall execute any
and all documents and take such other actions as may be necessary in
order to effect a prompt and valid transfer of its interest in the
Karakilise Licences.
2- PAYMENT and LIQUIDATION
2.1 AME shall be paid a non-recurring USD 50.000 (fifty thousand) by AVENUE
within five business days upon the execution of this Agreement. AME
covenants AVENUE not to claim any payment other than the said amount in
connection with the subject matter hereof. This payment shall be in
satisfaction of all amounts owed to AME, Oyman Xxxxx and their
affiliates and/or assigns through the Effective Date.
2.2 Mr. Ecvet XXXXX (at the same address of AME first stated above) shall
be the representative of AVENUE for the liquidation in Turkey as
authorized by the AVEUNE's Board Resolution and power of attorney,
which are attached hereto as Appendix 1 and 2 and he shall conduct
liquidation proceedings upon request of AVENUE
2.3 If so instructed to carry out the liquidation of AVENUE, Mr. Ecvet
XXXXX shall conduct the concerning liquidation proceedings arising out
of the termination of the PA, by being subject to the payment of the
above-mentioned amount by AVENUE. AME shall not demand to receive any
other payment from AVENUE, on the ground of so conducted liquidation
proceedings.
2.4 AVENUE shall continue to pay Xx. Xxxxx XXXX (Certified Public
Accountant) USD 1.700 (one thousand and seven hundred) as financial
consulting fee which is paid quarterly, until the end of year 2006 or
until the conclusion of liquidation proceedings formally in accordance
with Turkish laws and regulations, whichever comes last. AVENUE shall
be liable, and indemnify and hold harmless AME from the obligation of
payment of this amount.
2.5 All payments by AVENUE to AME required hereunder shall be made in US
Dollars by wire transfer to the account
with:
Citibank Ankara Branch
Xxxxxxx Xxxxxxx 00/00 Xxxxxx, Xxxxxx
US$ Account No: 310 030 031
SWIFT Code:XXXXXXXX
Beneficiary: Aladdin Middle East Ltd.
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3- OTHER TERMS
3.1 AVENUE hereby unilaterally terminates the "Amended and Restated
Representation Services Agreement" made by and between AVENUE and Oyman
XXXXX, dated October 22, 2004. Parties covenants each other not to make
and conduct any transaction relying on this Represantation Services
Agreement.
3.2 With regard to governing law and arbitration issues, Article
15.10 and 15.11 of the PA shall be applied,
notwithstanding the termination of the PA.
3.3 AVENUE shall execute and submit to AME statements of release with
regard to the waiver of its interests in the Exploration Licences
listed in Schedule A of the PA, attached hereto as Appendix 3/(a), (b),
(c), (d), (e) and (f).
3.4 With regard to the notices, Article 14 of the PA shall be applied,
notwithstanding the termination of the PA.
3.5 AME shall provide Avenue, monthly activity and revenue reports in
relation with the Karakilise License area to enable Avenue to monitor
the receivables from JKX for the remaining part of Karakilise-1 Well
back costs until such time that Avenue fully recovers its share of
backcosts of Karakilise-1 Well from JKX.
3.6 Upon execution of this agreement, parties shall submit the necessary
application(s) to the Turkish General Directorate of Petroleum Affairs
without delay, in accordance with the Turkish laws and regulations. AME
will asisst Avenue in preparation of such application.
3.7 This Agreement with its attachments constitute the entire agreement
between the Parties and supersedes and replaces any and all oral or
written communications made between the Parties in relation to the
subject matter hereof.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized signatories as of the day
and year first written above.
For and on Behalf of For and on Behalf of
Avenue Energy Inc. Aladdin Middle East Ltd
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Name: Xxxxxx Xxxxxx Name : Cem Xxxxx
Title: VP Avenue Group Title: Executive Vice President
Date: Date:
