FARMOUT and OVERRIDING ROYALTYAGREEMENT
FARMOUT
and OVERRIDING ROYALTYAGREEMENT
dated
June 26, 2009
Zentrum
Energie Trust AG,
and
TAMM
Oil and Gas Corp.
made this
26th day
of June, 2009
BETWEEN:
Zentrum Energie Trust AG – with
corporate offices in Zug Switzerland (hereinafter called
“Zentrum”)
and
TAMM Oil and Gas Corp, a body
corporate having an office in the City of Calgary, in the Province of
Alberta
(hereinafter
called “TAMM”)
WHEREAS the parties have entered into
this Farmout and Overriding Royalty Agreement in order to formalize the terms
upon which ZENTRUM is prepared to farm out its undivided interest in the Farmout
Lands to TAMM, subject to the reservation of an overriding royalty to
ZENTRUM;
NOW THEREFORE, in consideration of the
premises, covenants and agreements of the parties, the parties hereby covenant
and agree as follows:
1.
DEFINITIONS
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Each
capitalized term used in this Head Agreement will have the meaning given
to it in the Farmout and Royalty Procedure, and, in
addition:
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a)
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“Contract Depth” means a
depth of at least 150 meters, which is the minimum depth sufficient to
validate the Farmout Lands into their intermediate
term.
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b)
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“Farmee” means
TAMM.
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b)
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“Farmor” means
ZENTRUM.
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d)
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“Farmout & Royalty
Procedure” means the 1997 CAPL Farmout & Royalty Procedure
which is by this reference adopted and entirely incorporated into and
completed or amended by this
Agreement.
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e)
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“Test Well” means all
xxxxx drilled pursuant to this Agreement for the purposes of validating
the Title Documents into their intermediate
term.
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1
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f)
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“Production Month” is
any calendar month in which there is or has been production of any amount
from a Test Well. A Production Month will not be calculated
based on hours of production.
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2.
SCHEDULES
The
following Schedules are attached hereto and made part of this
Agreement:
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a)
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Schedule
“A” which describes the Farmout Lands, Title Documents, Farmor’s Working
Interest and the Encumbrances; and
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b)
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Schedule
“B” which are the elections and amendments to the Farmout & Royalty
Procedure; and
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c)
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Schedule
“C” which specifies the type of drilling information required to be
supplied by the Farmee to the Farmor pursuant to the Farmout & Royalty
Procedure.
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3.
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First Right of Refusal –
Zentrum shall have first right of refusal for any equity based financing
that TAMM may undertake for the next 36 months. Upon 60 days
notice to finance, Zentrum shall give formal notice that Zentrum shall
exercise its ROFR
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4.
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TEST
WELL
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A.
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Subject
to Article 3.00 of the Farmout & Royalty Procedure, the Farmee will
earn the following interest in the Farmout
Lands:
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100% of
the Farmor’s Working Interest in the sections of the Farmout Lands that are
validated into the intermediate term of the applicable Title Documents, subject
to the Overriding Royalty in Article 5.00 of the Farmout & Royalty
Procedure.
5.
RESTRICTION ON ADDITIONAL DRILLING
DURING EARNING PHASE
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No
Party may propose any operation on the Farmout Lands until such time as
the Farmee has earned the interest it is entitled to earn in the Farmout
Lands or its right to earn any further interest has
terminated.
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2
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6.
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LIMITATIONS
ACT
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The 2
year period for seeking a remedial order under section 3(1)(a) of the
Limitations Act, S.A. 2000 c. L-12, as amended (the “Act”), for any claim (as
defined in the Act) arising in connection with this Agreement is extended
to:
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a)
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for
claims disclosed by an audit, 2 years after the time this Agreement
permitted that audit to be performed;
or
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b)
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for
all other claims, 4 years.
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7.
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ADDRESS FOR
NOTICES
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The address for service of notices
hereunder of each of the parties shall be as follows:
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ZENTRUM
Energie Trust XX
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XXXX
Oil and Gas Corp.
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Zug
Switzerland
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000,
000 – 0XX
Xxxxxx XX
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Xxxxxxx,
XX X0X 0X0
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Attention: Land
Department
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Attention: Land
Department
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8.
MISCELLANEOUS
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(a)
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The
parties hereto represent and warrant that they have the requisite
capacity, power and authority to execute this Agreement and to perform the
obligations to which they thereby become
subject.
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(b)
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The
terms of this Agreement express and constitute the entire agreement
between the parties and no implied covenants or liability of any kind on
the part of the parties is created or shall arise by reason of anything
contained in this Agreement.
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3
9.
COUNTERPART
EXECUTION
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This
Agreement may be executed in counterpart. All of those executed
counterpart pages when taken together will constitute the entire
Agreement.
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IN WITNESS WHEREOF the parties
hereto have duly executed this agreement as of the day and year first above
written.
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ZENTRUM
ENERGIE TRUST XX
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XXXX
OIL AND GAS CORP.
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Per: _______________________________
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Per: ______________________________
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