Exhibit 10.3
Xxxxxx X. Xxxx
00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
000.000.0000 (Cell)
832.358.8446 (Facsimile)
August 1, 2003
Xx. Xxxxxx Xxxxxx, President
Cadence Resource Corporation
P. X. Xxx 0000 Xxxxx Xxxxx, XX 00000
Re: Geological & Operations Office
Dear Xx. Xxxxxx:
Reference is made to our existing Letter Agreement dated February 1, 2002,
relating to the creation and funding of a Geological & Operations Office (G&O)
to be staffed by Xxxxxx X. Xxxx (LCG) and paid for by Cadence Resource
Corporation (CRC). The parties thereto have agreed to amend and modify that
agreement in certain particulars effective as of August 1, 2003.
Effective as of that date (August 1, 2003) the Sections of that certain
February 1, 2002 Letter Agreement designated A thru H shall read as follows:
A. Phases: That period of time commencing on the effective date hereof
and continuing through July 31, 2004, is designated as Phase One. The
next twelve month period between August 1, 2004 and July 31, 2005, is
designated as Phase Two. Phase Three shall be the period from August
1, 2005 through July 31, 2006. CRC shall have the election to
terminate this agreement at the end of Phase One or extend same into
Phase Two by giving LCG written notice of such extension on or before
July 31, 2004. The extension of this agreement further into Phase
Three requires the mutual agreement of CRC and LCG, such agreement to
be in writing and delivered by both parties to both parties on or
before June 15, 2005. In the absence of the written election by CRC
concerning Phase Two or the mutual agreement involving Phase Three,
this contract will terminate at the end of the appropriate Phase.
B. Geological and Operations Services: LCG agrees to evaluate the
geological feasability and the land availability of areas in United
States and Canada, referred to herein as the "Contract Area", in order
to locate and define surface areas covering discrete traps deemed by
LCG to be prospectively productive of oil and/or gas in commercial
quantities and which may be available for acquisition, each of such
surface areas being referred to herein as a "Prospect". Such
evaluation shall be done in a professional manner using the skill and
expertise of LCG in the interpretation of gravity surveys, subsurface
geology, reflection seismology and other germane tools. In providing
such services, LCG agrees to devote seventy five percent (75%) of his
working time (not to exceed 30 hours per week) for 50 weeks during
each Phase to the origination, locating, developing, refining and, if
needed, marketing such Prospects as directed by CRC.
When a Prospect is located, LCG will provide CRC with his geological
and land brochures of the Prospect in the form of plats or maps
indicating the subsurface interpretation, type-written reports
describing such interpretation and a Xxxxx Survey or other land map on
which the surface area of the Prospect is outlined. LCG will further
furnish CRC with monthly reports giving synopses of the general areas
investigated, the result of such investigations and what is projected
to be covered in the future during the remainder of the applicable
Phase. Further decisions on each Prospect will handled in accordance
with Section SE below.
LCG will use his best efforts to generate three (3) viable, marketable
exploration projects per Phase.
C. Compensation: The direct compensation paid to LCG shall be calculated
at the rate of $7,500.00 US per calendar month paid on the first of
each month, commencing August 1, 2003. In addition, LCG will be
entitled to reimbursement of all travel and transportation expenses
incurred by LCG at the specific request of CRC, such reimbursement to
be mailed to LCG at the address shown above not later than ten (10)
days following receipt of LCG's invoice and support therefore.
If LCG performs services for any third party during the time not
dedicated to CRC (which services will not be actively solicited) such
services shall be carried out in such a manner so as not to interfere
or conflict with LCG's obligations to CRC under the terms of this
agreement. If LCG develops additional Prospects (over and above the
three referred to above) or develops Prospects during the
non-dedicated time (the other 25% of his time), LCG shall be free to
market same to any party under any terms that can be negotiated
between LCG and any other non-CRC party. LCG does, however, hereby
grant to CRC the right of first refusal to participate in such
Prospect under the same terms and to the same extent as may be
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acceptable to said non-CRC party. LCG shall notify CRC of said terms
and CRC shall have five (5) business days (Saturdays, Sundays and
legal holidays excluded) to respond in writing to such notification as
to CRC's desires. Failure to timely respond (time being of the essence
in this instrument) shall be deemed a rejection of such right.
D. Extension, Termination and Notification: Should CRC elect to extend
this agreement into Phase Two or from Phase Two into Phase Three, it
shall notify LCG of its election in writing, hand delivered or mailed,
United States Mail, postage prepaid, to the address shown above as
provided herein. Should LCG elect to extend this agreement from Phase
Two to Phase Three, he shall likewise notify CRC in writing sent
United States Mail, postage prepaid, to CRC's address shown above.
Each party may change its address for notification purposes by giving
the other party notice of such change in the same manner.
Termination of this agreement, whenever it occurs, shall not serve to
relieve CRC or LCG of any obligation which occurred or accrued prior
to the date of termination.
E. Method of Operation: After LCG has delivered to CRC the maps or plats,
the geological information and the reports on a Prospect as described
in Section B above, LCG, using CRC's funds, will acquire commercial
form oil, gas and mineral leases on the lands (or such of them as may
be obtainable within parameters established by LCG) included in the
Prospect. As appropriate, LCG will also negotiate and acquire, if
available and acceptable, farmout agreements from other lessees of oil
and gas leases covering lands in the Prospect. LCG will then prepare
the brochures on the Prospect and transmit them to CRC seeking its
ownership desires in said Prospect.
All the above will be conducted in a workmanlike and completely
professional manner accruing the smallest possible liability risk to
CRC.
F. Assignment of Override: On each oil, gas and mineral lease acquired by
CRC under ths agreement, CRC will assign to LCG, by recordable
instrument, an overriding royalty interest equal in value to Two
Percent (2%) of the sales price received for all oil, gas and minerals
produced, saved and sold under each such lease from the lands covered
thereby, said assignment to be made prior to the drilling of any test
well on the Prospect. In the event any lease covers less than the full
fee mineral estate in the lands or in the event CRC acquires less than
the entire undivided interest in such lease, then the overriding
royalty interest shall be reduced proportionately. All such
assignments shall contain provisions allowing the assignor therein to
pool and combine such overriding royalty interest in the same manner
and to the same extent as is provided in the affected leases for the
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lessor's interest and shall further provide that such overriding
royalty interest shall apply to any extensions, renewals or in-lieu
leases acquired thereon within one (1) year from the expiration or
termination of the prior lease. The assignor of the overriding royalty
shall not be under any obligation to maintain any lease in force and
effect and shall have the right to surrender, or release any lease in
its sole discretion.
G. Notices All notices, reports, maps, plats and information of a
geological, geophysical, land or technical nature to be furnished CRC
hereunder will be directed to the attention of Xxxxxx Xxxxxx,
President, at the address given above.
All payments and fundings due to LCG by CRC hereunder shall be payable
at the offices of LCG in Houston, Xxxxxx County, Texas, not later than
ten (10) days following receipt by CRC of an invoice therefore.
H. Relationship of the Parties: Except as provided herein, each of the
parties hereto shall be separately responsible for all costs,
obligations or liabilities arising out of related to the carrying out
of its respected services and duties under this agreement and nothing
herein contained shall be construed as creating any partnership
between the parties.
It is understood that the services to be performed hereunder by LCG
are to be performed by him personally and he may not transfer to
others his obligation to perform such services without the consent in
advance of CRC. If the above correctly sets out our understanding,
please indicate by signing and returning one (1) copy of this
agreement to the address given above within ten (10) days from the
date hereof. This agreement is effective August 1, 2003, whether
executed before or after such date.
Yours very truly,
/s/ Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. Xxxx
ACCEPTED AND AGREED TO THIS
DAY OF AUGUST, 2003
CADENCE RESOURCE CORPORATION
By /s/ Xxxx Xxxx
--------------------------------
Xxxx Xxxx, Vice President
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