|
EXHIBIT 10.5
NON-COMPETITION AGREEMENT
OF
TIDELANDS OIL & GAS CORPORATION
This
Non-competition Agreement (“Non-competition
Agreement”) dated March 25, 2008, is between West Texas
Gas, Inc., a Texas corporation (“WTG”), and
Tidelands Oil & Gas Corporation, a Nevada corporation
(“Tidelands”).
RECITALS
A.
WTG
and Reef Ventures, L.P., a Texas limited partnership
(“Reef”), have entered into a Purchase and Sale
Agreement dated March 25, 2008 (the
“PSA”). Terms with their initial letter
capitalized and not otherwise defined herein have the meanings
given them in the PSA.
B.
Tidelands,
together with its Affiliates (as defined below), own 98% of
Reef.
C.
In
connection with consummation of the transactions contemplated by
the PSA, WTG and Tidelands have agreed to enter into this
Non-competition Agreement.
For
and in consideration of the premises and mutual covenants
contained herein and intending to be legally bound hereby, WTG
and Tidelands agree as follows:
|
1.
|
Non-compete Covenants . As an inducement for WTG to execute
the PSA and all documents executed pursuant thereto with Reef, and
in consideration of consummation of the purchase and the other
transactions contemplated by the PSA, Tidelands agrees that for a
period of five years after the date of this Non-competition
Agreement, it will not: (i) directly or indirectly, as an owner,
partner, officer, director or shareholder or in any other capacity
whatsoever, or through any Affiliate, engage in any activity that
is in Competition (as defined below) in any manner whatsoever with
the business of WTG in the Specified Geographical Area (as defined
below); or (ii) derive any benefits whatever from such Competition
in the Specified Geographical Area. Tidelands further agrees that
neither it nor any Affiliate of it will render assistance or advice
to any person, firm or enterprise which is so engaged. For purposes
of this paragraph:
|
|
a.
|
“Competition”
means the sale, marketing, distribution or transportation of
natural gas.
|
|
b.
|
“Specified
Geographical Area” means a fifty (50) mile radius of Piedras
Negras, Coahuila, Mexico.
|
|
c.
|
“Affiliate”
means and includes any entity that, directly or indirectly, through
one or more intermediaries, is owned or controlled by Tidelands.
Control means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of
such entity, whether through the ownership of voting securities, by
contract or otherwise.
|
|
2.
|
Exception to Non-compete Covenants . Tidelands
will not be engaging in Competition by the mere legal or beneficial
ownership of not more than 5% of any class of stock or other
securities which are publicly traded on a national securities
exchange or in a recognized over-the-counter market.
|
|
3.
|
Soliciting Prohibited . Tidelands further agrees
not solicit, divert, or attempt to solicit or divert any of the
customers served by the assets transferred under the PSA, whether
directly or indirectly or through any person, partnership,
corporation or other entity as described in Section 1.
|
|
4.
|
Customers . Tidelands agrees it will not impede
WTG’s efforts to retain existing customers or obtain
potential customers who are physically and economically capable of
receiving gas deliveries directly from the assets conveyed to WTG
under the PSA.
|
|
5.
|
Injunctive Relief . WTG and Tidelands acknowledge
and agree that WTG will be irreparably damaged if the provisions of
this Non-competition Agreement are not specifically
enforced. Accordingly, WTG will be entitled to an
injunction restraining any violation of this Non-competition
Agreement by Tidelands or its Affiliates, without any bond or other
security being required, or any other appropriate decree of
specific performance. Such remedies will not be
exclusive and will be in addition to any other remedy that WTG may
have at law or in equity.
|
|
6.
|
Legal Construction . If any court of
competent
|
|
