Exhibit 10.3
TERMINATION
AGREEMENT
This TERMINATION AGREEMENT (this
“Agreement”), dated as of the 29th day of March,
2007 is between SYNTROLEUM INTERNATIONAL CORPORATION , a
Delaware corporation (“Syntroleum”) and SOVEREIGN
OIL & GAS COMPANY II, LLC , a Texas limited liability
company (“Sovereign”).
RECITALS
A. Syntroleum and
Sovereign are parties to that certain Joint Development Agreement
dated the 1 st
day of
March, 2004, as amended by that certain Syntroleum-Sovereign Letter
Agreement on OML 113 Lease effective as of December 17, 2004
(the “JDA”). Defined terms used in this Agreement and
not otherwise defined shall have the meanings given to them in the
JDA.
B. By letter dated April 3,
2006, Syntroleum described the 2006-2007 budgets pursuant to the
JDA (the “2006 Budget Letter”).
C. Pursuant to the JDA, Sovereign
obtained, on behalf of Syntroleum, Contract Areas described in
Schedule F of the JDA under the Field Names “Aje” (the
“Aje Field”) and “Ajapa” (the “Ajapa
Field”).
D. Syntroleum Nigeria Limited, a
company existing under the laws of the Republic of Nigeria
(“Syntroleum Nigeria”) was an Affiliate of Syntroleum
prior to January 19, 2007.
E. To develop the Aje Field,
Syntroleum Nigeria entered into a Participation Agreement for Oil
Mining Lease 113, Federal Republic of Nigeria, with Yinka Folawiyo
Petroleum Company Limited, Lundin Petroleum B.V., Palace
Exploration Company, Challenger Minerals Inc., Providence Resources
P.L.C. and Howard Energy Co., Inc., dated as of January 12,
2005 (the “Aje Participation Agreement”).
F. Syntroleum presented Sovereign
with notice of termination of the JDA dated November 15,
2006.
G. The parties have agreed that
certain terms of the JDA relating to termination of the JDA should
be clarified to be consistent with the intent of the parties and
the purposes of the JDA.
Accordingly, the parties agree as
follows:
AGREEMENT
1. Termination . Except for
Paragraph 3 hereof which shall expire on April 5, 2007, the
JDA shall terminate effective March 31, 2007.
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2. JDA Section 6.1 . Syntroleum and
Sovereign agree, consistent with the terms of the Budget Letter,
that any and all unspent funds in the Escrow Account or distributed
to Sovereign during the 2006-2007 budget year pursuant to the JDA
(exclusive of the Multiplier, as defined in the Budget Letter),
less any contingent liabilities Sovereign has incurred (such as
taxes and other levies or claims by third parties against
Sovereign), shall be returned to Syntroleum by May 31, 2007.
Sovereign will provide Syntroleum by April 30, 2007 a list of
outstanding invoices or purchase orders as of March 31,
2007.
3. JDA Section 6.6 .
Except for any transaction consummated between Syntroleum and
Energy Equity Resources Limited or its affiliates prior to the date
of this letter, Syntroleum agrees to provide to Sovereign warrants
to purchase twenty-five thousand (25,000) shares of Syntroleum
Common Stock, at the Exercise Price, in accordance with the terms
of Section 6.6.2.1, upon any acquisition by an Industry
Partner of an interest of Syntroleum Nigeria Limited in the Aje
Field pursuant to a commitment to purchase executed after the date
of this l
