ex10-1.htm


    Exhibit
      10.1

     

    FINAL
      RELEASE AND SETTLEMENT AGREEMENT

    


    


    This
      agreement is made to be effective as of the 11th day of September, 2007, by
      and
      between Tidelands Oil & Gas Corporation (“TIDE”), a Nevada corporation
      having its principal office at 1862 Bitters Road, Building No. 1, San Antonio,
      Bexar County, Texas 78248, its wholly owned subsidiary, Tidelands Exploration
      & Production, Inc. (“TEPI”), a Texas corporation; Michael Ward and Royis
      Ward (“WARD”) individuals residing at 13707 Bluffgate, San Antonio, Bexar
      County, Texas 78216; Bentley Energy Corp. (“BENTLEY”) located at
      _________________, San Antonio, Bexar County, Texas; and Regency Energy, Inc.
      (“REGENCY”) located at ____________________, San Antonio, Bexar County,
      Texas.  TIDE, TEPI, WARD, BENTLEY and REGENCY are collectively
      referred to herein as the “Parties.”

    


    RECITALS

    


    WHEREAS,
      WARD served as a Director of,
      and as the President and Chief Executive Officer of TIDE; and

    


    WHEREAS,
      there was a disagreement
      between WARD and the other Directors of TIDE regarding the financial and
      operational governance of the company; and

    


    WHEREAS,
      WARD resigned as a director
      and officer of TIDE and further resigned from all manager, director, and/or
      officer positions of all subsidiaries of TIDE on or about December 8, 2006;
      and

    


    WHEREAS,
      TIDE and WARD executed an
      agreement effective December 8, 2006 (“AGREEMENT”), a true and correct copy of
      which is attached hereto as Exhibit No. 1, to resolve all remaining matters
      between them in an amicable fashion and finalizing WARD’s separation from TIDE;
      and

    


    WHEREAS,
      in July 2006, TIDE formed its
      wholly owned subsidiary, TIDELANDS EXPLORATION & PRODUCTION, INC. (“TEPI”);
      and,

    


    WHEREAS,
      on or about July 9, 2006, TEPI
      entered into an agreement with REGENCY for a fifty percent (50%) interest in
      a
      twenty-four (24) mile natural gas pipeline located in Medina, Atascosa, and
      Bexar Counties; and

    


    WHEREAS,
      in connection with the
      transaction, TEPI entered into a Participation Agreement and a Joint Operating
      Agreement with REGENCY; and

    


    WHEREAS,
      TIDE has invested the sum of
      $510,000.00 pursuant to the terms of the Participation Agreement and/or the
      Joint Operating Agreement; and

    


    WHEREAS,
      by correspondence dated
      February 20, 2007, TIDE advised WARD of a dispute pursuant to the AGREEMENT
      alleging that WARD owed TIDE the approximate sum of $510,000.00 as a result
      of
      its transaction with REGENCY; and

    


    WHEREAS,
      TIDE and TEPI are in default
      pursuant to the terms of the Participation Agreement and/or the Joint Operating
      Agreement; and

    


    WHEREAS,
      TIDE has ceased payment of its
      salary obligations to WARD pursuant to the terms of the AGREEMENT;
      and

    


    WHEREAS,
      the issues and allegations
      between the Parties are disputed, but the Parties desire to avoid the cost
      of
      litigation and amicably resolve such disputes;

    


    WHERAS,
      TIDE has sued WARD, BENTLEY and
      REGENCY; and

    


    WHEREAS,
      WARD has agreed to assume the
      past, present and future obligations of TEPI pursuant to the terms of the
      Participation Agreement and the Joint Operating Agreement with REGENCY and
      to
      pay to TIDE the sum of $280,000.00 on the terms and conditions set forth herein,
      and the parties and their respective directors, officers and agents desire
      to
      have no further litigation between them.

    


    
      
         

      

      
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    AGREEMENT

    


    NOW,
      THEREFORE, in consideration of the foregoing recitals, the mutual promises
      and
      payments described herein, and other good and valuable consideration, the
      receipt and sufficiency of which is hereby acknowledged, the Parties agree
      as
      follows:

    


    I.  WARD’S
      OBLIGATIONS

    


    A.           WARD
      shall pay to TIDE the sum of $280,000.00, on or before October 1, 2007 in the
      form of a wire or cashier’s check.

    


    B.           WARD
      shall bring current, assume and be solely responsible for performing all of
      TEPI’s past, present and future obligations pursuant to the terms of the
      agreements with REGENCY from and after the date of execution of this Final
      Release and Settlement Agreement.

    


    C.           WARD
      hereby confirms and agrees that all obligations of TIDE in the December 8,
      2006
      (Agreement) are hereby released, save and except WARD’s right of first refusal
      for purchase of Sonterra as set forth in the Agreement.

    


    D.           WARD,
      BENTLEY and REGENCY, and each of their officers and directors hereby release
      and
      forever discharge TIDE and TEPI, and its officers, directors and attorneys,
      from
      any and all claims and demands, whether known or unknown, which they have
      singularly and collectively against TIDE and TEPI and their officers and
      directors.

    


    II.  TIDE’S
      OBLIGATIONS

    


    A.           TIDE
      and TEPI shall transfer and assign to WARD or his assigns all of its right,
      title and interest in and to the Participation Agreement, the Joint Operating
      Agreement (and all oil, gas, and mineral leases in which it has retained any
      interest) upon the payment of the sums specified herein by WARD.  Such
      transfer and assignment shall be made in the form of the instruments attached
      hereto as Exhibit No. 2.

    


    B.           TIDE,
      its officers and directors, hereby acknowledge and warrant that WARD has
      fulfilled, satisfied and/or paid all obligations and/or sums due TIDE pursuant
      to the terms of the AGREEMENT.  TIDE, its officers and directors,
      hereby release and forever discharge WARD, REGENCY and BENTLEY from any and
      all
      claims and/or demands, whether known or unknown, which TIDE has or which TIDE
      could assert arising pursuant to the terms of the AGREEMENT, save and except
      that TIDE is not releasing herein any liability imposed on TIDE by other third
      parties as a result of any action taken by WARD as an individual, officer and/or
      director of TIDE prior to the execution of this Agreement and, save and except
      any obligation of WARD pursuant to Section II.C., of the AGREEMENT.

    


    C.            TIDE
      hereby confirms and agrees that all obligations of WARD in the December 8,
      2006
      Agreement are hereby released, save and except obligations under the first
      right
      of refusal set forth in the Agreement.

    


    D.            TIDE,
      its Officers and Directors further confirm and agree that in the event that
      WARD
      and/or any of his assigns or successors in interest at any time, sells, conveys,
      assigns or transfers all or any part of the interest being acquired hereby,
      TIDE, it Officers, Directors, assigns or successors in interest shall have
      no
      right, interest or claim in and to any of the proceeds received, and will make
      no claim seeking recovery of any sums from WARD.  In consideration of
      TIDE agreeing to this paragraph, WARD warrants and represents presently there
      are no parties contemplating purchasing the interest being acquired by WARD
      hereunder.

    


    All
      parties hereto will dismiss with
      prejudice (upon performance of all parties’ obligations hereunder) Cause Nos.
      2007-CI-07451 and 2007-CI-11661, both pending in Bexar County,
      Texas.

     

    
 

    III.  MUTUAL
      OBLIGATIONS

    


    A.           Governing
      Law.  This Final Release and Settlement Agreement shall be
      construed according to the laws of the State of Texas.  Any action
      brought under this Final Release and Settlement Agreement, or which is related
      to this Final Release and Settlement Agreement, shall be brought in Bexar
      County, Texas.

     

    B.           Assignment.  Neither
      party may assign this Final Release and Settlement Agreement without the consent
      of the other party.  However, TIDE acknowledges that WARD may assign
      his rights to an entity owned or controlled by WARD, but that will not release
      WARD hereunder from any obligations herein.

     

    
      
         

      

      
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    C.           Amendments/Modifications.  This
      Final Release and Settlement Agreement may not be amended or modified except
      in
      a writing signed by both WARD and TIDE.

    


    D.           Waiver.  The
      waiver by either party of a breach or violation of any provision of this Final
      Release and Settlement Agreement shall not operate as or be construed to be
      a
      waiver of any subsequent breach hereof.  No waiver will be effective
      unless set forth in writing and signed by the party waiving such provision
      or
      breach of this Final Release and Settlement Agreement.

    


    E.           Notices.  Any
      notice given under this Final Release and Settlement Agreement shall be
      sufficient if in writing and mailed, by either registered or certified mail,
      return receipt requested, postage prepaid, to a party at the address set forth
      in the introduction to this Final Release and Settlement Agreement.

    


    F.           Severability.  In
      the event any provision contained herein is determined to be invalid, illegal
      or
      unenforceable under present or future laws effective during the term hereof,
      such provision shall be fully severable; this Final Release and Settlement
      Agreement shall be construed and enforced as if such illegal, invalid or
      unenforceable provision had never comprised a part hereof; and the remaining
      provisions hereof shall remain in full force and effect and shall not be
      affected by the illegal, invalid or unenforceable provision or by its severance
      there from.  In lieu of such illegal, invalid or unenforceable
      provision there shall be added automatically as a part hereof a provision as
      similar in terms to such illegal, invalid or unenforceable provision as may
      be
      possible and be legal, valid and enforceable.

    


    G.           Headings.  The
      captions, headings and arrangements used in this Final Release and Settlement
      Agreement are for convenience only and do not affect, limit or amplify the
      terms
      and provisions hereof.

    


    H.           Confidentiality.  TIDE
      and TIDE’s attorneys or representatives and WARD and WARD’s attorneys or
      representatives agree that all of the terms and amounts included in this Final
      Release and Settlement Agreement are and forever shall be kept completely
      confidential and at no time are TIDE or TIDE’s attorneys or representatives
      and/or WARD and WARD’s attorney’s or representatives to mention, state or
      otherwise infer to the terms and conditions or any details of this Final Release
      and Settlement Agreement, except to the extent, if any, disclosure is required
      by law or regulatory authority or to enforce the terms hereof.

    


    I.           Entire
      Agreement.  This Final Release and Settlement Agreement contains
      the entire understanding among the Parties concerning the subject matter
      contained herein.  There are no representations, agreements,
      arrange­ments or understandings, oral or written, among or between the
      parties hereto, relating to the subject matter of this Final Release and
      Settlement Agreement, which are not fully expressed herein.

    


    


    _______________________________________

    MICHAEL
      WARD

    


    


    _______________________________________

    ROYIS
      WARD

    TIDELANDS
      OIL & GAS CORPORATION

    


    


    By:
      ____________________________________

    JAMES
      B. SMITH,
      President

    


    


    TIDELANDS
      EXPLORATION & PRODUCTION, INC.

    


    


    By:
      ____________________________________

    JAMES
      B. SMITH,
      President

    


    


    BENTLEY
      ENERGY CORP.

    


    


    By:
      ____________________________________

    Name:
      __________________________________

    Title:
      ___________________________________

    


    


    REGENCY
      ENERGY, INC.

    


    


    By:
      ____________________________________

    Name:
      __________________________________

    Title:
      ___________________________________

    


     

    
      
         

      

      
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