Document:

DC2784.pdf -- Converted by SEC Publisher 4.2, created by BCL Technologies Inc., for SEC Filing

	
CONSULTANT CONTRACT

     This Agreement for consulting services is between Northrop Grumman Corporation, a Delaware corporation, whose principal place of business is located at 1840 Century Park East, Los Angeles, California
90067 (“NGC”) and Scott J. Seymour of [personal address deleted ] (“Consultant”).

I. ENGAGEMENT

     NGC hereby retains Consultant to provide the services described in Attachment A hereto. Consultant shall serve at NGC’s call but shall have the right to decline any request by NGC to perform
services provided such declination is provided in a timely fashion after the request is made. Consultant’s principal point of contact at NGC with respect to the specific nature and scope of the services to be provided hereunder shall be
NGC’s Chairman and Chief Executive Officer. Consultant shall submit monthly written reports to NGC, in the format described in Attachment B hereto, setting forth the actions taken on behalf of NGC and provide such other reports as NGC may
reasonably require.

     The parties do not expect that Consultant’s services to NGC hereunder will exceed 20% of the average level of bona fide services performed by Consultant (whether as an employee or an independent
contractor) over the 36-month period immediately preceding the commencement of the term of this Agreement.

II. PLACE OF ENGAGEMENT

     Consultant shall perform the services called for under this Agreement in Los Angeles County and Orange County California and in such other places as are mutually agreed to by NGC and
Consultant.

III. TERM OF ENGAGEMENT

     The term of this Agreement shall be for a period of one year commencing on April 1, 2008 and expiring on March 31, 2009. This Agreement may be renewed or extended for such time as NGC and the
Consultant may agree upon in writing.

	
IV.      		
COMPENSATION	
	 
	 	
A. Fee. NGC shall pay Consultant and Consultant shall accept from NGC in full	
	 

payment for services hereunder, compensation at the rate of three thousand five hundred dollars per day ($3500/day) for each full or partial day of service performed. Payment shall be made only upon submittal of a proper
invoice and only to the extent that Consultant satisfactorily performs services pursuant to this Agreement and substantiates such performance in the monthly activity report required by Attachment B. In the event services are not required or
performed in a given month, NGC shall be under no obligation to pay any compensation for that month except as otherwise provided herein. If Consultant fails to substantiate any invoice for services, NGC shall have no obligation to compensate
Consultant for such claimed services.

     B. Expenses.  NGC shall reimburse Consultant for all reasonable and necessary business expenses incurred by Consultant in
connection with the rendering of services hereunder provided that all such expenses are approved in advance by the Northrop Grumman Chief Executive Officer or his designee. Claims for expenses must be in accordance with NGC’s established
policies and limitations pertaining to allowable expenses and documented pursuant to the procedures applicable to NGC’s employees.

     C. Maximum Compensation. Notwithstanding any other provisions of this Agreement to the contrary, NGC shall not be obligated to
request or to pay Consultant for any minimum amount of services, and in no event shall NGC be obligated during the term of this Agreement for consulting fees and expenses of more than one hundred seventy-five thousand dollars
($175,000.00).

     D. Full Extent Of Compensation. Unless otherwise specifically stated in writing, this Section IV describes the full extent of
compensation Consultant shall receive under this Agreement and Consultant shall not be entitled by virtue of this Agreement to be paid a commission or to participate in any insurance, saving, retirement or other benefit programs, including, without
limitation, stock ownership plans offered by NGC to its employees, nor shall this Agreement in any way modify any other Agreement that Consultant may have with NGC.

     E. Warranty.  Consultant certifies and warrants that in the course of performing services under this Agreement, no payments
will be made to government officials or customer representatives, that no government official or customer representative has any direct or indirect

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investment interest or interest in the revenues or profits of Consultant, and that no expenditure for other than lawful purposes will be made.

     F. Exclusion Of Lobbying Costs From Overhead Rates. NGC is prohibited from charging directly or indirectly, costs associated
with lobbying activities to its contracts with the United States Government. Unallowable costs associated with lobbying activities are defined at Federal Acquisition Regulations (FAR) 31.205-22, effective as of the date of this Agreement. Consultant
agrees that in the event that consultant performs lobbying activities under this Agreement, Consultant shall provide NGC with a detailed accounting of time expended, individual agency/congressional employees contacted, and NGC programs discussed in
the required activity report.

	
V.      		
TRADE SECRETS AND PROPRIETARY INFORMATION	
	 
	 	
A. Disclosure To Third Parties Prohibited. Consultant shall not divulge, disclose	
	 

or communicate any information concerning any matters affecting or relating to the business of NGC without the express written consent of NGC. The terms of this section shall remain in full force and effect after the termination
or expiration of this Agreement.

     B. Ideas, Improvements and Inventions. Any and all ideas, improvements and inventions conceived of, developed, or first reduced
to practice in the performance of work hereunder for NGC shall become the exclusive property of NGC and ideas and developments accruing therefrom shall all be fully disclosed to NGC and shall be the exclusive property of NGC and may be treated and
dealt with by NGC as such without payment of further consideration than is hereinabove specified.  Consultant shall preserve such ideas, improvements and inventions as confidential during the term of the contract and thereafter and will execute all
papers and documents necessary to vest title to such ideas, developments, information, data, improvements and inventions in NGC and to enable NGC to apply for and obtain letters patent on such ideas, developments, information, data, improvements and
inventions in any and all countries and to assign to NGC the entire right, title and interest thereto.

     C. Notes, Memoranda, Reports and Data. Consultant agrees that the original and all copies of notes, memoranda, reports,
findings or other data prepared by Consultant in connection with the services performed hereunder shall become the sole and exclusive property of NGC.

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     D. Disclosure of Confidential or Proprietary Information of Third Parties Prohibited. Consultant will not disclose to NGC or
induce NGC to use any secret process, trade secret, or other confidential or proprietary knowledge or information belonging to others, including but not limited to the United States. Such information includes but is not limited to information
relating to bids, offers, technical proposals, responses to requests for procurement, rankings of competitors and other similar procurement sensitive information.

VI. PRESERVATION OF TRADE NAMES, TRADE MARKS AND PATENT RIGHTS

     All trade names, trade marks and patent rights of NGC pertaining to NGC products, including the names “Northrop,” “Grumman” and “Northrop Grumman Corporation” shall
remain the sole property of NGC and Consultant agrees to do all things necessary to protect and preserve such trade names, trade marks and patent rights from claims by other persons or entities.

VII. COOPERATION WITH NGC

     During and after the expiration of this Agreement, Consultant shall cooperate with NGC in regard to any matter, dispute or controversy in which NGC is involved, or may become involved and of which
Consultant may have knowledge. Such cooperation shall be subject to further agreement providing for legally appropriate compensation.

VIII. INDEMNIFICATION

     Consultant shall indemnify, defend and hold NGC harmless from any and all claims of third parties for loss or damage arising out of or relating to Consultant’s activities or operations or
omissions, including those of the Consultant’s employees, pursuant to this Agreement. Such indemnification shall survive the expiration or termination of this Agreement.

IX. INDEPENDENT CONTRACTOR

     Consultant shall render all services hereunder as an independent contractor and shall not hold out himself or herself as an agent of NGC. Nothing herein shall be construed to create or confer upon
Consultant the right to make contracts or commitments for or on behalf of NGC.

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X.      		
TAXES	
	 
	 	
Consultant shall pay all taxes due with respect to the compensation paid hereunder.	
	 
	
XI.      		
OBSERVANCE OF APPLICABLE LAWS AND REGULATIONS	
	 
	 	
A. United States Laws. Consultant shall comply with and do all things necessary	
	 

for NGC to comply with United States laws and regulations and express policies of the United States Government, including but not limited to the requirements of the Foreign Corrupt Practices Act, 15 U.S.C. Section 78 dd-1
et seq., the Federal Acquisition Regulations, 48 CFR section 1.101 et seq., (“FAR”), the International Traffic in Arms
Regulations, 22 CFR Parts 120 through 130 and applicable regulations; the Byrd Amendment (31 U.S.C. Section 1352) and applicable regulations; the Office of Federal Procurement Policy Act (41 U.S.C. Section 423) and applicable regulations; and the
DoD Joint Ethics Regulation (DoD 5500.7-R). No part of any compensation or fee paid by NGC will be used directly or indirectly to make any kickbacks to any person or entity, or to make payments, gratuities, emoluments or to confer any other benefit
to an official of any government or any political party. Consultant shall not seek, nor relay to NGC, any classified, proprietary or source selection information not generally available to the public. Consultant shall also comply with and do all
things necessary for NGC to comply with provisions of contracts between agencies of the United States Government or their contractors and NGC that relate either to patent rights or the safeguarding of information pertaining to the security of the
United States. This entire Agreement and/or the contents thereof may be disclosed to the United States Government.

     B. No Selling Agency Employed. Consultant further represents and warrants that no person or selling agency has been or will be
employed or retained to solicit or secure any contract, including but not limited to a United States Government contract, upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or
bona fide established commercial or selling agencies maintained by the Consultant for the purpose of receiving business. In the event of a breach or violation of this warranty, NGC shall have the right to annul this Agreement without liability or in
its discretion to deduct from the fee or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage or contingent fee.

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     C. State Law And Regulations.  Consultant shall comply with and do all things necessary for Consultant and NGC each to comply
with all laws and regulations of the State of California and any other state, in which services hereunder are or may be rendered.

     D. Maintenance Of Time And Expense Records.  Consultant shall maintain appropriate time and expense records pertaining to the
services performed under this Agreement. Said records shall be subject to examination and audit by NGC and the United States Government until notified by NGC in writing, that the records no longer need to be maintained.

     E Certification. This Agreement is made in material reliance upon the representations and warranties made by Consultant.  The
effectiveness of this Agreement is contingent upon and will not commence until receipt by NGC of the certifications set forth in Attachment C hereto. In the event that NGC has reason to believe that these certifications are incorrect, NGC may treat
this Agreement as being null and void or may terminate this Agreement pursuant to Section XVI.

     F. Standards of Business Conduct. Consultant hereby acknowledges that he has received a copy of the NGC Standards of Business
Conduct (or amendment thereof) and agrees to conduct his activities for or on behalf of NGC in accordance with such principles as a condition of this Agreement.

XII. ASSIGNMENT OF RIGHTS

     This Agreement and the rights, benefits, duties and obligations contained herein may not be assigned or otherwise transferred in any manner to third parties without the express written approval of
NGC. Any such assignment or transfer without prior approval of NGC will be null, void and without effect.

XIII. MODIFICATION

     No waiver or modification of this Agreement or of any covenant, condition, or limitation herein shall be valid and enforceable unless such waiver or modification is in writing.

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XIV. USE OR EMPLOYMENT OF THIRD PARTIES

     Consultant shall not utilize or employ any third party, individual or entity, in connection with Consultant’s performance of services under this Agreement without the express written approval of
NGC.

XV. CONFLICTS OF INTEREST

     No business or legal conflicts of interest shall exist between services performed or to be performed by Consultant on behalf of NGC and by Consultant on behalf of any other client. The identity of
Consultant’s directorships, other employment and clients shall be fully disclosed in the Certification, Attachment D.

	
XVI.      		
TERMINATION	
	 
	 	
A. Thirty Days Notice. Either party may terminate this Agreement upon thirty days	
	 

written notice to the other.  Except as otherwise provided herein, in the event of termination, Consultant shall be entitled to compensation until the expiration of the stated notice period.

     B. Violation Of Term Or Condition. Notwithstanding the foregoing, in the event of a violation by Consultant of any term or
condition, express or implied, of this Agreement or of any federal or state law or regulation pertaining to or arising from Consultant’s performance of services under this Agreement, NGC may, in its discretion, terminate this Agreement
immediately, without notice and in such event, Consultant shall only be entitled to compensation up to the time of such violation.

     C. Bankruptcy. Notwithstanding the foregoing, in the event that Consultant is adjudicated a bankrupt or petitions for relief
under bankruptcy, reorganization, receivership, liquidation, compromise or other arrangement or attempts to make an assignment for the benefit of creditors, this Agreement shall be deemed terminated automatically, without requirement of notice,
without further liability or obligation to NGC.

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XVII. SEVERABILITY OF PROVISIONS

     All provisions contained herein are severable and in the event any of them are held to be invalid by any competent court, this Agreement shall be interpreted as if such invalid provision was not
contained herein.

XVIII.AVAILABILITY OF EQUITABLE REMEDIES

     Consultant understands and agrees that any breach or evasion of any of the terms of this Agreement will result in immediate and irreparable injury to NGC and will entitle NGC to all legal and
equitable remedies including, without limitation, injunction or specific performance.

XIX. GOVERNING LAW

     This Agreement and the performance hereunder shall be governed by and construed in accordance with the laws of the State of California (excluding any conflicts of laws provisions) which shall be the
exclusive applicable law. 

	
XX.      		
SETTLEMENT OF DISPUTES	
	 
	 	
A. NGC and Consultant hereby consent to the resolution by arbitration of all dis-	
	 

putes, issues, claims or controversies arising out of or in connection with this Agreement, that NGC may have against Consultant, or that Consultant may have against NGC, or against its officers, directors, employees or agents
acting in their capacity as such. Each party’s promise to resolve all such claims, issues, or disputes by arbitration in accordance with this Agreement rather than through the courts, is consideration for the other party’s like promise. It
is further agreed that the decision of an arbitrator on any issue, dispute, claim or controversy submitted for arbitration, shall be final and binding upon the NGC and Consultant and that judgment may be entered on the award of the arbitrator in any
court having proper jurisdiction.

     B. Except as otherwise provided herein or by mutual agreement of the parties, any arbitration shall be administered in accordance with the then-current Model
Arbitration Procedures of the American Arbitration Association (AAA) before an arbitrator who is licensed to practice law in the state in which the arbitration is convened. The arbitration shall be held in Los Angeles, CA or at any other location
mutually agreed upon by the parties.

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     C. The parties shall attempt to agree upon the arbitrator. If the parties cannot agree on the arbitrator, the AAA shall then provide the names of nine (9) arbitrators
experienced in business employment matters along with their resumes and fee schedules. Each party may strike all names on the list it deems unacceptable. If more than one common name remains on the list of all parties, the parties shall strike names
alternately until only one remains. The party who did not initiate the claim shall strike first. If no common name remains on the lists of the parties, the

	
AAA      		
shall furnish an additional list until an arbitrator is selected.	
	 
	 	
D. The arbitrator shall interpret this Agreement, and any applicable NGC policy or	
	 

rules and regulations, any applicable substantive law (and the law of remedies, if applicable) of the state of California, or applicable federal law. In reaching his or her decision, the arbitrator shall have no authority to
change or modify any lawful NGC policy, rule or regulation, or this Agreement. The arbitrator, and not any federal, state or local court or agency, shall have exclusive and broad authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Agreement, including, but not limited to, any claim that all or any part of this Agreement is voidable.

XXI. NOTICE

     Any notice to be given hereunder shall be in writing, mailed by certified or registered mail with return receipt requested addressed to NGC: Northrop Grumman Corporation 1840 Century Park East Los
Angeles, CA 90067 Attn.: Fritz Baskett

	
or to Consultant:

	 	
Scott J. Seymour

[Personal address deleted]

or to such other address as may have been furnished at the date of mailing either by NGC or Consultant in writing.

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XXII. COMPLETE AGREEMENT

     This Agreement constitutes the entire agreement of the parties with respect to the engagement of Consultant by NGC and supersedes any and all other agreements between the parties. The parties
stipulate and agree that neither of them has made any representation with respect to this Agreement except that such representations are specifically set forth herein. The parties acknowledge that any other payments or representations that may have
been made are of no effect and that neither party has relied on such payments or representations in connection with this Agreement or the performance of services contemplated herein.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be entered into and executed as set forth below.

	
NORTHROP GRUMMAN CORPORATION

	
By: /s/ Ian Ziskin

	
Date: 10/2/07

	
CONSULTANT

/s/ S J Seymour

Scott J. Seymour

	
Date: 10/3/07

	 	
TIN:

10

	
ATTACHMENT A

STATEMENT OF WORK

	
Scott J. Seymour

     When requested, Consultant shall advise NGC on issues relating to matters he was involved with while an employee of NGC, as well as issues relating to business development, new business proposals and
business opportunity evaluations. 

ATTACHMENT B

MONTHLY ACTIVITY REPORT FORMAT Scott J. Seymour

     As a Consultant, you are required to submit a written activity report each month directly to the Northrop Grumman Corporation (“NGC”) employee identified in Article I of the Agreement. Each
activity report must include the following information:

1. A detailed accounting of the amount of time spent by you on behalf of NGC since your last Activity Report, itemized each hour or by fraction of an hour worked, reflecting the work performed during each periodic segment and the
individual who performed it.

2. The identity of all persons with whom you met or discussed business on behalf of NGC, including a description of the business or government affiliation of the individual, as well as the specific position or rank of each
person.

3. A statement of the subject matter of all meetings and discussions in which you participated on behalf of NGC, including all NGC programs discussed in connection with any activities performed.

4. An invoice, on a separate page, clearly identifying the Agreement, specifying the time period covered, summarizing the fees and expenses claimed for that time period, and enclosing the original receipts for all claimed
expenses. Consultant must certify on each invoice that the charges for the period covered by it do not include any charges for assignments not authorized by the Agreement. A suggested certification is as follows:

"The undersigned certifies that the payment requested herein is correct and just, and that payment has not been received. The undersigned certifies that this invoice does not include any charges for services not authorized by the
Agreement and, specifically, that no services have been performed involving the influence or attempt to influence any Federal agency officer

or employee, any Member of Congress, officer or employee of Congress, or employee of a Member of Congress, in connection with any Federal action as defined in the Byrd Amendment (including the awarding, extension, continuation,
renewal, amendment, or modification of any Federal contract); and that no services have been performed regarding advice, information, direction or assistance to NGC for a Federal contract."

Unless your services are fully described and accurately recorded in this fashion, your fees will not be paid by NGC. You are not authorized to engage in any activity covered by the Byrd Amendment (31 U.S.C. Section 1352), but if
you do so you must clearly identify it as such in your activity report, and the activity you describe shall be treated as a material representation of fact upon which NGC shall rely in preparing any certifications and/or disclosures required by the
Byrd Amendment, 31 USC Section 1352. Any and all liability arising from an erroneous representation shall be borne solely by you.

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ATTACHMENT C

CERTIFICATION

Scott J. Seymour

The undersigned, Scott J. Seymour (“Consultant”), hereby certifies, represents and warrants the following:

1. In past dealings with Northrop Grumman Corporation (“NGC”) or other clients, Consultant has complied with all applicable laws, rules, regulations and express policies of the United States and the State or territory in
which services were performed.

2. In performing the services under this Agreement, Consultant will comply with all applicable laws, rules, regulations and express policies of the United States and the State or territory in which services will be
performed.

3. There have been no kick-backs or other payments made, either directly or indirectly, to any NGC director, employee or consultant or to the family of any NGC director, employee or consultant.

4. No kick-backs or other payments will be made, either directly or indirectly, to any NGC director, employee or consultant or to the family of any NGC director, employee or consultant.

5. Consultant has not used and will not use any part of the compensation paid by NGC to make payments, gratuities, emoluments or to confer any other benefit to an official of any government, or any political party, or official of
any political party.

6. No person or selling agency has been or will be employed or retained to solicit or secure any contract, including but not limited to a United States government contract, upon an agreement or understanding for a commission,
percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial selling agencies maintained by the Consultant for the purpose of receiving business.

7. No classified, proprietary, source selection or procurement sensitive information has been or will be solicited on behalf of or conveyed to NGC.

8. Consultant has not influenced or attempted to influence and will not influence or attempt to influence any United States government official or employee in connection with the award, extension, continuation, renewal, amendment
or modification of a federal contract or otherwise engage in “non-exempt services” within the meaning of the Byrd Amendment, 31 U.S.C. Section 1352.

9. Consultant has not utilized or employed and will not utilize or employ any third party, individual or entity, in connection with the performance of services on behalf of NGC, except as follows: (if none, state “None”).

10. No business or legal conflicts of interest exist between services performed or to be performed by Consultant on behalf of NGC and by Consultant on behalf of any other client, the identities of which Consultant has fully
disclosed to NGC.

The person whose signature appears below is authorized by Consultant to certify that the foregoing is true and correct.

I declare under penalty of perjury that the foregoing certificate is true and correct

___________________________
 Date: 
______________________
 Scott J. Seymour

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ATTACHMENT D

CERTIFICATION OF DIRECTORSHIPS, EMPLOYMENT AND CLIENTS

Scott J. Seymour

The following is a complete list of Consultant’s directorships, employment and consulting clients (if none, state “None”):

I. Directorships and Employment

Name of Company Responsibilities/Duties
_______________

	
II. CLIENTS 
		
 		
 
	
	
Name of Company 
		
 		
Services/Duties
_______________________ 
	

	
Signature: 
		
 		
 
	
	
 
		
 		
Scott J. Seymour 
	
	
 
	
	
 
	
	
 
	
	
Date: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.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    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.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    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:
      ___________________________________

    

     

    
      
         

      

      
        3

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