LETTER OF INTENT
THIS LETTER OF INTENT,
hereinafter referred to as the “LOI”, is entered into, dated and made effective
this 19th day of June, 2009,
|
BETWEEN:
|
AMERICAN XXXXX-XXXXXX,
INC.
|
| (“APH”) |
|
AND:
|
S&W
OIL & GAS, LLC
|
| (“S&W”) | |
WHEREAS subject to the
provisions of this LOI and that “Request for Interest” executed and delivered
contemporaneously herewith, S&W has offered to
APH a proportionate share of S&W’s working interest in and to the Rooney
Prospect as described as: T-29-S, R-24 &25W, Ford County, Kansas, including
over 8 sections and over 5,120 acres (the “Prospect”);
AND WHEREAS APH wishes to
acquire a fifty percent (50%) working interest and eighty-one and one-half
percent (81.5%) net revenue interest in the Prospect, and S&W wishes to sell
and transfer to APH, such interests in exchange for payment to S&W of a
total of up to $329,999.76, due and payable as set forth below.
AND WHEREAS the parties wish
to enter into this letter of intent (the “LOI”) that sets forth the material
terms of agreement and payment structure.
NOW, THEREFORE, in
consideration of $10.00 and other good and valuable consideration, the parties
agree as follows:
|
1.
|
APH
agrees to acquire 32/64ths or twenty five percent (50%) working interest
and eighty-one and one-half percent (81.5%) net revenue interest in the
Prospect for (1) an upfront cash payment of $113,333.12 to cover land
acquisition costs and leasing of 1 and ½ sections of the Prospect, and (2)
a cash call right of $216,666.64 to cover 3D seismic survey costs (turnkey
through processing and interpretation). Provided production is
established in the Prospect, and APH has paid its proportionate share of
the costs associated with establishing production from the well, S&W
will deliver to APH an Assignment of fifty percent (50%) of the working
interest and eighty-one and one-half percent (81.5%) net revenue interest,
to APH.
|
|
2.
|
S&W
represents and warrants to APH
that:
|
|
(a)
|
it
is validly incorporated and is in good standing with all regulatory
agencies;
|
|
(b)
|
there
are no legal actions against S&W or its directors or officers nor does
S&W know of any intended legal actions against it or any of its
officers or directors and S&W is not engaged in any legal actions
against other parties, and is current in all filings with tax and
regulatory authorities, to the extent any of the above would materially
affect this proposed transaction;
and
|
|
(c)
|
it
owns the rights and has the authority and is not precluded by law or
contract from issuing the fifty percent (50%) working interest and
eighty-one and one-half percent (81.5%) net revenue interest in the
Prospect as contemplated under this LO; provided, however, S&W makes
no warranty express or implied, against title defects or encumbrances
against the working interest, whether of record or
otherwise.
|
|
3.
|
APH,
will not make any disclosure or public announcement of the proposed
transactions, this LOI, or the terms hereof, or the proposed or actual
operations or results hereunder, without the prior knowledge and written
consent of S&W except as required by U.S. securities
laws.
|
|
|
S&W
will not make any disclosure or public announcement regarding APH’s
participation in the proposed transactions, this LOI, the terms hereof, or
the proposed or actual operations or results hereunder, without the prior
knowledge and written consent of
APH.
|
|
4.
|
Each
party agrees and acknowledges that such party and its directors, officers,
employees, agents and representatives will and may disclose business
information and information about the proposed transaction in the course
of securing financings for APH and S&W and that both parties and their
representatives may be required to disclose that information under
applicable regulatory requirements, if
any.
|
|
5.
|
This
LOI shall be construed in accordance with, and governed by, the laws of
the State of Kansas, and each party separately and unconditionally
subjects to the jurisdiction of any court of competent authority in
Wichita, Kansas, and the rules and regulations thereof, for all purposes
related to this agreement and their respective performance hereunder and
regardless of whether or not any business, transaction of business or
other connection to the State of Kansas is absent, and otherwise without
regard to choice of law provisions.
|
|
6.
|
This
LOI is subject to that Request for Interest dated June 19, 2009 and
executed by APH and delivered to S&W contemporaneously
herewith. In the event of a conflict between the terms of this
LOI and the terms of the Request for Interest, the Request for Interest
shall control.
|
|
7.
|
If
any term or provision hereof shall be held illegal or invalid, this LOI
shall be construed and enforced as if such illegal or invalid term or
provision had not been contained
herein.
|
|
8.
|
All
references to currency in this LOI are references to the lawful currency
of the United States of America.
|
|
9.
|
APH
may, at any time upon prior consent of S&W, which consent may be
granted or withheld at S&W’s sole discretion, which consent shall not
be unreasonably withheld, assign any or all of APH’S interest in and to
this LOI.
|
|
10.
|
This
LOI shall terminate and be of no further effect upon the occurrence of
either
|
|
a.
|
The
point at which production is successfully established from the proposed
Rooney #1 well, and S&W has delivered to APH the above-described
Assignment; or
|
|
b.
|
The
Rooney #1 well has been plugged and abandoned as a dry
hole.
|
The
above terms are hereby read, understood, acknowledged and accepted effective the
19th day of June, 2009.
AMERICAN
XXXXX-XXXXXX, INC.
/s/
Xxxxxx XxXxxxxx
Name:
Xxxxxx XxXxxxxx
Title:
President, CEO
S&W
GAS & OIL, LLC
/s/
X.X. Xxxx
Name:
X.X. Xxxx
Title:
President
