FARM-OUT ASSIGNMENT OF CORRECTION (Correcting prior Assignments dated October 4, 2007 and December 10, 2007)
Exhibit
10.1
FARM-OUT
ASSIGNMENT
OF
CORRECTION
(Correcting
prior Assignments dated October 4, 2007
and
December 10, 2007)
THIS
FARM-OUT ASSIGNMENT OF CORRECTION made and entered into this the 18th day of
June, 2008, by and between K & D ENERGY, a Kentucky Partnership, by
Partners, Xxxxx Xxxxxxxxx, of P. O. Xxx 000, Xxxxxx, Xxxxxxxx 00000, and Xxxxx
Xxxx, 00 Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000, being all partners in the
partnership, hereinafter ASSIGNOR and KY USA ENERGY, INC., X/X Xxxxx Xxxxxxxx,
000 Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000, hereinafter ASSIGNEE;
WITNESSETH:
Whereas, ASSIGNOR owns certain oil and gas leases in West Central, Kentucky,
more specifically described hereinafter and desire to do this Farm-Out
Assignment to ASSIGNEE to form a core basis for a publicly traded company so
that money can be raised to fully develop the project from which ASSIGNOR will
receive a carried working interest and by their signatures below the parties
agree to this Assignment on the following terms and conditions:
WITNESSETH:
WHEREAS ASSIGNOR executed and delivered to ASSIGNEE a “Farm-Out Assignment”
dated October 4, 2007 and recorded as follows:
Christian
County, Kentucky Lease Book 43, page 484;
Muhlenberg
County, Kentucky Lease Book 94, page 697;
Xxxx
County, Kentucky Lease Book 22, page 700;
and
a
“Supplemental Farm-Out Assignment” dated December 10, 2007 and recorded as
follows:
Christian
County, Kentucky Lease Book 43, page 514;
Muhlenberg
County, Kentucky Lease Book 95, page 27;
Xxxx
County, Kentucky Lease Book 22, page 705; and,
WHEREAS,
Paragraph #5 of the above Farm-Out Assignment dated October 4, 2007 incorrectly
indicates a first right to drill oil above the New Albany Shale (Devonian)
is
being assigned to ASSIGNEE with a reversion to ASSIGNOR of any undrilled
locations above the New Albany Shale that appear favorable. This correction
is
being executed to delete all rights of production for oil and gas above the
New
Albany Shale. ASSIGNEE is receiving the rights to produce the New Albany Shale
and all deeper formations for both oil and gas; and,
WHEREAS
some requirements for the original Farm-Out Assignment have already been met,
such as payment and extension of the Xxxxxx and Xxxxxxxxx/Xxxxxx Leases, this
Assignment is corrected and re-executed as follows:
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1.
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ASSIGNOR
does hereby Farm-Out Seventy-Five Percent Net Revenue Interest (75%
N.R.I.) In and to 2099 acres, comprised of nine (9) separate mineral
leases, to ASSIGNEE. The farm-out interest is hereby granted as One
Hundred Percent Working Interest (100% W.I.); thereby ASSIGNEE will
pay
100% of the drilling, completion, and operation costs to earn their
75%
NRI.
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2.
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The
purchase price for the subject leaseholds has been delivered to ASSIGNOR’S
Bank Account of choice via wire-transfer
(EFT).
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3.
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ASSIGNEE
must continue drilling to retain their Farmed-In rights. They must
drill a
minimum of twelve (12) New Albany Shale xxxxx per year, until all
locations have been developed on the available acreage, to maintain
their
rights.
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4.
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This
assignment pertains to the New Albany shale and all formations beneath
it
for all hydrocarbons. All formations above the new Albany shale are
reserved for ASSIGNOR. Should conflict ever occur in the development
of
the leases on matters such as well location, location of roads,
infrastructure and similar matters, the rights assigned herein shall
be
superior to the rights retained by
ASSIGNOR.
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5.
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ASSIGNEE
will have the option to contract ASSIGNOR for management of drilling
and
completion operations, and shall receive $10,000.00 per well for
this
service, due at the commencement of drilling
activities.
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6.
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ASSIGNOR
shall have the right to sell gas from any of its pre-existing gas
xxxxx on
the project acreage, including the new Xxxxxxx #1 well, into the
natural
gas gathering line network that ASSIGNEE will construct without being
assessed any fees, including but not limited to transportation,
compression, or scrubbing of said gas. This right shall also extend
to any
shallow xxxxx drilled in the future by ASSIGNOR at its own
expense.
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7.
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ASSIGNEE
shall maintain General Liability Insurance at all times during the
project, and shall name as Additionally Insured: ASSIGNOR and its
successors and assigns in these leases, as well as Xx. Xxxxx Xxxxxxxxx
and
Xx. Xxxxxx X. Xxxx as individuals. The General Liability Insurance
policy
shall provide the following minimum coverage limits: General Aggregate
$2
Million; General Liability $1 Million; Products and Completed Operations
$1 Million; Environmental Spills & Cleanup $1 Million; and Medical
Payments $10,000.
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8.
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ASSIGNEE
shall be responsible for all legal work associated with obtaining
a Title
Opinion for the subject leaseholds.
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9.
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ASSIGNEE
shall assume responsibility for all land and crop damages arising
from
drilling or production activities such as road & location
construction, spills, etc.
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10.
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ASSIGNEE
shall assume responsibility for the maintenance of the leasehold
property
and infrastructure including roads, gates, etc.; insofar as said
maintenance shall extend only to that leasehold infrastructure that
will
be utilized or created as a result of this agreement. This clause
shall
take affect on the date of closing of this agreement and the leasehold
infrastructure, with all pre-existing structures and improvements
shall be
transferred “as-is” on that day.
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NOW,
THEREFORE, for and in consideration of the above terms and conditions, and
one
dollar ($1.00) plus other good and valuable considerations, the receipt and
sufficiency of which are acknowledged, the ASSIGNOR does hereby bargain,
transfer and assign to ASSIGNEE the following described Oil and Gas
Leases:
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Lease
Name
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County
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Lease
Book/Page
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Date
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Acreage
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Lakefield/Xxxxxx
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Muhlenberg
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94/83
& 94/452
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10/18/07
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130
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&
94/734
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Xxxxx/Xxxx
Xxxxxxxx
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Xxxx
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22/697
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10/08/07
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323
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Xxxxx/Xxxx
Xxxxxxxx
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Xxxxxxxxx
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43/464
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10/08/07
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000
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Xxxxx
Xxxxxx (Xxxxxxx Xxxxxx)
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Xxxx
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22/672
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4/25/07
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184
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Xxxxxxx
Xxxxxxx
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Muhlenberg
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94/332
(Lease)
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94/537
(Extension)
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6/30/06
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187
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Xxxxx
Xxxxxxxx
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Xxxxxxxxx
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43/137
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7/1/04
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130
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Xxxxx
Xxxxxxxx
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Xxxx
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22/430
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7/1/04
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Golden
Eagle/Xxxxxx
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Xxxx
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22/258
& 22/318
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4/16/01
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80
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Xxxxxxx/Xxxxx
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Xxxxxxxxx
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41/263
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10/21/92
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200
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Hunter/Xxxxx
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Xxxxxxxxx
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41/23
& 41/19 &
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543
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41/19
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TO
HAVE
AND TO HOLD unto ASSIGNEE, its successors and assigns, a 75% Net Revenue
Interest as the 100% Working Interest in above described leases, subject to
all
the aforesaid terms and conditions, as well as all terms and conditions in
the
original leases with only such Warranty of title as ASSIGNOR actually
possesses.
ASSIGNOR
does warrant that there are no undisclosed material defects in the above leases
of which ASSIGNOR is aware and the ASSIGNOR has taken no action or made no
omissions in actions that would render any of the above leases invalid or of
no
effect.
ASSIGNEE
by signature below acknowledges the changes in the original assignment set
out
herein.
WITNESS
the signatures of the parties hereto on this the 18th day of June,
2008.
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K
& D ENERGY, Assignor
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BY:
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XXXXX
XXXXXXXXX, Partner
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BY:
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XXXXX
XXXX, Partner
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KY
USA ENERGY, INC., Assignee
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BY:
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XXXXX
XXXXXXXX, President
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COMMONWEALTH
OF KENTUCKY
COUNTY
OF____________________
SIGNED
AND ACKNOWLEDGED to before me by K & D ENERGY, Assignor, by and through its
partner, XXXXX XXXXXXXXX, who personally appeared before me and known to me
or
satisfactorily identified by me, to be his free act and deed, on this the _____
day of June, 2008.
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NOTARY
PUBLIC - State at Large - KY
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My Commission Expires:
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COMMONWEALTH
OF KENTUCKY
COUNTY
OF
______________
SIGNED
AND ACKNOWLEDGED to before me by K & D ENERGY, Assignor, by and through its
partner, XXXXX XXXX, who personally appeared before me and known to me or
satisfactorily identified by me, to be his free act and deed, on this the
_______ day of June, 2008.
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NOTARY
PUBLIC - State at Large - KY
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My Commission Expires:
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COMMONWEALTH
OF KENTUCKY
COUNTY
OF
______________
SIGNED
AND ACKNOWLEDGED to before me by KY USA ENERGY, INC., Assignee, by and through
XXXXX XXXXXXXX, President, who personally appeared before me or satisfactorily
identified by me, to be the corporation’s free act and deed, on this the ____
day of June, 2008.
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NOTARY
PUBLIC - State at Large - KY
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My Commission Expires:
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THIS
INSTRUMENT PREPARED BY:
BASIL
LAW
FIRM
000
Xxxx
Xxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
Phone:
000-000-0000
Facsimile:
000-000-0000
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Attorney
at Law
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BONNIE’S
DOCS/OIL & GAS FOLDER/KYUSA(FARMOUT ASSIGNMENT)
REVISED
6/18/08 @ 3:00 P.M. (CDT)
