AGREEMENT TO OPERATE SOUTH GLENROCK BLOCK “C” AND EXTENSION OF PURCHASE AGREEMENT
AGREEMENT
TO OPERATE
SOUTH GLENROCK BLOCK “C”
AND
EXTENSION OF PURCHASE AGREEMENT
THIS AGREEMENT TO OPERATE SOUTH
GLENROCK BLOCK “C” AND EXTENSION OF PURCHASE AGREEMENT (“Agreement”), effective
as of March 30, 2009 (the “Effective Date”) at 8:00 a.m. Mountain
Time (“Effective Time”), is between Ameriwest Energy Corp. (“Ameriwest”) and
Muddy Mineral Exploration, LLC (“Muddy”).
WHEREAS, Muddy and Ameriwest have been
parties to a Letter of Intent dated October 1, 2007 and subsequent amendments
(collectively “Letter of Intent”) under which Muddy agreed to sell its working
interest and net royalty interest in and to the South Glenrock Block “C” field
in Converse County, Wyoming (“South Glenrock ‘C’”);
Until
Closing or at such time as this Agreement is terminated, as set forth below,
Ameriwest agrees to be responsible for, and diligently perform, standard and
customary duties of a prudent oil operator in the State of Wyoming, and shall be
responsible for the overall operations and management of South Glenrock “C”,
including, without limitation, performing or having performed reasonably
necessary maintenance and repairs, payment of expenses and costs associated with
maintenance and repairs, payment of applicable taxes and fees, marketing and
selling oil from production, obtaining and maintaining proper bonding and
insurance, and otherwise protecting and preserving the South Glenrock “C”
assets. Ameriwest hereby agrees to indemnify, hold harmless and
defend Muddy from and against any and all claims, liabilities, losses, expenses
(including reasonable attorneys’ fees and costs), fines, penalties, taxes or
damages (collectively “Liabilities”), asserted by any third party against Muddy
in relation to Ameriwest’s operation of South Glenrock “C”. Ameriwest
shall periodically, and more often upon Muddy’s request, provide Muddy with
information, reports and documentation evidencing compliance with its
operational responsibilities. If Muddy requests after the execution
of this Agreement and prior to Closing, Ameriwest shall execute Muddy’s
Operating Agreement and perform the obligations arising
thereunder. In the event that Muddy, in its reasonable discretion,
deems its interests in South Glenrock “C” or any of the related assets are
impaired or are insecure, then Muddy may terminate this Agreement upon written
notice to Ameriwest.
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2. EXTENSION
OF CLOSING DATE TO PURCHASE SOUTH GLENROCK “C”.
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2.1
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Subject
to the terms of this Agreement, Muddy hereby grants to Ameriwest and/or
its permitted assigns an extension of the closing date for the purchase of
the interests owned by Muddy as of the Effective Date in South Glenrock
“C”, for payment of the Purchase Price and subject to the terms set forth
below.
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2.2
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Closing
shall occur on or before the 1st
day of June, 2009, unless otherwise extended by mutual agreement of the
parties. If Closing does not occur by June 1, 2009 (or as
otherwise extended by mutual written agreement) this Agreement shall
automatically terminate.
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2.3
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As
a material inducement for the execution of this Agreement, Muddy and
Ameriwest agree that the Purchase Price for South Glenrock “C” has been
changed to $4,000,000.00, as per Muddy’s December 1, 2008
letter. Muddy agrees that the sum of $1,750,000.00, which
non-refundable amount was previously paid to Muddy by Ameriwest, shall be
credited against the Purchase Price at the time of Closing. At
Closing, Ameriwest shall pay the sum of Purchase Price, less properly
credited amounts.
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2.4
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If
Ameriwest elects to purchase South Glenrock “C”, then Ameriwest shall
provide written notice of its election to Muddy prior to the Closing date
set forth in paragraph 2.2, above.
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2.5
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Ameriwest
will have until June 1, 2009 within which to undertake its due diligence
on title and environmental related matters. Prior to June 1,
2009, Ameriwest may terminate its obligation to purchase South Glenrock
“C” and this Agreement by written notification to Muddy, if it identifies
material title or environmental
defects.
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3.1
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In
the event a party terminates this Agreement in accordance with a right
granted hereunder or otherwise by operation of this Agreement, the
following shall apply:
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A.
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Muddy
shall be entitled to retain all sums previously paid by Ameriwest prior to
Closing and commence as operator of the South Glenrock
“C”.
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B.
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Ameriwest
shall be entitled to retain all revenue from oil produced during the
period Ameriwest acted as operator, through the date of
termination.
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C.
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Immediately,
and not later than five (5) business days, Ameriwest shall: (a) assign to
Muddy all of its interest in and to South Glenrock “C”, whether created by
the Assignment of Revenues dated May 1, 2008, including all oil in the
tanks and all rents, issues, profits, proceeds, products, revenues and
other income from or attributable to South Glenrock “C”, or otherwise; (b)
assign to Muddy all of its right, title and interest in and to that
$100,000 Certificate of Deposit bearing the bond account number 00000000
issued to the Director of the Office of State Lands & Investments to
act as bonding security to cover operations on State of Wyoming Oil and
Gas Leases that are a part of, or related to, South Glenrock “C” (“Bond”);
and (c) execute such assignments and other documents as are necessary or
desirable in order to evidence and/or effectuate the intent of this
paragraph, including without limitation, the transfer of Ameriwest’s
operator status of South Glenrock “C” and the
Bond.
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2
The
parties acknowledge that the directors of Ameriwest hold ownership interests in
Muddy and South Glenrock “C” and hereby state that full disclosure of said
interests have been made to the parties.
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5.6
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CONSTRUCTION
OF AGREEMENT. All questions with respect to the construction of
this Agreement and the rights and liabilities of the parties hereto shall
be governed by the laws of the State of Wyoming. The section headings
herein are for the convenience of reference only and are not a substantive
part of the Agreement.
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3
Muddy
Mineral Exploration, LLC:
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By:
/s/ Xxx X. Xxxxxxxxxx
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By:
/s/ Xxxxxx Xxxxxxxx
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Title:
Manager
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Title:
President
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