LEASE ACQUISITION AGREEMENT

 

 

This LEASE ACQUISITION AGREEMENT (the “Agreement”) is made as of February ___,
2013, by and among Santa Fe Petroleum, Inc., a Delaware corporation (the
“Purchaser”), and Long Branch Petroleum LP., a Texas limited liability company
(the “Seller”). Purchaser and Seller are sometimes referred to herein
individually as the “Party” or collectively as the “Parties.”

RECITALS

 

A.                WHEREAS, through its wholly owned subsidiaries Langtre LLC and
Woodlake LLC, the Seller controls the mineral interest leases of certain
properties in the Comanche and Brown counties of the State of Texas (the
“Current Leases”), which are more specifically referred to in Schedule A
attached hereto (the “Properties”);

 

B.                 WHEREAS, the Seller has agreed to sell to the Purchaser a
100% of its interest in the Current Leases in exchange for entering into
Unsecured Convertible Promissory Notes in the total amount of Four Hundred and
Forty Four Thousand One Hundred and Forty Eight Dollars ($444,148), which are
more specifically referred to in Schedule B attached hereto (the “Notes”);

 

C.                WHEREAS, as a result of negotiations by and between the
Purchaser and the Seller, the Parties have proposed a resolution that they deem
to be fair and equitable, and by this Agreement, the Parties wish to effectuate
the sale and transfer of the Current Leases.

 

AGREEMENT

 

NOW THEREFORE in consideration of the mutual promises and covenants of the
parties contained herein, it is hereby agreed as follows:

 

1.For the purposes of this Agreement, the following terms shall have the meaning
set forth as follows:

 

 A. “Area of Interest” means all leases within 5 miles of the Properties;

 

 B. “Current Leases” means the leases comprising a total of approximately
    1628.528 acres.

 

 C. "Property Rights" means all licenses, permits, easements, rights-of-way,
    certificates and other approvals obtained by either of the parties, either
    before or after the date of this Agreement, and necessary for the
    development of the Properties or for the purpose of placing the Properties
    into production or of continuing production on the Properties.

 

2.The Seller represents and warrants to the Purchaser that:

 

 A. the Seller has the full right and authority to enter into, execute and
    deliver this Agreement;

 

 B. the Seller exercises full control of the Properties and the Properties are
    free and clear of, and from, all liens, charges and encumbrances of any kind
    whatsoever;

 

 C. the Seller holds all permits, licences, consents and authorities issued by
    any government or governmental authority which are necessary in connection
    with the ownership of the Properties and the Property Rights;

 

 D. the Properties has been properly staked, located and recorded pursuant to
    the applicable laws and regulations and all mining leases comprising the
    Properties and the Property Rights are in good standing;

 

 E. there are no outstanding agreements or options to acquire the Properties or
    any portion thereof, and no person has any proprietary or possessor interest
    in the Properties;

 

 F. to the best of the Seller's knowledge, there are no outstanding orders or
    directions relating to environmental matters requiring any work, repairs,
    construction or capital expenditures with respect to the Properties and the
    conduct of the operations related thereto, and the Seller has not received
    any notice of the same and is not aware of any basis on which any such
    orders or direction could be made;

 

 G. there is no adverse claim or challenge against or to the ownership of or
    title to any part of the Properties and, to the best of the Seller’s
    knowledge there is no basis for such adverse claim or challenge which may
    affect the Properties;

 

 H. the consummation of the transactions contemplated by this Agreement does not
    and will not conflict with, constitute a default under, result in a breach
    of, entitle any person to a right of termination under, or result in the
    creation or imposition of any lien, encumbrance or restriction of any nature
    whatsoever upon or against the Properties;

 

 I. reclamation and rehabilitation of those parts of the Properties which have
    been previously worked have been properly completed in compliance with all
    applicable laws; and

 

 J. the Seller has advised the Purchaser of all of the material information
    relating to the Properties of which he has knowledge.

 

3.The representations and warranties contained in Section 2 of this Agreement
are provided for the exclusive benefit of the Purchaser, and a breach of any one
or more representations or warranties may be waived by the Purchaser in whole or
in part at any time without prejudice to its rights in respect of any other
breach of the same or any other representation or warranty, and the
representations and warranties contained in Section 2 of this Agreement will
survive the execution and delivery of this Agreement.

 

4.The Purchaser represents and warrants to the Seller that:

 

 A. the Purchaser is a valid and subsisting corporation duly incorporated and in
    good standing under the laws of the State of Delaware;

 

 B. the Purchaser has the full right, power, capacity and authority to enter
    into, execute and deliver this Agreement and to be bound by its terms;

 

 C. the consummation of this Agreement will not conflict with nor result in any
    breach of its constating documents or any covenants or agreements contained
    in or constitute a default under any agreement or other instrument whatever
    to which the Purchaser is a party or by which the Purchaser is bound or to
    which the Purchaser may be subject; and

 

 D. no proceedings are pending for, and the Purchaser is unaware of any basis
    for, the institution of any proceedings leading to the placing of the
    Purchaser in bankruptcy or subject to any other laws governing the affairs
    of insolvent parties.

 

5.The representations and warranties contained in Section 4 of this Agreement
are provided for the exclusive benefit of the Seller, and a breach of any one or
more representations or warranties may be waived by the Seller in whole or in
part at any time without prejudice to his rights in respect of any other breach
of the same or any other representation or warranty, and the representations and
warranties contained in Section 4 of this Agreement will survive the execution
and delivery of this Agreement.

 

6.The Seller and the Purchaser will execute and deliver such additional
documentation as legal counsel for the Seller and the Purchaser determine is
necessary in order to duly register and record in the appropriate registration
and recording offices notice that the Seller’s interest in and to the Properties
is subject to and bound by the terms of this Agreement.

 

7.If the Purchaser identifies any material defect in the Seller’s title to the
Properties, the Purchaser shall give the Seller notice of such defect.  If the
defect has not been cured within 60 days of receipt of such notice, the
Purchaser shall be entitled to take such curative action as is reasonably
necessary, and shall be entitled to deduct the costs and expenses incurred in
taking such action any payments then otherwise due or accruing due to the
Seller.  If there are no such payments, the Purchaser shall be entitled to a
refund in the amount of said costs and expenses.

 

8.If any third party asserts any right or claim to the Properties or to any
amounts payable to the Seller, the Purchaser may deposit any amounts otherwise
due to the Seller in escrow with a suitable agent until the validity of such
right or claim has been finally resolved.  If the Purchaser deposits said
amounts in escrow, the Purchaser shall be deemed not in default under this
Agreement for failure to pay such amounts to the Seller.

 

9.The Purchaser is obligated to pay the taxes and maintain the legal status of
the leases comprising the Properties in accordance with applicable law.

 

10.Purchaser covenants and agrees with the Seller that the Purchaser will, at
its own cost:

 

 A. maintain the Properties in good standing by doing and filing all assessment
    work or making payments in lieu thereof and by performing all other acts
    which may be necessary in order to keep the Properties in good standing and
    free and clear of all liens and other charges arising from or out of the
    Purchaser's activities on the Properties;

 

 B. do all work on the Properties in accordance with sound drilling, exploration
    and engineering practices and in compliance with all applicable laws,
    bylaws, regulations, orders, and lawful requirements of any governmental or
    regulatory authority and comply with all laws governing the possession of
    the Properties, including, without limitation, those governing safety,
    pollution and environmental matters; and

 

 C. maintain true and correct books, accounts and records of operations
    thereunder, such records to be open at all reasonable times upon reasonable
    notice for inspection by the Seller or his duly authorized representatives
    and agents.

 

11.If either party is prevented or delayed in complying with any of the
provisions of this Agreement (the "Affected Party") by reason of strikes,
lockouts, land claims and blockages, NGO activities, forest or highway closures,
earthquakes, subsidence, general collapse or landslides, interference or the
inability to secure on reasonable terms any private or public permits or
authorizations, labor, power or fuel shortages, fires, wars, acts of God, civil
disturbances, governmental regulations restricting normal operations, shipping
delays or any other reason or reasons beyond the reasonable control of the
Affected Party whether or not foreseeable (provided that lack of sufficient
funds to carry out exploration on the Properties will be deemed not to be beyond
the reasonable control of the Affected Party), then the time limited for the
performance by the Affected Party of its obligations hereunder will be extended
by a period of time equal in length to the period of each such prevention or
delay.  Nothing in this section or this Agreement will relieve either party from
its obligation to maintain the leases comprising the Properties in good standing
and to comply with all applicable laws and regulations including, without
limitation, those governing safety, pollution and environmental matters.  The
Affected Party will promptly give notice to the other party of each event of
force majeure under this section within seven days of such event commencing and
upon cessation of such event will furnish the other party with written notice to
that effect together with particulars of the number of days by which the time
for performing the obligations of the Affected Party under this Agreement has
been extended by virtue of such event of force majeure and all preceding events
of force majeure.

 

12.If a party is in default of any requirement of this Agreement or is in breach
of any provision contained in this Agreement, the party affected by the default
(the "Non-Defaulting Party") may terminate this Agreement by giving written
notice of termination to the other party but only if:

 

 A. it will have given to the other party written notice of the particular
    failure, default, or breach on the part of the other party; and

 

 B. the other party has not, within 30 days following delivery of such written
    notice of default, cured such default or commenced to cure such default, it
    being agreed by each party that should it so commence to cure any default it
    will prosecute such cure to completion without undue delay.

 

13.Each of the Purchaser and the Seller covenants and agrees to indemnify and
save harmless the other against all liabilities, claims, demands, actions,
causes of action, damages, losses, costs, expenses or legal fees suffered or
incurred by reason of or arising out of or relating to any matters in connection
with this Agreement.

 

14.Each of the parties hereto agrees to do and/or execute all such further and
other acts, deeds, things, devices, documents and assurances as may be required
in order to carry out the true intent and meaning of this Agreement.

 

15.This Agreement shall inure to the benefit of and be binding upon the parties
hereto and each of their successors and permitted assigns, as the case may be.

 

16.This Agreement shall be construed by and governed by the laws of the State of
Delaware.

 

17.This Agreement may be executed in counterparts and any party hereto may
execute any counterpart, each of which when executed and delivered will be
deemed to be an original and all of which counterparts taken together will be
deemed to be one and the same instrument.

 

18.Each of the parties hereto will be entitled to rely upon delivery by
facsimile or electronic transfer of executed copies of this Agreement, and such
facsimile copies will be effective to create a valid and binding agreement among
the parties hereto in accordance with the terms and conditions of this
Agreement.

 

19.Unless otherwise provided, all dollar amounts referred to in this Agreement
are in lawful money of the United States of America.

 

20.Each party has the right to assign all or any part of its interest in the
Properties and this Agreement.  It shall be a condition to any such assignment
that the assignee of the interest being transferred agrees in writing to be
bound by the terms of this Agreement, as if it had been an original party
hereto.

 
 

 

IN WITNESS WHEREOF the parties hereto have executed this Lease Acquisition
Agreement this ___ day of ____________, 2013.

 

 

 

LONG BRANCH PETROLEUM LP

 

______________________________

Authorized Signatory

 

 

 

SANTA FE PETROLEUM INC.

 

______________________________

Authorized Signatory

 

 
 

 

Schedule “A”

PROPERTIES

 

The following is a list of those certain tracts of property located the Comanche
and Brown counties of the State of Texas whose mineral interest leases are sold
and conveyed pursuant to the Lease Acquisition Agreement:

 

Landowner Date Lease was Signed Leased Acres Location of Lease Raymond Stepp
2/21/2012 1010.976   Tom & Scheryl Scarborough 3/7/2012 11.82   John A Darwin
(25%) 2/22/2012 20   Danny & Virginia Glover (25%) 2/22/2012 20   Travis
McCluskey (50%) 2/28/2012 40   Susan Gayle Peterson (75%) 2/28/2012 78.113  
Mark& Jane Knox (25%) 2/28/2012 26.038   Randall Lovelace 2/28/2012 129   Travis
McCluskey 2/28/2012 38.185   Edmund Wade (50%) 3/26/2012 43.599   Robert Rogers
(50%) 6/12/2012 43.599   Joseph Wade 2/21/2012 87.198   Jessie & Mary Wood
5/10/2012 80.00   Totals   1628.528  

 

 
 

 

Schedule “B”

UNSECURED CONVERTIBLE PROMISSORY NOTES

 

The following is a list of those certain Unsecured Convertible Promissory Notes
to be entered into as consideration for the sale of the mineral interest leases
to Santa Fe Petroleum, Inc.:

 

Promissory Note Holder Amount of Note Duration of Note Roger K. Hubele Trust
$75,000 14 Months Suzanne Tomm $37,500 14 Months Jason Hubele $37,500 14 Months
Ryan Raber $25,000 15 Months Dennis Gormley $25,000 15 Months Long Branch
Petroleum LP $244,148 15 Months Totals $444,148