avnuform8k01162008ex10_24.htm


    January  
      , 2008

    


    Attn:
      Stephen Komlosy

    


    Ref.:                      
      Heletz-Kokhav
      Farm-In Agreement

    


    Gentlemen:

    


    This
      letter of Intent (Letter) sets forth the general terms of a Definitive Agreement
      (Definitive Agreement) between Avenue Group, Inc. (“Avenue”) and TomCo Energy
 Plc (“TomCo”) and
      Avenue Energy Israel (together referred to as “Avenue or AEI”) which it is
      intended shall be entered into by the parties hereto (the
      parties)  within 45 days (The Closing Date) of the date set forth
      above (the “Effective Date”) pursuant to which TomCo shall acquire a fifty (50%)
      percent working interest in the Heletz-Kokhav License (the “License”) awarded to
      AEI and including the aforesaid parties by the Israel Petroleum Commission
      (“IPC”).

    


    Now
      Avenue and TomCo desire to set forth herein the general terms and conditions
      which shall be contained in the Definitive Agreement.

    


    This
      Letter of Intent is subject to the execution of the Definitive Agreement. This
      present letter of Intent is not a contract and is not intended to create any
      legally binding obligations between the parties except for the provisions of
      Paragraphs 1, 3 and 12 hereof and if the Definitive Agreement is not executed
      within 45 days of the date hereof, (subject to the right of extention contained
      in paragraph 4(b)) the parties shall have no obligations one to the other save
      for the provisions of Paragraphs 1, 3 and 12 hereof, which both parties agree
      are binding upon them and shall survive.

    


    


    1.           
      Representations.  Avenue
      hereby represents the following:

    


    
      	
              (a)  

            	
              Avenue
                owns all record title working interest in an exploration and production
                block located in the State of Israel as defined in the License (“the
                Block”)  and covering 229,600 dunams, more or less. The area
                included in the Block is shown by the map and coordinates attached
                hereto
                and made a part hereof as Exhibit
                A.

            


    

    


    
      	
              (b)  

            	
              Avenue’s
                current development plans for the License are set forth on Exhibit B attached
                hereto.

            


    

    


    
      	
              (c)  

            	
              The
                License, a copy of which is attached and made a part hereof as Exhibit C is in
                good
                standing and all payments and guarantees to the Government of Israel
                required by the Contract have been made,
                and

            


    

    


    
      	
              (d)  

            	
              Avenue
                and AEI are in good standing under the jurisdiction of their formation
                and
                are authorized and able to enter into this
                Agreement

            


    

    


    


    2.           
      Participation.  Subject
      to the terms and conditions of the Definitive Agreement, Avenue agrees to convey
      to TomCo, and TomCo agrees to accept, an undivided fifty percent (50%) record
      title interest in the License.    If the necessary approvals
      of this transfer of interest are not approved by the IPC, or any other Israeli
      governmental authority whose approval is required, to the transfer within one
      year from the date of this Letter, then Avenue shall execute such other
      documents as TomCo may reasonably request in order to ensure and document that
      TomCo shall have and retain the same interest as if the conveyance had been
      approved and recorded in the records of the IPC.   Avenue agrees
      to work diligently with TomCo to obtain the necessary approvals of the IPC
      or
      any other applicable Israeli authority to the conveyance.

    


    3.           
      Security
      Deposit.  No later than five business days from the date of
      execution of this Letter, TomCo shall pay Avenue the cash sum of $75,000 (the
      “Security Deposit”).  In the event that TomCo fails to pay the amounts
      described in Paragraph 4 of this Letter on or before the Closing Date (as
      defined herein), or otherwise fails to perform any of its obligations hereunder,
      then TomCo shall automatically forfeit the Security Deposit and Avenue shall
      be
      entitled to retain said Security Deposit with no further obligation to TomCo
      and
      TomCo shall have no obligation to Avenue; provided, however that TomCo shall
      be
      entitled to recover the Security Deposit should Avenue be in breach of any
      of
      the representations set forth in Paragraph 1 of this Letter.  The
      Security Deposit shall be credited against other amounts owed by TomCo to Avenue
      hereunder.

    


    4.           
      Consideration and
      Payment of Costs.

    


    
      	
              a.  

            	
              TomCo
                shall earn a fifty percent (50%) Net Working Interest (NWI) (after
                the
                deduction of Government and LG Royalties) by assuming one hundred
                (100%)
                percent of the costs associated with implementing the 3 year work
                program
                (Exhibit B) or by
                expending $4,500,000 of CAPEX, whichever is
                greater.

            


    

    


    
      	
              b.  

            	
              At
                Closing of this transaction (“Closing Date”), TomCo shall pay Avenue the
                cash sum of US$1,000,000 and an additional equivalent of US$500,000
                in
                Ordinary TomCo Shares quoted on AIM (with restricted sale conditions)
                each
                share to be valued at the average middle market price of the shares
                for
                the seven days prior to the date of Closing. Closing shall be no
                later
                than Forty Five (45) days from Effective Date of execution of this
                letter.
                TomCo may extend the Closing date for an additional Fifteen (15)
                days by
                providing an additional $25,000 Security Deposit. The effective date
                of
                the conveyance shall be deemed to be the first day of the first full
                month
                preceding the Closing Date.  By way of example only, if the
                Closing Date occurs on February 18, 2008, then the effective date
                for
                payment of Avenue's share of production and all other matters shall
                be
                deemed to be January 1, 2008.

            


    

    


    
      	
              c.  

            	
              On
                or before the Closing Date, TomCo shall pay its proportionate share
                (50%)
                of all costs already incurred by Avenue in connection with the
                Contract  including, but not necessarily limited to, all
                bona-fide costs of production equipment and installation costs, subsurface
                lease fees (US$8,000). A list of these costs as known to Avenue at
                this
                time is attached and made a part hereof as Exhibit
                D.  Additionally, in consideration for the payments
                described in Paragraphs 4(a) and 4(b) of this Letter, TomCo shall
                acquire
                an undivided 50% ownership interest in all equipment described on
                the list
                attached hereto and made a part hereof as Exhibit E. TomCo
                acknowledges that the parties have to maintain a suitable Standby
                Letter
                of Guarantee acceptable to the Israeli Government in the sum of
                $4.5m.

            


    

    


    


    5.           
      License Conversion
      Bonuses.  In addition to any amounts paid by TomCo to Avenue
      including, but not necessarily limited to, amounts described in Paragraph 4
      of
      this Agreement, TomCo shall pay the following license conversion bonus to
      Avenue:

    


    
      	
              a.  

            	
              If
                at any time during the first term or second term of the license,
                the IPC
                grants Avenue’s request to convert the license to a 30 year production
                lease, then TomCo shall pay Avenue, within ninety (90) days following
                such
                determination, the cash sum of
                US$1,500,000.

            


    

    


    
      	
              b.  

            	
              If
                at any time it is determined that the Block contains petroleum reserves
                greater than ten (10) million barrels of proven producing (“PDP”), proven
                developed non producing (“PDNP”) or proven undeveloped (“PUD”) oil
                reserves as confirmed by an internationally recognized U.S. based
                reservoir engineering firm, then TomCo shall pay Avenue, within ninety
                (90) days following such determination, the cash sum of
                US$5,000,000.   The definitions of PUD, PDP and PDNP
                reserves shall be as recognized by the Society of Petroleum
                Engineers.   Those engineering firms set out on Exhibit F hereof
                shall
                be deemed approved by the parties.  Any other firm may be deemed
                acceptable to the parties if mutually agreed in writing at the
                time.

            


    

    


    


    6.           
      Payment
      Terms.  All payments described in this Letter shall be made by
      wire transfer to Avenue’s account pursuant to the wiring instructions attached
      hereto as Exhibit
      G.  In the event that TomCo fails to make any payment on the
      schedule set forth above, or otherwise fails to perform any of its obligations
      set forth in the Definitive Agreement, unless TomCo shall have paid any such
      scheduled due payment and or remedied any such breach of its obligations under
      the Definitive Agreement within 45 days of receipt of a written notice of
      default from Avenue then:.

    


    
      	
              a.  

            	
              If
                Tomco shall have expended less than the minimum of $2.25 Million
                and would
                have not paid any such scheduled due payment and or remedied any
                such
                breach of its obligations under the Definitive Agreement within 45
                days of
                receipt of a written notice of default from Avenue, then Tomco shall
                forfeit all its rights to the License and the Block and under the
                Definitive Agreement.

            


    

    


    
      	
              b.  

            	
              If
                Tomco shall have expended more than $2.25 Million and would have
                not paid
                any such scheduled due payment and or remedied any such breach of
                its
                obligations under the Definitive Agreement within 45 days of receipt
                of a
                written notice of default from Avenue, then Tomco’s interest shall be
                reduced from a 50% Interest to a 25% Interest in the
                License..

            


    

    


    
      	
              c.  

            	
              This
                provision shall not affect the normal rights of parties to make non
                consent elections under the terms of the Joint Operating Agreement
                to be
                entered into by the parties.

            


    

    


    


    7.  Joint
      Operating
      Agreement.  Avenue and TomCo agree that the terms of the Joint
      Operating Agreement (“JOA”) attached hereto as Exhibit H are substantially
      agreeable to the parties hereto, and that said JOA shall govern all operations
      on the   Block.  Avenue agrees to execute a JOA
      substantially in the form of Exhibit H within sixty (60)
      days following execution of this Letter.

    


    8.   Title.  TomCo
      will not warrant title to the Block or License, except by, through and under
      Avenue but with full subrogation and substitution in and to all actions in
      warranty.  TomCo will become a party to the Contract, if permitted to
      do so by IPC or the Israeli Government, and Avenue will render all assistance
      practicable to assist TomCo in that regard.  If the approval is denied
      or otherwise delayed, the alternative arrangements to establish the 50% TomCo
      ownership of the License referred to in Paragraph 2 shall apply.

    


    9.  Operator.  Avenue
      shall be designated as the initial Operator under the terms and provisions
      of
      the JOA attached as Exhibit
      H.   It is understood and acknowledged that TomCo through
      its participation on the technical committees established under the JOA intends
      to be actively involved in the exploration and development activities for the
      Block.

    


    10.  Overriding
      Royalty
      Interests.  In addition to royalties and additional payments to
      the IPC, the Block is encumbered by a              
(%)
      percent overriding
      royalty to be paid to a third party and 12.5% Government royalty. Such
      overriding royalty will be borne between TomCo and Avenue as to 50%
      each.

    


    11.  Individual
      Liability.  The rights, duties, elections, obligations, and
      liabilities of the parties in this Letter and the Definitive Agreement shall
      be
      several and not joint or collective, and nothing contained in them is intended
      to create, nor shall be construed as creating, a partnership of any kind, joint
      venture, association, or other business entity recognizable at law for any
      purpose.  The parties shall be individually responsible only for their
      own obligations, except as herein described.

    


    12.
Confidentiality
      The
      parties undertake to each other not to use or disclose to any third party any
      information, other than information available in the public domain, data or
      accounting or methodology or customers or any technology or other information
      (Confidential Material) which the other party discloses to it or which may
      otherwise come into the procession of the receiving party as a result of the
      co-operation contemplated in this Letter. Such undertaking applies even if
      the
      Confidential Material is not designated as confidential or is not otherwise
      indicated as being of a confidential character or is disclosed verbally and
      not
      in writing or other material form including Email. Such undertaking shall
      continue for a period of three years beyond the termination of this
      Letter

    


    a.
      Neither party shall make any public announcement or any disclosure of the
      relationship with the other party envisaged herein without the other Party’s
      express written consent and consent relating to the exact form of any such
      announcement or disclosure.The parties acknowledge that both of them are subject
      to stock exchange authority requirements with regard to announcement in the
      form
      and on the basis required by such authorities and hereby agree to fully
      co-operate with each other so that there will be no impediment to such
      announcements being made and on a timely basis.

    


    b.
      Each
      of the parties further undertakes with the other not to use for its own business
      purpose any information of whatever nature disclosed to it by the other party
      concerning the other party’s business or contacts other than information already
      in the public domain.

    


    13.  Notices.  All
      notices required hereunder or in the Definitive Agreement shall be in writing,
      certified or overnight delivery, or by facsimile telecommunications to the
      addresses set forth below, and shall be deemed effective when actually received
      by the addressee, as follows:

    


    AVENUE
      GROUP, INC.

    405
      Lexington Avenue

    26th
      Floor

    New
      York,
      NY 10174

    Attn:              
      Mr. M. Mochkin, Vice President

    Telephone:
      (212) 812 2174

    Facsimile:   (646)
      706 7258

    


    With
      a
      copy to:

    


    


    TomCo
      Energy Plc

    34
      Grosvenor Gardens

    London
      SW1W 0DH

    Attn
      Stephen Komlosy, Chairman

    Telephone:
      0207 808 4857

    Fax:
      0207
      808 4857

    


    With
      a
      Copy to:

    Rex
      Newman

    Wallace
      LLP

    1
      Portland Place

    London
      W1N 3AA

    


    14.  Conflict
      with
      JOA.  In the event of a conflict between the terms and
      provisions of the Definitive Agreement and the JOA attached as Exhibit H the terms of the
      Definitive Agreement shall prevail.

    


    15.  Waiver.  No
      waiver of any provision of the Definitive Agreement shall be valid unless in
      writing and signed by the parties against whom it is sought to be
      enforced.

    


    16.  Governing
      Law.  This letter and the Definitive Agreement shall be
      governed by and in accordance with the laws of the State of New York, excluding
      any choice of law rule thereof that would direct the application of the laws
      of
      any other jurisdiction.  No party shall be liable to the other for
      consequential, punitive, or incidental damages.

    


    17.  Assignability.  The
      Definitive Agreement may not be assigned by TomCo, in whole or in part, without
      first obtaining the prior written consent of Avenue, which consent will not
      be
      unreasonably withheld, consent shall not be required if such assignment is
      to an
      affiliate or parent, or pursuant to merger or acquisition.

    


    18.  Disclaimer.  Avenue
      has furnished to TomCo materials and representations that are accurate and
      complete to best of Avenue’s knowledge; however, it is understood and
      acknowledged that TomCo has made an independent evaluation of the operations
      proposed under the Definitive Agreement.

    


    19. 
      Dispute
      Resolution.  Any controversy or claim arising out of or
      relating to this Letter and the Definitive Agreement, or breach thereof, shall
      be resolved by binding arbitration in accordance with the Forum Code of
      Procedure of the National Arbitration Forum. Any award, judgment or ruling
      rendered by the arbitrator(s) shall be conclusive and final; the judgment upon
      the award, judgment or ruling rendered by the arbitrator(s) may be entered
      in
      any court having jurisdiction thereof. Such arbitration shall be held in New
      York, New York, U.S.A., at a site selected by the arbitration panel selected;
      provided, however, that in any such arbitration proceeding there shall be (a)
      only one arbitrator if the claim in question involves a controversy with a
      value
      of $250,000 or less, and in such case the arbitrator shall be a lawyer who
      has
      practiced law for at least 20 years, and (b) three arbitrators if the claim
      in
      question involves a controversy with a value of more than $250,000, and in
      such
      case at least one of the arbitrators shall be a lawyer who has practiced law
      at
      least 20 years. The parties further acknowledge and agree that any party may
      apply to any Court with jurisdiction over the parties and the controversy to
      seek injunctive relief so as to maintain the status quo until such time as
      the
      arbitration award is rendered or the controversy is otherwise resolved.
      Notwithstanding any inference to the contrary in the preceding sentence, if
      either Avenue or TomCo is made a defendant or a party to any litigation filed
      by
      another party, then this provision shall not limit, prohibit, restrict or
      otherwise limit the rights of Avenue or TomCo, under those circumstances to
      file
      a cross-claim or third party claim, or other legal pleading in that litigation,
      for the purpose of seeking indemnity, contribution or enforcement of any alleged
      right to recovery of a reimbursement of from the other party to this Letter
      or
      the Definive Agreement with respect to the claims made against Avenue or TomCo
      in that litigation.

    


    20.  Complete
      Agreement.  The Definitive Agreement will constitute the
      complete and final agreement of the parties hereto, and supersedes all prior
      written or oral agreements or understandings.  No amendment to the
      Definitive Agreement shall be binding upon the parties unless agreed to in
      writing as an amendment thereto.

    


    21.  Successors
      and
      Assigns.  Subject as stated herein  and to the
      provisions of Paragraph 17 of this Letter  the terms and provisions of
      the Definitive Agreement, shall be binding upon and shall inure to the benefit
      of the parties and their respective successors, representatives, and authorized
      assigns.

    


    If
      this
      Letter accurately sets forth the understanding of TomCo, please so signify
      by
      executing in the space provided below and returning one fully executed original
      to my attention.

    


    


    Sincerely,

    


    AVENUE
      GROUP INC and

    AVENUE
      ENERGY ISRAEL LTD

    


    


    


    


    


    _________________________________

    By
      Mendel
      Mockin,

    Executive
      vice President  - Avenue Group Inc

    Executive
      Director – Avenue Energy Israel LTD.

    


    


    


    AGREED
      AND ACCEPTED THIS THE

    ________DAY
      OF __________, 2008.

    


    ______________________________

    


    


    BY:
      Howard Crosby___________________________

    Title:
      CEO

    TomCo
      Energy
      Plc

    


    


    List
      of
      Exhibits:

    Exhibit
“A”
–
Map
      and
      Coordinates of the Block

    Exhibit
“B”
–
Current
      Development Plans for Block

    Exhibit
“C”
–
Heletz-Kokhav
      License

    Exhibit
“D”-
      List of
      Costs

    Exhibit
“E”
–
List
      of
      Equipment

    Exhibit
“F”
–
List
      of
      Acceptable Engineering Firms

    Exhibit
“G”
–
Wiring
      Instructions

    Exhibit
“H”
–
Draft
      JOA

    Exhibit
“I”
      –

    


    



    
      
        
          405
            Lexington Ave 26th Fl

          New
            York,
            NY 10174

          (888)
            612-4188

          www.avenuegroupinc.com