Letter Agreement for Acquisition of Elk Hills Heavy Oil, LLC and Four Bear Heavy Oil, LLC by Stellar Resources Ltd.

If the parties mutually agree to enter into a further agreement (the “Definitive Agreement”) is shall be subject to commercial arbitration which shall be concluded March 10, 2010.  If the Definitive Agreement is not mutually agreed by the Closing Date then this Letter Agreement shall remain binding and enforceable. The Definitive Agreement shall be in form and substance satisfactory to each of Stellar and the Sellers and shall include customary terms and conditions, including representations and warranties, covenants, conditions and completion mechanics (including without limitation, the representation of warranties, covenants, conditions and completion of mechanics contained in this agreement to the extent still applicable), for a transaction of this nature.  In addition, the Definitive Agreement may include the following mutual conditions precedent to the consummation of the Transaction:

The obligation to close the transaction shall be subject to each party being satisfied with their due diligence review of the other party.  Each party and their respective accountants, legal counsel, technical and financial advisors and other representatives thereof shall be entitled to perform a due diligence review and examination of the other of them and the business and affairs thereof.

Whereas the parties have previously entered into a confidentiality agreement, the Transaction and this Letter Agreement shall be considered confidential in its entirety pursuant to the provisions of that confidentiality agreement.  Subject to applicable law, the parties shall agree with each other on the form, content and timing of any public announcement regarding the Transaction.

This Letter of Intent may be executed by each of the parties in counterparts and by facsimile or other electronic means, each of which when so executed and delivered will be an original, but both such counterparts, whether executed and delivered in the original or by facsimile or other electronic means, will together constitute one and the same agreement.

This Letter Agreement shall enure to the benefit of and are binding upon the parties hereto and their respective successors and permitted assigns.  Neither party may assign this Letter Agreement to other than an affiliate without the prior written consent of the other party.  An assignment by a party hereto to an affiliate will not relieve the assigning party of its rights and obligations hereunder.

This Letter Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes and replaces all negotiations, correspondence, letters of intent and prior agreements or understandings relating thereto, whether written or oral.

The invalidity or unenforceability of any provision or part of any provision of this Letter Agreement shall not affect the validity or enforceability of any other provision or part thereof, and any such invalid or unenforceable provision or party thereof will be deemed to be separate, severable and distinct, and no provision or part thereof will be deemed dependent upon any other provision or part thereof unless expressly provided for herein.

Each party will be responsible for their own costs of completing the negotiation of this Letter Agreement and performing their respective obligations under this Letter Agreement.

Any notice or other writing required or permitted to be given hereunder or for the purposes hereof shall be sufficiently given if delivered personally, or if sent by prepaid mail or transmitted by facsimile to such party:

 

(a)       in the case of a notice to the Sellers at:

 

1011 S. Jefferson St.                              12922 – 19A Avenue

Spokane, WA 99204                             Surrey, BC, V4A 8P1

Or at such other address or addresses as the party to whom such notice or other writing is to be given shall have last notified the party giving the same in the manner provided in this section. Any notice or other writing delivered to the party to whom it is addressed hereinbefore provided shall be deemed to have been given and received on the day it is so delivered at such address, provided that if such day is not a business day in the city where the notice is delivered, then such notice or other writing shall be deemed to have been given and received on the next following business day.  Any notice or other writing transmitted by facsimile or other form of recorded communication shall be deemed to have been given and received on the first business day after its transmission.

Each of the parties shall provide such further documents or instruments required by the other party as may reasonably be necessary or desirable in order to give effect to the terms and conditions of this Letter Agreement and carry out its provisions.

 

 

This Letter Agreement is subject to the terms and conditions hereof and shall be binding upon the parties following execution of this Letter Agreement.

This Letter Agreement shall close on or before March 15, 2010.

The parties to this Agreement have obtained or have chosen not to seek independent legal advice prior to entering this Agreement.

 

To confirm your acceptance to the terms of this Letter Agreement, please sign below where indicated and return the signed copy to the undersigned as soon as possible.  If you have any questions or would like to discuss this Letter Agreement further, please feel free to call me at  ###-###-####.

 

Yours sincerely,

 

 

By: Luigi Rispoli

 

 

_____________________

President

 

Accepted on behalf of the Sellers this 25 day of February, 2010.

 

 

By:                                            

Glen Landry