Scout Exploration 8K/A, Share Purchase Agreement

Exhibit 10.1



SHARE PURCHASE AGREEMENT



THIS AGREEMENT made effective as of the 1st day of January, A.D. 2008.



BETWEEN:



BRIAN MAHOOD , Businessman, of Suite 600, 600 - 6 th Avenue S.W., Calgary, Alberta, T2P 0S5;



(hereinafter referred to as the "Vendor")



OF THE FIRST PART

AND:



SCOUT EXPLORATION, INC. , a Nevada Corporation, with an office at 609 - 475 Howe Street, Vancouver, British Columbia, V6C 2B3;



(hereinafter referred to as the "Purchaser")



OF THE SECOND PART

AND:



KERRISDALE RESOURCES LTD. , a company duly incorporated under the laws of the Province of Alberta, and having an office at Suite 600, 600 - 6 th Avenue S.W., Calgary, Alberta, T2P 0S5;



(hereinafter referred as the "Company")



OF THE THIRD PART




WHEREAS the Vendor is the legal and beneficial owner of all of the issued shares in the capital stock of the Company.



AND WHEREAS the Purchaser is desirous of purchasing and the Vendor is desirous of selling the Shares on the terms and conditions hereinafter set forth.



NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter set forth and in consideration of the sum of Two ($2.00) Dollars paid by each party to each of the other parties (the receipt and sufficiency of which consideration is hereby acknowledged by all parties), the parties hereto agree as follows:















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1. DEFINITIONS AND INTERPRETATION


1.1 Definitions. In this Agreement, including the recitals hereto:



"Agreement" means the agreement constituted by the execution of this document by the parties hereto, including all schedules referred to herein, as same may be supplemented or amended from time to time.



"Business Day" means a day other than a Saturday, Sunday, statutory holiday or day that is declared by any governmental authority to be a civic holiday in the jurisdiction in which an event contemplated hereby is to take place.



"Closing" means the completion of the sale to the Purchaser and the purchase from the Vendor of the Shares hereunder by the transfer and delivery of documents of title thereto and the payment of the purchase price therefor as set out in Section 2.2 hereof;



"Closing Day" means the day upon which the events described in section 7 hereof occur.



"Company" means Kerrisdale Resources Ltd., a company incorporated under the laws of the Province of Alberta, having an office at Suite 600, 600 - 6 th Avenue S.W., Calgary, Alberta T2P 0S5.



"Company's Financial Statements" means the unaudited financial statements of the Company for the year ended September 30, 2007 as prepared by a Chartered Accountant and the unaudited interim financial statements of the Company for the periods ended March 31, 2008 prepared by management, copies of which are attached hereto as Schedule "A".



"Purchaser" means Scout Exploration, Inc.



"Place of Closing" means 2100, 777 ? 8 th Avenue S.W., Calgary, Alberta or such other place as the parties may mutually agree upon.



"Property" means the oil and gas interests set out in Schedule "C" to this Agreement.



"Purchaser's Solicitors" means Hemsworth, Schmidt or such other solicitors as are appointed by the Purchaser from time to time.



"Shares" means the 100 Class A voting shares, issued and outstanding, in the capital stock of the Company owned by the Vendor.














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"Vendor's Solicitors" means Dunphy Best Blocksom LLP, or such other solicitors as are appointed by the Vendor from time to time.






Any other terms defined within the text of this Agreement shall have the meanings so ascribed to them.



1.2 Headings and Paragraphs . The headings to, and the division of this Agreement into Articles and paragraphs are for convenience of reference only and shall not in any way affect or be used in interpreting any of the provisions of this Agreement.



1.3 Gender and Number . The provisions of this Agreement shall be read with all changes in gender and number as may be required by the context.



1.4 Currency and Method of Payment . All monetary amounts specified in this Agreement are in reference to lawful currency of Canada, unless specifically stated otherwise. Any monies payable hereunder shall be paid in cash or by bank draft, certified cheque or solicitor = s trust cheque.



1.5 Severance . If any provision of this Agreement is determined to be illegal or unenforceable, such provision shall be ineffective to the extent of such illegality or unenforceability, but shall not invalidate or affect the validity or enforceability of the remaining provisions of this Agreement.



1.6 Governing Laws . This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein, and the parties agree to submit to the jurisdiction of the courts of Alberta with respect to any legal proceedings arising therefrom.



1.7 Action on Non-Business Day . If by the terms hereof the Closing or any other event is scheduled to take place at a time which falls on a day which is not a Business Day, the Closing or other event shall take place on the first Business Day next following.



1.8 Schedules . Appended to this Agreement are the following Schedules which form an integral part hereof:





Schedule "A" - Company's Financial Statements

Schedule "B" - Vendor's and Company's Disclosures

Schedule "C" - The Property

Schedule "D" - The General Security Agreement

Schedule "E" - Management Agreement






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2. PURCHASE AND SALE



2.1 Purchase and Sale . The Vendor hereby covenants and agrees to sell, assign and transfer the Shares to the Purchaser and the Purchaser covenants and agrees to purchase same from the Vendor on the Closing.



2.2 Purchase Price . The Purchase Price payable for the Shares by the Purchaser to the Vendor shall consist of:



(a) the payment of $25,000.00 CDN to the Vendor upon the signing of a Letter of Intent (which sum has been paid);


(b) the payment of $400,000.00 CDN to the Vendor upon the Closing Day;


(c) a payment obligation of $350,000.00 CDN (the "Principal Amount") which payment obligation the Company hereby irrevocably and unconditionally assumes from the Purchaser for valuable consideration had and received, and promises to pay to the Vendor and which the Vendor agrees to accept, and which payment obligation in respect of the Principal Amount shall be as follows:


a. the Company shall make all payments to the Vendor at 15, Wentworth Manor S.W. Calgary Alberta T3H 5K5 or such other address as the Vendor may provide by notice to the Company and to the Purchaser as provided for in Clause 8.1 hereof;


b. the Company shall effect payment in full of the Principal Amount and all interest and any charges that may accrue to the account of the Vendor under this Agreement and the General Security Agreement on or before Friday, 12:00 p.m. MST December 31, 2010 subject to the provisions of this paragraph. For clarity, it is understood and agreed that any amount of the Principal Amount plus accrued interest that has not been paid prior to December 31, 2010 will be paid on December 31, 2010;


c. Interest shall accrue on the Principal Amount from the Effective Date to payment in full of all the Principal Amount, all accrued interest and any and all charges that arise hereunder and that accrued to the account of the Vendor hereunder, to and including any judgment hereunder for unpaid monies and to and including full collection thereof, at a rate of 6.75% per annum;


d. The Company shall remit payment in full of all interest as it accrues at each calendar quarter-end and deliver payment thereof to the Vendor on the first business day following each quarter-end; however the first payment of












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interest for the period from the Effective Date and ending on June 30, 2008 shall be due and be paid by the Company to the Vendor on July 1, 2008;


e. Effective on January 2, 2009, regardless of whether or not the Company is in full compliance hereunder, the Company shall be required to make and deliver to the Vendor either of the following:


(a) a payment to the Vendor equal to a portion of the Principal Sum in the amount of $125,000.00 accompanied by the interest remittance payment for the quarter ending December 31, 2008; OR


(b) a payment to the Vendor of the Principal Amount IN TOTAL to the Vendor in the amount of $350,000.00 accompanied by:


(i) the interest remittance payment for the quarter ending December 31, 2008; plus a sum equal to accrued interest on the TOTAL Principal Amount outstanding, if any; AND


(ii) a payment equal to the interest that accrued on the Principal Amount under this Agreement for the two calendar quarters ending December 31, 2008.


f. If the Company chooses and timely performs election 2.2(c)e.(a) above, effective on January 2, 2010, regardless of whether or not the Company is in full compliance hereunder, the Company shall be required to make and deliver to the Vendor either of the following:


(a) a payment to the Vendor equal to a portion of the Principal Sum in the amount of $125,000.00 accompanied by the interest remittance payment for the quarter ending December 31, 2009; OR


(b) a payment to the Vendor of the balance of the Principal Amount unpaid to the Vendor on December 31, 2009 accompanied by:


(i) the interest remittance payment for the quarter ending December 31, 2009; plus a sum equal to accrued interest on the TOTAL Principal Amount outstanding, if any; AND


(ii) a payment equal to the interest that accrued on the Principal Amount under this Agreement for the calendar quarter ending December 31, 2009.












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g. Except as specifically provided for above, the Company shall not have the right to pre-pay any amount on account of the Principal Amount at any time during the term of the payment obligation; AND if the Company should attempt to do so, the Vendor shall be unconditionally entitled and without any rights arising thereby in the Company, to reject payment thereof and to insist upon the specific performance by the Company of the conditions of the payment obligation of this Clause;


h. The Company shall sign and deliver a General Security Agreement to the Vendor (attached hereto as Schedule "D") to secure in and to the Vendor all such personal and real property rights of the Company, as of the Closing Date to and including the day the Company pays in full all its accrued obligations hereunder, and entitle the Vendor to file a "financing statement" to record the interests and rights of the Vendor hereunder, all as such quoted terms are defined in and as the rights of the Vendor arise under the Personal Property Security Act, RSA (such real property interests shall be those attached hereto in Schedule "C");


i. The Company's payment obligation:


(a) shall be a personal obligation between the Company and the Vendor and shall not be assignable in whole or in part, in law or in equity by the Company; except with the prior written consent of the Vendor such consent not to be unreasonably withheld;


(b) subject to time being of the essence;


(c) shall enure to the benefit of the Vendor and his respective successors and assignees, for which the Vendor shall be entitled to assign his rights hereunder in whole or in part and which assignment shall be effective upon the Vendor's delivery of a notice thereof with full particulars to the Company;


3. ADDITIONAL PROVISIONS



3.1 The Purchaser shall pay the Vendor's consulting company, Kerrisdale Consulting Inc., the sum of $1,000.00 CDN. (exclusive of GST) per month, for one year, commencing January 1, 2008, in consideration for consulting services to be performed by the Vendor for the Purchaser in respect to the operations of the Company, including the consolidation of the interests in the operating assets of the Company. A copy of the Management Agreement shall be attached hereto as Schedule "E". There will be a lump sum payment of $6,000.00 CDN. plus GST on June 18 th , 2008, as per the terms of the Management Agreement.



3.2 The Company agrees to make a payment of $500.00 CDN. (exclusive of GST) per month to Kerrisdale Consulting Inc. for a period of one year, commencing January 1, 2008, in consideration of the sub-lease by the Company of an office located at Suite 600, 600 - 6 th Avenue S.W., Calgary, Alberta T2P 0S5.














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4. REPRESENTATIONS AND WARRANTIES OF THE VENDOR AND THE COMPANY



4.1 Representations . Each of the Vendor and the Company jointly and severally represent and warrant to the Purchaser (and acknowledge that the Purchaser is relying upon such representations and warranties in entering into this Agreement and completing the transactions contemplated hereby) that except as disclosed in Schedule "B" attached hereto:



(a) the Company is duly incorporated and organized, validly subsisting and in good standing under the laws of the Province of Alberta;


(b) the authorized capital of the Company consists of an unlimited number of Class A voting shares and an unlimited number of Class B non-voting shares of which 100 Class A shares are validly issued and outstanding as fully paid and non-assessable as of the date hereof, and there are no other shares of the Company issued and outstanding;


(c) all the issued and outstanding shares in the capital of the Company are duly authorized, validly issued, fully paid, non-assessable and issued in compliance with all applicable corporate, securities and other laws;


(d) the Vendor is the legal and beneficial owner of the Shares, holds such Shares free and clear of any and all liens, adverse claims, charges, pledges, hypothecations and encumbrances whatsoever;


(e) the Vendor has full and absolute right, power and authority to enter into this Agreement on the terms and conditions herein set forth and to transfer the legal and beneficial title and ownership of the Shares to the Purchaser as contemplated hereby;


(f) no person, firm or corporation has any agreement or option or a right capable of becoming an agreement or option for the purchase of any of the Shares or for the purchase of any of the unissued shares in the capital stock of the Company except as disclosed in Schedule "B" attached hereto;


(g) there are no shareholders agreements, proxies, voting trust agreements or similar agreements among the Vendor or any other parties with respect to the Shares;


(h) the Vendor is not acting as nominee, agent, trustee, executor, administrator or other legal representative of any person in the sale of the Shares hereunder;


(i) neither the Vendor nor the company have agreed to pay any finder = s fee or commissions in connection with the sale of the Shares contemplated by this








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