ASSET PURCHASE AGREEMENT
THIS ASSET
PURCHASE AGREEMENT made on this 1s` day of
September, 2006 (the "Effective Date").
BETWEEN:
QUANTUM ENERGY
INC., a company
duly incorporated under the
laws of Nevada and having its mailing address at #1880 - 1066
West Hastings Street, Vancouver, British Columbia.
(the "Transferee");
OF THE FIRST PART
AND:
NITRO PETROLEUM INCORPORATED, a company duly incorporated under
the laws of Nevada
and having an address for notice and
delivery located at #29 - 3800 Pinnacle Way, Gallaghers Canyon,
Kelowna, British Columbia.
(the "Transferor");
OF THE SECOND PART
WHEREAS:
A. The Transferor
is the owner of
certain interests in
the Corsicana
Fields
Project, Barnet Shale
Formation, McKinney,
Blackburn, in Texas
(collectively,
the "Assets"), a
complete listing of
such Assets of the
Transferor being
set
forth in Schedule
"A" which is attached
to this Agreement and which forms a
material part hereof;
B. The
Transferee is desirous of acquiring the Assets of the
Transferor.
NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the mutual
covenants and provisos herein contained, THE PARTIES HERETO AGREE
AS FOLLOWS:
Article I
DEFINITIONS
1.1
Definitions
-----------
For all purposes of, this Agreement, except as otherwise expressly provided or
unless the context
otherwise requires,
the following
words and phrases
shall
have the following meanings:
(a) "Agreement"
means this Asset
Purchase Agreement as entered into
between the Transferor and the Transferee herein, together with
any
amendments and any Schedules;
<page>
2
(b) "Assets" has the
meaning ascribed to it in recital "A" hereinabove,
and which Assets are
particularly described
in Schedule "A" which
is attached hereto;
(c) "Confidential Information" has the meaning ascribed to it in
section
"9.1" hereinbelow;
(d) "Defaulting Party" and "Non-Defaulting Party" have the meanings
ascribed to them in section "12.1" hereinbelow;
(e) "Indemnified Party" has the meaning ascribed to it in section
"13.1"
hereinbelow;
(f) "Parties" or
"Party" means, respectively, the Transferor and/or the
Transferee hereto,
as the case may be, together with their
respective successors
and permitted assigns as the context so
requires.
Article 2
PURCHASE AND SALE OF ASSETS
2.1
Purchase and Sale
-----------------
The Transferee hereby
purchases and the
Transferor hereby
sells the Assets in
consideration of FOUR
HUNDRED THOUSAND
(400,000) US Dollars
to be paid by the
Transferee to the Transferor according to terms and conditions as
set out in the
promissory note attached hereto as a Schedule "B".
Article 3
ACCOUNTING AND INSPECTION
3.2
Accounting
----------
It is hereby also
acknowledged
and agreed by the Parties hereto that the
Transferee, or its
subsidiary
as the case may be, will maintain, at its
principal place of business, separate accounts, and records
thereto, of business
and activities
conducted pursuant to
this Agreement and that such accounts and
records are to be in
sufficient detail.
In this regard the
Transferee
shall
retain the accounts,
and records in relation thereto, for at least one year
after the date upon which they were made and presented to the Transferor. The
Transferee shall
furnish such reasonable evidence as the Transferor deems
necessary to verify the accounting and will permit the Transferor's respective
representatives to make copies of or extracts from such accounts
and records.
3.3
Inspection
----------
The Transferor
shall have, on at
least five business
days' notice,
unimpeded
right and authority to enter on the premises of the Transferee, its
representatives, its
agents, its counsel or
any other party having
control or
possession of records
or premises
of the Transferee or in relation to its
production or sales or distribution of the Products, for the
purpose of all such
investigations as the
Transferor
may require to assure
themselves
as to the
compliance by the
Transferee with
appropriate
accounting
provisions of this
Agreement. In this
regard the Transferee covenants to allow and assist the
Transferor, and the Transferor's duly authorized representatives,
access to all
the aforesaid premises
and locations and access to all such personnel and other
persons as the
Transferor
may require, and the Transferee shall make such
premises, records and
persons available
within five business days of notice by
the Transferor. In the event that any aforesaid party refuses or
delays or omits
to give the Transferor
entry and access to premises or records, the Transferee
warrants to give the Transferor all reasonable assistance to effect
such end.
<page>
3
Article 4
REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE TRANSFEROR
4.1
Representations, Warranties and Covenants by the Transferor
-----------------------------------------------------------
In order to induce the Transferee to enter into and consummate
this Agreement,
the Transferor represents to and warrants to the Transferee that,
to the best of
the informed knowledge, information and belief of the
Transferor:
(a)
the Transferor
is duly incorporated under the laws of its
jurisdiction of
incorporation
and is validly
existing and in
good standing with respect to all statutory filings required by
the applicable corporate laws;
(b)
the Transferor
is qualified to do business in those
jurisdictions where it
is necessary to fulfill its obligations
under this Agreement
and the Transferor has
the full power and
authority to enter
into this Agreement
and any agreement or
instrument referred to or contemplated by this Agreement;
(c)
the Transferor is the
registered and
beneficial
owner of its
interests in the Assets as set out in the Agreements referred
to
in Schedule
"A" and has the
requisite power, authority and
capacity to own and use the Assets and the Transferor owns the
right to develop and
maintain the Assets
subject the terms
of
the Agreements as referred to in Schedule "A";
(d)
no person,
firm
or corporation has any written or oral
agreement, option,
understanding or commitment, or any right or
privilege capable of
becoming an agreement,
for the purchase
from the Transferor
any of the Assets
except as set out in the
Agreements referred to in Schedule "A";
(e)
the Transferor has not experienced, nor is the Transferor aware
of, any occurrence or
event which has had, or might reasonably
be expected to have, a materially adverse affect on the Assets;
(f)
the Transferor
is not in breach of
any provision or
condition
of, nor has the Transferor done or omitted to do anything
that,
with or without
the giving of notice or lapse or both,
would
constitute a breach of any provision or condition of, or give
rise to any right to
terminate or cancel or accelerate the
maturity of any
payment under, any deed of trust, contract,
certificate, consent,
permit, license or other instrument to
which the Transferor
is a party,
by which the
Transferor
is
bound or from which
the Transferor derives benefit, or any
judgment, decree,
order, rule or regulation of any Court or
governmental authority
to which the
Transferor is subject,
or
any statute or regulation applicable to the Transferor, to an
extent that, in the aggregate, has a material adverse affect
on
the Transferor or the Assets;
(g)
the Transferor has not committed to sell, license, distribute,
option, or otherwise
dispose of or grant any interest in all or
any part of the Assets
or agree to do or perform any act or
enter into any transaction or negotiation which could
reasonably
be expected to
interfere with this.
Agreement or which would
render inaccurate
any of the
representations,
warranties
or
covenants set forth in this Agreement;
<page>
4
(h)
the execution and delivery of this Agreement and the agreements
contemplated hereby
have been duly
authorized by all necessary
action, corporate or otherwise, or will have been so authorized
at the relevant time;
(i)
this Agreement
constitutes a legal,valid and binding obligation
of the Transferor
enforceable against it in accordance with its
terms, except as enforcement may be limited by laws of general
application affecting the rights of creditors and the
discretionary authority of courts of law;
(j)
no proceedings are pending for,and the Transferor is unaware
of,
any basis for the institution of any proceedings leading to
its
respective dissolution
or winding up, or the
placing of it in
bankruptcy or subject to any other laws governing the affairs
of
insolvent companies;
(k)
the making
of this Agreement and the completion of the
transactions contemplated hereby and the performance of and
compliance with the
terms hereof does not and will not:
(i) conflict with or
result in a breach of or violate any of the
terms, conditions or provisions of the Transferor's
constating documents;
(ii) give to any party
the right of termination, cancellation or
acceleration in or with respect to any agreement,contract or
commitment to which the Transferor is a party;
(iii) give to any
government or
governmental
authority, or
any
municipality or any
subdivision
thereof,
including any
governmental
department,
commission, bureau,
board or
administration agency,any right of termination, cancellation
or suspension of, or constitute a breach of or result in a
default under, any
permit, license, control or authority
issued to the
Transferor which is necessary or desirable in
connection with the conduct and operations of its respective
Business and the ownership or leasing of its respective
Assets or other assets; or
(l)
the Transferor
will employ good
faith, due diligence, and best
efforts to perform its obligations of this Agreement and will
enter into such additional or collateral agreements as may be
reasonably required by the Transferee to effect and complete
the
objects and intent of this Agreement.
4.2
Continuity of the Representations. Warranties and Covenants by
the
------------------------------------------------------------------
Transferor
----------
The representations,
warranties and
covenants by the
Transferor contained
in
this Article, or in
any certificates
or documents
delivered pursuant to the
provisions of this Agreement or in connection with the transactions
contemplated
hereby, will
be true at and as of the Effective Date. Subject to any
investigations or
inquiries made by the Transferee or by the Transferee's
professional advisors,
or the waiver of any
condition by the
Transferee, the
representations,
warranties and covenants of the Transferor contained in this
Article shall
continue in full force and effect for a period of twelve
(12)
months from the Effective Date; provided, however, that the
Transferor shall not
be responsible for the breach of any representation, warranty or
covenant of the
Transferor contained herein caused by any act or omission of the
Transferee. In
the event that any of the representations, warranties or covenants of the
Transferor are found
by a Court of competent jurisdiction to be incorrect and
such incorrectness
results in any loss or damage sustained, directly or
indirectly, by the
Transferee, then the
Transferor will pay the amount of such
loss or damage to the Transferee within 30 calendar days of
receiving notice of
judgment
therefor,
provided that
the damages will be limited to the
consideration paid upon closing.
<page>
5
Article 5
WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE TRANSFEREE
5.1
Warranties, Representations and Covenants by the Transferee
-----------------------------------------------------------
In order to induce the
Transferor to enter into and consummate this Agreement,
the Transferee hereby
warrants to and represents to the Transferor that, to the
best of the informed
knowledge, information and belief of the Transferee, after
having made due
inquiry:
(a) the
Transferee
is duly incorporated under the laws of its
jurisdiction of
incorporation and is
validly existing and in
good standing with respect to all statutory filings required
by the applicable corporate laws;
(b) the
execution and delivery of this Agreement and the
agreements contemplated hereby has been duly authorized by all
necessary corporate action on its part;
(c) there are
no consents,approvals or conditions precedent to the
performance of
this Agreement;
(d) this
Agreement constitutes a legal, valid and binding
obligation of
the Transferee enforceable against the
Transferee in accordance with its terms, except as enforcement
may be limited by laws of general application affecting the
rights of creditors;
(e) no
proceedings are
pending for, and the Transferee is unaware
of, any basis for the institution of any proceedings leading
to the dissolution
or winding up of the Transferee or the
placing of the
Transferee
in bankruptcy or subject to any
other laws governing the affairs of insolvent companies;
(f) the
Transferee is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which
it is subject or which apply to it;
(g) there
has been and
there will be prepared and filed on a
timely basis
all federal and state income tax returns,
elections and
designations,
and all other governmental
returns, notices and
reports of which the Transferee had, or
ought reasonably
to have had,
knowledge required to be or
reasonably
capable of
being filed with respect to the
operations of the Transferee, and no such returns, elections,
designations, notices
or reports contain or
will contain any
material misstatement
or omit any
material statement that
should have been
included, and each
such return,
election,
designation,
notice or report, including accompanying
schedules and
statements,
is and will be true,
correct and
complete in all material respects;
(h)
the making of
this Agreement and the completion of the
transactions
contemplated hereby
and the performance of
and
compliance with the
terms hereof does not and will not:
(i) conflict with or result in a breach of or violate any of
the terms, conditions or provisions of the constating
documents of the Transferee;
(ii) conflict with or
result in a breach of or violate any of
the terms, conditions
or provisions of any law, judgment,
order, injunction,
decree, regulation or ruling of
any
Court or governmental authority, domestic or foreign, to
which the Transferee
is subject, or constitute or result
in a default under any agreement,contract or commitment to
which the Transferee is a party;
<page>
6
(iii) give
to any party the right of termination,
cancellation or
acceleration in or
with respect
to any
agreement, contract or commitment to which the Transferee
is a party;
(iv) give to any government or governmental
authority,
or any municipality or any subdivision thereof, including
any governmental department, commission, bureau, board or
administration agency, any right of termination,
cancellation or suspension of,or constitute a breach of or
result in a default under, any permit, license, control or
authority issued to the Transferee which is necessary or
desirable in
connection
with the conduct and
operations
of its business and the ownership or leasing of its
business assets; or
(v) constitute a
default by the Transferee,or any event which,
with the giving of notice or lapse of time or both, might
constitute an event of default, under any agreement,
contract, indenture or other instrument relating to any
indebtedness of the Transferee which would give any party
to that agreement,contract, indenture or other instrument
the right to accelerate the maturity for the payment
of
any amount payable
under that agreement, contract,
indenture or other instrument;
(i) neither
this Agreement nor any
other document,
certificate
or statement furnished to the Transferor by or on behalf of
the Transferee
in connection with the transactions
contemplated hereby knowingly or negligently contains any
untrue or incomplete
statement of material fact or omits to
state a material fact
necessary
