SETTLEMENT, SHARE SALE &
RELEASE AGREEMENT
THIS AGREEMENT
MADE AS OF THE 22 ND DAY OF APRIL 2009;
SCOUT EXPLORATION
INC.
a corporation incorporated under the
laws of the State of Nevada USA,
having an office in the City of
Vancouver, Province of British Columbia
(“ Scout
”)
and
BRIAN MAHOOD
Businessman, residing in the City of
Calgary, Province of Alberta
(“ Mahood
”)
and
KERRISDALE RESOURCES
LTD.
a corporation incorporated under the
laws of Alberta,
having an office in the City of City
of Calgary, Province of Alberta
that is the wholly owned subsidiary
of Scout
(“ Corporation
”)
and
KERRISDALE CONSULTING
INC.
a corporation incorporated under the
laws of Alberta,
having an office in the City of City
of Calgary, Province of Alberta
that is owned, controlled and
managed by Mahood
(“ Kerrisdale
”)
WHEREAS:
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The Parties
hereto are parties to a Share Purchase Agreement dated effective
January 1, 2008, under which Scout as “Purchaser”
agreed with Mahood as “Vendor” to purchase all the
issued securities of the Corporation that were owned by Mahood
alone – 100 Class “A” Common Voting Shares
– the “ Shares ” for a purchase price of
Cdn $775,000.00 – the “ Purchase Price ”
– the “ Agreement ”. Scout paid
$425,000 of the Purchase Price to the closing of the
Agreement.
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The
Agreement provides that a portion of the Purchase Price be paid by
the Corporation for Scout as its parent corporation after the
closing of the Agreement, in an amount to be paid of
$350,000.00 under post-closing, interest bearing payment
provisions, the intent being that the Corporation would finance for
Scout, the balance of the purchase payable by Scout from the
Corporation’s cash flow from operations.
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The Parties
agreed to amend the Agreement under the “Share Purchase
Agreement – Amendment Agreement” entered into amongst
the Parties effective December 31, 2008, under which the Purchase
Price was increased by $10,000.00 to $785,000.00, and the
Corporation for Scout, paid Mahood $35,000.00 of the balance of the
Purchase Price, the balance remaining to be paid over time under
the Agreement then being reduced to $325,000.00, the portion of the
Purchase Price having been paid by Scout and the Corporation to
Mahood being $460,000.00 – such agreements shall be referred
to collectively as the “ Agreements
”.
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Pursuant to
the Agreements and as security to Mahood for the payment in full of
the balance of the Purchase Price, the Corporation issued to Mahood
a General Security Agreement over and in respect of its assets, for
the balance owing under the Purchase Price obligation of Scout to
Mahood, registered in Alberta under the Personal Property Security
Act as Registration 08061834982 on June 18, 2008 – the
“ GSA ”.
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The cash
flow from operations of the Corporation have not been sufficient to
fund the obligations of Scout and the Corporation as joint obligors
to Mahood under the Agreements for the payment of the balance of
the Purchase Price, to enable the Corporation to keep current on
its term payments under the Agreements and the GSA.
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Mahood has
agreed with Scout and the Corporation to forego his right to
collect the balance of the Purchase Price owing to him under the
Agreements on the condition that Scout sell him the Shares for
$1.00; and that all Parties involved in the Agreements release each
other.
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NOW
THEREFORE in
consideration of the Recitals to this Agreement which are included
herein by this reference, and the mutual covenants contained herein
the sufficiency of which consideration is acknowledged by the
Parties hereto, the Parties agree as follows:
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“
Closing Date ” means such date, time and place
as the Parties agree for the closing of the transactions comprising
this Settlement Agreement, namely on June 16, 2009.
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“
Effective Date ” means the date this Settlement
Agreement becomes effective; namely the same date set out at the
head of this Settlement Agreement – April 1, 2009 at 12:01
a.m. MST.
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“
Management Agreement ” means the agreement
entered into between Scout and Kerrisdale, dated as of January 1,
2008, under which Kerrisdale has been retained by Scout to provide
management services for the Corporation.
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“Rental Arrangement
” means the agreement entered
into between the Corporation and Kerrisdale and contained in the
Agreements, wherein Kerrisdale has agreed to provide the use of
space to the Corporation in premises that Kerrisdale leases in the
building with an address of 600, 600 – 6
th Avenue S.W. Calgary Alberta T2P 0S5.
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“
Settlement Agreement ” means this agreement and
in all agreements, instruments and documents relating hereto,
entered into and delivered on the Closing Date among the Parties,
and if applicable, thereafter.
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“
Three Parties ” means jointly and severally,
Scout, the Corporation and Mahood;
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“
Unpaid Purchase Price ” means that portion of
the Purchase Price payable by Scout and the Corporation to Mahood
under the Agreements and the GSA remaining for them to pay Mahood
to the Effective Date for the purchase of the Shares, plus all
interest that shall have accrued due for payment on such amount
from and after April 1, 2009 as provided in the Agreements, the
principal portion of which is $325,000.00.
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The expressions
defined in the Recitals hereto shall have those defined meanings
when used in this Settlement Agreement and in all agreements,
instruments and documents relating hereto.
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Except to the
extent an expression is defined anew in this Settlement Agreement,
all definitions contained in the Agreements and the GSA shall have
the same meanings when used in this Settlement Agreement and in all
agreements, instruments and documents relating hereto
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MERGER OF
AGREEMENTS, RIGHTS AND OBLIGATIONS OF THE PARTIES
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The
Parties’ entering into of this Settlement Agreement shall
witness the Parties’ agreement to merge all their rights and
obligations contained in and relating to the Agreements, the GSA,
the Management Agreement and the Rental Arrangement, and all
agreements, instruments and documents relating thereto and the
release of the Parties from any and against and in respect of all
terms and conditions of those instruments.
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SETTLEMENT
& DISCHARGE OF RIGHTS & OBLIGATIONS
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Upon the
closing to all Parties’ satisfaction of the terms and
conditions of this Settlement Agreement upon the Closing Date, and
effective as of the Effective Date:
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The Three
Parties agree that the Agreements, the GSA, the Management
Agreement and are terminated;
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Kerrisdale and
Scout agree that the Rental Arrangement is terminated;
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The Three
Parties agree that any and all obligations that accrued amongst or
between the Three Parties to the Effective Date under the
Agreements, the GSA and the Management Agreement and that remain to
be discharged in whole or in part as of the Closing Date, are
hereby fully and absolutely discharged and settled in
full;
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Kerrisdale and
Scout agree that any and all obligations that accrued between them
to the Effective Date under the Rental Arrangement and that remain
to be discharged in whole or in part as of the Closing Date, are
hereby fully and absolutely discharged and settled in
full;
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The Three
Parties agree that any and all rights that each of the Three
Parties held amongst or between the Three Parties to the Effective
Date under the Agreements, the GSA, and the Management Agreement
and that remain to each such Party’s account as of the
Closing Date, are hereby fully and absolutely released and are of
no further validity or enforceability;
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Kerrisdale and
Scout agree that any and all rights that each of them held between
themselves to the Effective Date under the Rental Arrangement and
that remain to each such Party’s account as of the Closing
Date, are hereby fully and absolutely released and are of no
further validity or enforceability;
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Mahood fully
and absolutely releases Scout and the Corporation jointly and
severally , their
officers, directors, employees, agents, professional advisors,
contractors, associated and affiliated corporations, their
successors and assignees, from any and all claims, liabilities or
obligations in relation to all prior association and conduct
between them whatsoever and however arising and for all work,
services and products rendered or delivered by and between them
under the Agreements and the GSA, including any and all claims in
contract, in equity and in quantum meruit ;
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(h)
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Scout and
the Corporation jointly and severally fully and absolutely release
Mahood , his employees,
agents, professional advisors, contractors, associated and
affiliated corporations, their successors and assignees, from any
and all claims, liabilities or obligations in relation to all prior
association and conduct between them whatsoever and however arising
and for all work, services and products rendered or delivered by
and between them under the Agreements and the GSA, including any
and all claims in contract, in equity and in quantum meruit
;
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Kerrisdale
fully and absolutely releases Scout and the Corporation jointly and
severally , their
officers, directors, employees, agents, professional advisors,
contractors, associated and affiliated corporations, their
successors and assignees, from any and all claims, liabilities or
obligations in relation to all prior association and conduct
between them whatsoever and however arising in any and all ways
between them under the Rental Arrangement, including any and all
claims in contract, in equity and in quantum meruit
;
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Scout and
the Corporation jointly and severally fully and absolutely release
Kerrisdale , its
officers, directors, employees, agents, professional advisors,
contractors, associa
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