SETTLEMENT, SHARE SALE & RELEASE AGREEMENT
Exhibit
10.1
SETTLEMENT,
SHARE SALE & RELEASE AGREEMENT
THIS
AGREEMENT MADE AS OF THE 22ND DAY OF
APRIL 2009;
BETWEEN:
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
XXXXX
XXXXXX
Businessman,
residing in the City of Calgary, Province of Alberta
(“Xxxxxx”)
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 Xxxxxx
(“Kerrisdale”)
WHEREAS:
A.
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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 Xxxxxx as
“Vendor” to purchase all the issued securities of the Corporation that
were owned by Xxxxxx 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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B.
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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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C.
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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 Xxxxxx $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 Xxxxxx
being $460,000.00 – such agreements shall be referred to collectively as
the “Agreements”.
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D.
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Pursuant
to the Agreements and as security to Xxxxxx for the payment in full of the
balance of the Purchase Price, the Corporation issued to Xxxxxx a General
Security Agreement over and in respect of its assets, for the balance
owing under the Purchase Price obligation of Scout to Xxxxxx, registered
in Alberta under the Personal Property Security Act as Registration
08061834982 on June 18, 2008 – the “GSA”.
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E.
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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
Xxxxxx 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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X.
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Xxxxxx
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:
DEFINITIONS
1.
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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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2.
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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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3.
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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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4.
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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 000,
000 – 0xx
Xxxxxx X.X. Xxxxxxx Xxxxxxx X0X
0X0.
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5.
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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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6.
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“Three
Parties” means jointly and severally, Scout, the Corporation and
Xxxxxx;
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7.
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“Unpaid
Purchase Price” means that portion of the Purchase Price payable by
Scout and the Corporation to Xxxxxx under the Agreements and the GSA
remaining for them to pay Xxxxxx 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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8.
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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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9.
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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
10.
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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
11.
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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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(a)
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The
Three Parties agree that the Agreements, the GSA, the Management Agreement
and are terminated;
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(b)
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Kerrisdale
and Scout agree that the Rental Arrangement is
terminated;
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(c)
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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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(d)
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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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(e)
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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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(f)
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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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(g)
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Xxxxxx 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) | Scout and the Corporation jointly and severally fully and absolutely release Xxxxxx, 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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(i)
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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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(j)
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Scout and the Corporation
jointly and severally fully and absolutely release Kerrisdale, its
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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(k)
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The Corporation fully and
absolutely releases Scout, its 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, including any and all claims in contract, in equity and in
quantum
meruit;
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(l)
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Scout fully and absolutely
releases the Corporation, its 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, including any and all claims in contract, in equity and in
quantum
meruit;
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(m)
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Notwithstanding
particular covenants, representations, warranties, terms and conditions of
this Settlement Agreement, each of the Parties effecting a release to one
or more other Parties hereto as provided above, hereby agrees to indemnify
and hold harmless each Party so released, from and against any and all
claims, damages, suits, proceedings, causes of action, and all other third
party liability that has arisen, now exists or that might arise by,
through and under the conduct, acts and omissions of such releasing Party
in its having held the status of such Party in the affairs and agreements
between and amongst the Parties that are the subject of those releases,
which indemnification shall include all legal fees (on a solicitor and own
client basis) related costs and expenses that an indemnified Party might
sustain or pay in regard to its defence of any such matter for which such
an indemnity is now granted, including any and all proceedings that
indemnified Party might be required to maintain against the indemnifying
Party to cause that indemnifying party to perform and discharge its
obligations of indemnity hereunder.
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TERMS
AND CONDITIONS FOR SETTLEMENT
12.
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At
the closing on the Closing Date and as of the Effective
Date:
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(a)
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Scout’s Performance
Obligations
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(i)
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Scout
shall sign and deliver to Xxxxxx a Transfer of the Shares for
consideration payable by Xxxxxx to Scout of
$1.00;
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(ii)
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Scout
shall cause to be signed and delivered to Xxxxxx a Resignation of Mr.
Xxxxx Xxxxx, as both a Director and as the President and
Secretary-Treasurer of the Corporation; and if since the entering into of
the Agreements, Scout has caused any other directors to be elected for the
Corporation or any other officers to be appointed by the Board of
Directors of the Corporation, Scout shall also cause to be delivered
resignations from such person or
persons;
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(iii)
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Scout
shall cause the Board of Directors of the Corporation to sign Consent
Resolutions to conduct the following business for the
Corporation;
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(A)
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To
approve the transfer of the Shares from Scout to Xxxxxx and to issue a
replacement Share certificate therefor in the name of
Xxxxxx;
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(B) | To approve the change of counsel, auditors, accountants and registered and records office of the Corporation to: |
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(1)
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Counsel
– Xxxxx X. Winter Professional Corporation, 000, 000 – 0xx
Xxxxxx X.X. Xxxxxxx Xxxxxxx X0X
0X0;
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(2)
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Accountants
– Xxx Xxxxxxxx C.A.
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(3)
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Registered
& Records Office – c/o Xxxxx X. Winter Professional Corporation, 000,
000 – 0xx
Xxxxxx X.X. Xxxxxxx Xxxxxxx X0X
0X0;
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(iv)
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Scout
shall cause the Board of Directors of the Corporation to sign and deliver
a replacement certificate for the certificate for the Shares, issued in
the name of Xxxxxx on the Effective Date for 100 Class “A” Common Shares
of the Corporation;
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(v)
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Scout
shall cause counsel of its choice for Scout, to issue an opinion letter to
Xxxxxx, for the specific and limited purposes of this Agreement, that to
the Closing Date Scout has not in any way at law or in equity, alienated
or burdened any or all its rights in and to the Shares, including by way
of hypothecation, pledge, the granting of legal or equitable rights of
charge or security therein, conditional sale, assignment and transfer to
and including the Closing Date;
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(vi)
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Scout
shall cause all counsel for both Scout and the Corporation, including
Hemsworth Xxxxxxx
Barristers &
Solicitors of Vancouver, B.C., and Hustwick Xxxxxxx &
Xxxxx Barristers
& Solicitors of Edmonton Alberta, to issue releases to the
Corporation as to any and all outstanding obligations for the payment of
fees, disbursements, other charges and GST to such firms accruing to the
Closing Date;
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(vii) | Scout shall cause all accountants and auditors for both Scout and the Corporation, including MacKay LLP, Chartered Accountants of Vancouver, B.C., to issue releases to the Corporation as to any and all outstanding obligations for the payment of fees, disbursements, other charges and GST to such firms accruing to the Closing Date; | |
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(viii)
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Board
of Directors of the Corporation to sign and deliver a replacement
certificate for the certificate for the Shares, issued in the name of
Xxxxxx on the Effective Date for 100 Class “A” Common Shares of the
Corporation;
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(ix)
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From
and after April 22, 2009, to and including the Closing Date, Scout shall
not permit any signing officer of the Corporation on its bank account(s)
to sign any cheques, authorize any draws or use to any purpose the money
in the bank account(s) of the Corporation on that date and the money that
might be deposited into such bank account(s) from and after that date,
Xxxxxx to retain the right to sign and deliver any and all payments he
believes in good faith and in the best interests of the Corporation to be
paid to and including the Closing Date (but which payments if made, shall
not be made to Xxxxxx, any person related or associated with Xxxxxx or to
any legal entity in which Xxxxxx holds any legal or beneficial rights,
unless and until Xxxxxx obtains the written consent of a representative of
Scout so to do) and Xxxxxx shall deliver to Scout at the closing a full
list of such cheques and all draws or other withdrawals of money from the
bank account(s) to the Closing
Date;
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(x)
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No
later than 48 hours before the agreed time for the closing on the Closing
Date, Scout shall deliver to counsel for Xxxxxx a copy of Scout’s proposed
Press Release and Xxxxxx shall have an opportunity to comment on the
content of that Release;
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(xi)
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Scout
shall cause to be delivered to Xxxxxx the Closing Book and Seal for the
Corporation.
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13.
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At
the closing on the Closing Date and as of the Effective
Date:
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(a)
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Xxxxxx’x Performance
Obligations
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(i)
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Xxxxxx
shall deliver to counsel for Scout a Discharge of Security Interest from
Xxxxxx to the Corporation under the GSA; and immediately following the
closing, Xxxxxx shall cause to be filed a Discharge of Financing Statement
in the Personal Property Registry for the Province of Alberta under the
Personal Property
Security Act RSA in respect of the registration made by Xxxxxx as
Secured Party against the Corporation as Debtor 08061834982 that Xxxxxx
caused to be registered on June 18, 2008; and shall then cause to be
delivered to Scout or its counsel as Scout shall choose at or before the
closing hereof, a copy of the confirmation of registration of that
Discharge
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(ii)
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Xxxxxx
shall accept delivery of Scout’s and where applicable, the Corporation’s,
obligations for delivery at the
closing.
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14.
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There
shall not be any adjustments made or to be made amongst the Parties at the
closing in respect of liabilities of the Corporation arising both before
and after the Effective Date; however, the Corporation shall
not be liable for any unpaid invoices of or for work in progress not to
that date invoiced, of accountants, auditors and lawyers that have acted
or that may act for either or both Scout and the
Corporation. Accordingly, Xxxxxx shall accept the transfer of
the Shares in the Corporation and cause the Corporation to pay all other
liabilities of the Corporation to the Closing Date, and all cash in the
bank account(s) of the Corporation and all receivables of the Corporation
as at the Closing Date shall remain the property of the Corporation as
acquired by Xxxxxx on the Closing
Date.
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15.
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Xxxxxx,
as new owner of the Corporation on the Closing Date, shall assume the
responsibility for and shall cause to be prepared the stub-year financial
statements of the Corporation to the Closing Date and the Income Tax Act RSC
return for that fiscal period; for which from the date of signing hereof,
Scout and its representatives shall co-operate fully with Xxxxxx, his
agents and contractors and the agents and contractors of the Corporation
in respect of the Corporation’s securing for its own record and use the
financial records of the Corporation and whatever assistance Xxxxxx and
the Corporation may require for the completion of such financial
statements and the preparation and filing of that
return.
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TERMS
AND CONDITIONS FOR THE TRANSFER OF THE SHARES
16.
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At
the closing on the Closing Date and as of the Effective
Date:
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(a)
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Scout’s Representations,
Warranties & Covenants
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(i)
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Scout
by this instrument represents and warrants to Xxxxxx the same
representations and warranties Xxxxxx, as “Vendor” in the Agreement, made
to Scout as “Purchaser” in the Agreement, as set out in Clause 4.1
thereof, which representations and warranties are included in this
Settlement Agreement by this reference, subject to these
provisos:
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(A)
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All
references to “the Company” shall be to the
Corporation;
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(B)
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Clause
4.1(cc) shall be deleted;
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(C)
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Clause
4.1(dd) shall have inserted for “Xxxxx Xxxxxx – President,
Secretary and Director” – “Xxxxx Xxxxx – President,
Secretary Treasurer and
Director”;
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(ii)
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Scout
by this instrument makes the covenants to Xxxxxx that Xxxxxx, as “Vendor”
in the Agreement, made to Scout as “Purchaser” in the Agreement, as set
out in Clause 4.2 to 4.8 thereof, which covenants are included in this
Settlement Agreement by this reference, subject to these
provisos:
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(A)
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All
references to “the Company” shall be to the
Corporation;
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(B)
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In
Clause 4.2(b) vi) “thirty (30) days” shall
be replaced with “fifteen (15)
days”;
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(C)
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In
Clause 4.6 “$700,000.00” shall be
replaced with “$50,000.00”;
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(b)
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Xxxxxx’x Representations,
Warranties &
Covenants
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(i)
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Xxxxxx
by this instrument represents and warrants to, and makes covenants to
Scout and agrees to be bound by the same representations, warranties an
covenants that Scout, as “Purchaser” in the Agreement, made to Xxxxxx as
“Vendor” in the Agreement, as set out in Clause 5.1 to 5.3 (numbered in
error in the Agreement as a second Clause 5.2) thereof, which
representations, warranties and covenants are included in this Settlement
Agreement by this reference, subject to these
provisos:
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(A)
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All
references to “the Company” shall be to the
Corporation;
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(B)
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Clause
5.1(a) shall be deleted;
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(C)
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Wherever
references in the applicable Clauses are made to the Purchaser as a
corporate entity, such references shall be ignored; to which purpose
Clause 5.1(c)(i) shall be deleted.
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(c)
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Scout & Xxxxxx Conditions
Precedent and Closing
Arrangements
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(i)
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Xxxxxx
and Scout by this instrument agree to be bound by the same terms and
conditions of Clauses 6.1 to 6.5, Clauses 7.1 to 7.3 and Clauses 8.1 to
8.7 of the Agreement that Scout, as “Purchaser” in the Agreement, agreed
with Xxxxxx as “Vendor” in the Agreement, with such terms and conditions
to apply to Scout and Xxxxxx as current Share vendor to Share purchaser
respectively, which terms and conditions are included in this Settlement
Agreement by this reference, subject to these
provisos:
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(A)
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All
references to “the Company” shall be to the
Corporation;
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(B)
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In
Clause 7.1, The time for closing on the Closing Date shall be as agreed in
this Settlement Agreement;
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(C)
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Clause
7.2(e) shall be deleted;
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(D)
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Clauses
7.3(a) to 7.3(e) shall be deleted
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17.
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If
the closing of this Agreement does not occur on or prior to the Closing
Date, no Party to this Settlement Agreement shall have any further
obligations hereunder, and this Settlement Agreement shall be of no
further force or effect.
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CONFIDENTIALITY
18.
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The
Parties shall keep confidential the entering into of this Settlement
Agreement and its terms and conditions except for disclosure as required
by law and by operation and management of either Party’s
affairs.
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GENERAL
PROVISIONS
19.
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This
Settlement Agreement shall be binding upon the Parties hereto and their
successors and assignees where
applicable.
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20.
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In
the event that any provision in this Settlement Agreement shall be deemed
void or invalid by a court of competent jurisdiction, the remaining
provisions shall be and remain in full force and
effect.
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21. | The waiver by any Party or breach or violation of any provision of this Settlement Agreement shall not operate or be construed, as a waiver of any similar subsequent breach or violation of it. |
22.
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Any
modification to this Settlement Agreement must be in writing and signed by
all the Parties or it shall have no effect and shall be
void.
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23.
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This
Settlement Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta, as they were on the date of execution
of this Agreement.
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24.
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The
Parties shall sign and deliver amongst themselves such additional and
further agreements, instruments and documents as their counsel may
consider necessary or advisable to effect and discharge the purposes and
intent of this Settlement
Agreement.
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25.
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The
headings utilized in this Settlement Agreement are for convenience only
and are not to be covenants and agreements contained in this Settlement
Agreement.
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26.
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This Settlement Agreement
supersedes all prior written and oral agreements and arrangements among
the Parties in any way relating to all or any portion of the obligations
referred to and settled under this Settlement
Agreement.
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IN WITNESS WHEREOF the parties
have executed this Settlement Agreement as of the day and year first above
written.
SCOUT
EXPLORATION INC.
Per:
____________________
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KERRISDALE
RESOURCES LTD.
Per:
____________________
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Duly Authorized Officer | Duly Authorized Officer |
KERRISDALE
CONSULTING INC.
Per:
____________________
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Xxxxx Xxxxxx, President | |
________________________________ | ________________________________ |
Witness
to the signature of Xxxxx Xxxxxx
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Xxxxx
Xxxxxx
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