Purchase and Sale Agreement CANDAK AREA, NORTH DAKOTA This Agreement made January 16, 2008
Exhibit
10.4
CANDAK
AREA, NORTH DAKOTA
This
Agreement made January 16, 2008
BETWEEN:
XXX
OIL (USA) INC.,
a
body
corporate, registered to carry on business in the State of Nevada
and
having an office in the town of Didsbury, Alberta
(hereinafter
called the “Transferor”)
-
and
-
JAYHAWK
ENERGY INC.,
a
body
corporate, registered to carry
on
business in the State of Colorado and having an office in the town of
Broomfield
(hereinafter
called the “Transferee”)
Whereas
Transferor wishes to sell and the Transferee wishes to purchase the Assets,
the
Parties agree as follows:
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1.
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Definitions
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Each
capitalized term used in this Head Agreement will have the meaning
given
to it in the 2000 CAPL Property Transfer Procedure (hereinafter referred
to as the “Property Transfer Procedure”). In
addition:
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(a)
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“Closing
Date” means 3:00 p.m. on January 25th, 2008, or such other time and date
as may be agreed upon in writing by the
Parties.
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(b)
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“Effective
Date” means January 1, 2008.
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2.
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Schedules
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The
following Schedules are attached hereto and made part of this
Agreement:
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(a)
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Schedule
“A”, which is the Land Schedule, and
identifies:
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(i)
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the
Lands;
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(ii)
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the
Leases;
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1
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(iii)
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any other agreements, documents or data that are to be excluded from
the
Miscellaneous Interests under that
definition;
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(iv)
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any
encumbrances;
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(v)
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any
Rights of First Refusal;
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(vi)
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production
sale agreements;
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(vii)
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other
agreements, penalties or restrictions by contract on the use of the
Assets
required to be included in the Land Schedule under the definition
of
Permitted Encumbrances or the definition of Title and Operating
Documents;
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(viii)
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any
Facilities required to be included in the Land Schedule under the
definition of Facilities, any other Tangibles described in Paragraph
(c)
of the definition of Tangibles and any assets otherwise falling within
the
definition of Tangibles that are specifically excluded therefrom;
and
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(ix)
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the
Xxxxx;
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(x)
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any
lawsuits and claims;
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(xi)
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any
default notices;
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(xii)
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any
outstanding AFE’s;
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(xiii)
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any knowledge of environmental matters under Clause 6.02(k) of the
Property Transfer Procedure;
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(xiv)
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any areas of mutual interest; and
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(xv)
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any commitments to deliver under Clause 6.02(t) of the Property Transfer
Procedure.
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(b)
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Schedule
“B”, which is the Property Transfer Procedure, including the Exhibit
thereto that is the form of the General Conveyance. For
clarity, this Schedule “B” to the Agreement includes a summary sheet that
indicates the elections and rates in the Property Transfer Procedure
that
have been agreed to by the Parties. A blank copy of the
Property Transfer Procedure, including the Exhibit thereto that is
the
form of the General Conveyance, is attached to such summary sheet
of the
elections and rates for the Property Transfer Procedure. The
Parties shall deem that such summary sheet of the elections and rates
of
the Property Transfer Procedure shall operate as having the same
effect as
if such elections and rates were physically typed into the copy of
the
Property Transfer Procedure included in Schedule
“B”.
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2
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3.
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Purchase
and Sale
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(a)
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The
Transferor agrees to dispose of the Assets to the Transferee and
the
Transferee agrees to purchase the Assets from the Transferor on the
terms
and conditions set forth in this
Agreement.
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(b)
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Subject
to the modifications that may be made under the Property Transfer
Procedure, the consideration payable by the Transferee to the Transferor
for the Assets is $ 3,500,000.00, plus any interest that accrues
under
Clause 2.04 of the Property Transfer Procedure. The Purchase
Price shall be allocated among the Assets as
follows:
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(i)
To Petroleum and Natural Gas Rights
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$
2,799,990.00
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(ii) (ii) To
Tangibles
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$
700,000.00
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(iii) (iii)
To Miscellaneous Interests
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$
10.00
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Total
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$3,500,000.00
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The GST
payable on the Tangibles and Miscellaneous Interests
totals
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$
NOT APPLICABLE
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**(Note
that Parties will have to examine the GST issue where any fee simple/freehold
interests or other real
property
interests are to be purchased by Transferee prior to finalizing this Clause
and
Clause 2.03 A of the
Property
Transfer Procedure).
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(c)
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The
Transferee will pay the Purchase Price to the Transferor
as
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follows:
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(i)
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the
delivery of ten percent (10%) of the Purchase Price, representing
a
Deposit towards the Purchase Price, payable on or before January
18, 2008;
and
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(ii)
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at
Closing, the delivery of the remainder of the Purchase Price (ie.
the
Purchase Price less the Deposit made under Clause 3(c)(i) hereof),
any
interest that accrues under Clause 2.04 of the Property Transfer
Procedure.
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4.
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Additional
Conditions
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(a)
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The
following additional condition precedent is included for the benefit
of
the
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Transferee
under Clause 10.02(d) of the Property Transfer Procedure:
(i)
Environmental Review: The Transferee will have completed
a review of
the
environmental condition of the Assets prior to January 15, 2008,
through
which
the Transferee is satisfied, acting reasonably, with the
environmental
condition
of the Assets.
3
In
witness whereof the Parties have duly executed this Agreement.
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XXX
OIL (USA) INC.
Per:____________________
Per:____________________
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JAYHAWK
ENERGY INC.
Per:____________________
Per:____________________
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This
is
the execution page of that certain Purchase and Sale Agreement dated January
16,
2008 between XXX OIL (USA) INC., as Transferor, and JAYHAWK ENERGY INC., as
Transferee.
4
This
is SCHEDULE "A" to a Purchase and Sale Agreement dated
January
16, 2008
between
XXX OIL (USA) INC. and JAYHAWK ENERGY INC.
(1)
162
pages constitute the Land Schedule for the Agreement.
(2) see
item (1)
(3) see
item (1)
(4) see
item (1)
(5) no
Rights of First Refusal
(6) See
attachment dated August 25, 2006 between SemCrude and Xxx Oil
USA Contract Number SC060032.
(7)
C
01245 Lease Acquisition and Exploration Agreement with attached AAPL
Form 610 – 1989 Operating Agreement
(8)
See
attachment labeled Surface Lease Equipment
(9)
Xxxxxxx 4-25H-T164N R97W5PM
Xxxxxxxx
1-27H T164N R97W5PM
Xxxxxxxxx 1-33H
T164N R97W5PM
Xxxxxx
0-00X X000X X00X0XX
Xxxxxxx
5-26H T164N R97W5PM
(10)
$3.6
million against Xxx Oil Inc. by Portside Growth and Opportunity Fund, breach
of
10% convertible note
(contact
Xxxxxx Xxxxxxxx V.P. legal and Corporate affairs, at
0-000 000-0000)
(11)
No
Default Notices
(12)
No
Outstanding A.F.E.’s
(13)No
knowledge of any environmental concerns
(14)
Yes,
AMI contained in Contract 01245
(15)
None
5
This
is Schedule “B” to a Purchase and Sale Agreement dated
January
16, 2008
between
XXX OIL (USA) INC. and JAYHAWK ENERGY INC.
SUMMARY
SHEET OF ELECTIONS AND RATES FOR THE
PROPERTY
TRANSFER PROCEDURE
1. GST
(Subclause 2.03A): (i) GST
Election: Alternate __NA (USA
Properties)_
(ii) GST Business #: NA
2. Interest
Accrual (Clause 2.04): Alternate 1
.
3. Place
of Closing (Clause 3.01): Office of: Western Divestments,
2020, 000- 0xx
Xxxxxx
X.X Xxxxxxx, XX X0X 0X0
4. Access
to Transferee’s Files (Subclause 3.04B): 60
months
5. Distribution
of Specific Conveyances (Clause 3.05): Alternate
__2___
6. Final
Statement of Adjustments (Paragraph
4.02A(b)) _180_day period
7. Treatment
of Income During Interim Period (Clause 4.03): Alternate
1
Income
Tax Adjustment if Alternate 1 applies: ___% NOT
APPLICABLE
Exception
to 4.03A if Alt. 1 applies (Subclause
4.03B): will__X_/ will
not_____
apply
NOT APPLICABLE
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8.
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Transferor’s
Representations and Warranties (Clause 6.02). Those
representations and warranties in that Clause that apply are indicated
by
a Y below.
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__ (a)
Residency for Tax Purposes
_Y_
(b) Lawsuits and Claims
_Y_
(c) No Default Notices
_Y_
(d) Compliance with Leases
_Y_
(e) Payment of Royalties
_Y_
(f) Encumbrances
_Y_
(g) No Reduction
_Y_
(h) Sale Agreements
_Y_
(i) Provision of Documents
_Y_
(j) Authorized Expenditures
_Y_
(k) Environmental Matters
_Y_
(l) Condition of Xxxxx
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_Y_
(m) Abandonment of Xxxxx
_Y_
(n) Condition of Tangibles
_Y_
(o) Well/Tangibles Lic. Transfers
_ _
(p) Reg. Production Penalties
__ (q)
Reg. Production Allowables
_Y_
(r) Area of Mutual Interest
___
(s) No Offset Obligations
_Y__
(t) Commitment to Deliver
___
(u) ARTC
_Y_
(v) Quiet Enjoyment
___
(w) Additional Representations
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9.
Survival of Representations and Warranties (Clause
6.04) __12___ months.
10. Option
to Terminate Re ROFR Exercises (Subclause 7.01D): will___/ will
not__X__apply
11.
Delivery of Title Defects Notice (Subclause
8.02A): _5_ Business Days.
12.
Title Defects Mechanism (Subclause
8.02B): Alternate:__1__
If
Alternate
2 applies (i) $ Value threshold (Sublclause
8.02B):
ten percent (10%) of the Purchase Price
6
(ii) Transferor’s
termination threshold (Paragraph 8.02B(c))):
Not Applicable
(iii) Transferee’s termination threshold (Paragraph 8.02B(d)):
Not Applicable
13. Responsibility
of Transferor (Clause 13.01):
(i)
Subclause 13.01A: Alternate __2__
(ii) Subclause
13.01B: _12_ months
14.
Limit of Transferor’s Responsibility (Subclause
13.03A): will _X_ / will not__apply.
15. Minimum
Claim Threshold (Subclause 13.03B): will ___ / will
not__X__
apply.
$
Threshold if Subclause B applies: $____________.
16. Address
for Service (Clause 15.02):
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XXX
OIL (USA) INC.
Box
0000
0000-00xx
Xxxxxx
Xxxxxxxx,
Xxxxxxx
X0X
0X0
Attention: Land
Department
Fax
No. (000) 000-0000
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Jayhawk
Energy Inc.
000
Xxxxxxxxxxx Xxxx Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attention: Land
Department
Fax
No. (000) 000-0000
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7
SURFACE
LEASE EQUIPMENT
Burner
1-34
1 HG
000-000-000 Pumping
unit 2005
1 32
HP C-106 Gas Engine
1 12’X12’
Engine
House 2005
1 50#
WP 6’x32’ Vertical
Treater 2005
1 10’x12’
Treater
House 2005
1 Solar
Ignitor at pit
1 400
BBL Fibreglass Water
Tank 2005
2 400
BBL welded cone bottom oil
tanks 2005
1 Monel
35601 recycle pump w/5.5 hp Honda
1 Superior
Beam chemical pump
Xxxxxxxxx 1-33
1 HG
000-000-000 Pumping
Unit 2005
1 Ajax
Gas Engine
1 12’X12’
Engine
House 2005
1 75#WP
6’x20’ Vertical
Treater 2005
1 12’x12’
Treater
House 2005
1 Solar
Ignitor at pit
1 400
BBL Fibreglass Water
Tank 2005
2 400
BBL steel welded Oil
Tanks 2005
1 Monel
35601 recycle pump w/5.5 hp Honda
Xxxxxxx 4-24
1 HG
000-000-000 Pumping
Unit 2005
1 32HP
C-106 Gas Engine
1 12’X12’
Engine
House 2005
1 75#WP
6’x20’ Vertical
Treater 2005
1 12’x12’
Treater
House
2005
1 Solar
Ignitor at pit
1 400
BBL Fibreglass Water
Tank 2005
2 400
BBL steel welded Oil
Tanks 2005
1 Monel
35601 recycle pump w/5.5 hp Honda
8
Xxxxxx
5-26H
1 HG
000-000-000 Pumping
Unit 2005
Ser#
QB050808.16109
1 32HP
C-106 Gas Engine
Ser#
302981
1 12’X12’
Engine
House 2005
1 75#WP
6’x20’ Vertical Treater
coated 2005
1 12’x12’
Treater
House
2005
1 Solar
Ignitor at pit
1 400
BBL Fibreglass Water Tank
Ser#1178
2005
2 400
BBL steel welded Oil
Tanks 2005
Ser#
7273,7262, 7263
1 Monel
35601 recycle pump w/5.5 hp Honda
Ser#
ZM1541605
1 Superior
Beam chemical pump
Xxxxxxxx
1-27
1 HG
000-000-000 Pumping
Unit 2005
1 Ajax
Gas Engine
1 12’X12’
Engine
House 2005
1 75#WP
6’x20’ Vertical
Treater 2005
1 12’x15’
Treater
House
2005
1 Solar
Ignitor at pit
1 400
BBL Fibreglass Water
Tank 2005
3 400
BBL welded cone bottom oil
tanks 2005
1 Monel
35601 recycle pump w/5.5 hp Honda
1 Superior
Beam chemical pump
GENERAL
AREA EQUIPMENT
H2S
personal monitoring device
2
Portable Xxxxx Air Packs
Trailer
Mounted Portable Gas Meter
Centrifuge
Fax/Copier
Office
Trailer and Lot located at Xxxxxx City – Xxxxxx Acres Xxx 0X Xxxxx
0
0
Xxx
Xxxxx
Any
remaining material is property of Jayhawk
1
Fluid
Level Gun (Xxx invoice # 13331 for $9,000.00)
