Texas South Energy, Inc. 8-K [txso-8k_010417.htm]

 

Exhibit 10.1

ASSET PURCHASE AGREEMENT

by and among

TEXAS SOUTH ENERGY, INC.,

SYDSON RESOURCES, L.P.,

and

SYDSON ENERGY, INC.

Dated as of January 4, 2017

 

 

 

TABLE OF CONTENTS

Page

  Recitals 1   Agreement 1 I. Purchase and Sale of Assets 1   1.1 Acquired
Assets 1   1.2 Assumed Liabilities 1   1.3 Excluded Liabilities2 2   1.4
Delivery of Files 3 II. Purchase Price 3   2.1 Purchase Price 3   2.2 The
Closing 3   2.3 Deliveries at the Closing 3 III. Representations and Warranties
of Seller 4   3.1 Organization and Capitalization 4   3.2 Authorization 4   3.3
No Adverse Consequences 5   3.4 Consents 5   3.5 Approval by Shareholders and
Partners 5   3.6 Title to and Condition of Acquired Assets 5   3.7 Reserved 5  
3.8 Reserved 5   3.9 Contracts and Commitments 5   3.10 Labor Matters 7   3.11
Litigation 7   3.12 Taxes 7   3.13 Solvency 7   3.14 Environmental Matters 7  
3.15 Compliance with Laws 8   3.16 No Bankruptcy, Etc. 8   3.17 Intellectual
Property 8   3.18 Fraudulent Transfer 9   3.19 Other Transactions 9   3.20
Disclosure of Material Facts 9   3.21 Acknowledgments by Sydson Resources and
Sydson Energy 9

i 

 

 

TABLE OF CONTENTS (cont’d)

Page

IV. Representations and Warranties of Buyer 12   4.1 Organization 12   4.2
Authorization 12   4.3 No Adverse Consequences 12   4.4 No Conflicts 12   4.5
Filings, Consents and Approvals 13   4.6 Issuance of the Securities 13   4.7 SEC
Reports, Financial Statements 13   4.8 Litigation 13   4.9 Absence of Certain
Changes 13   4.10 Compliance with Laws 14 V. Closing 14   5.1 Seller’s
Deliverables 14   5.2 Buyer’s Deliverables 15   5.3 Closing into Escrow 15 VI.
Additional Covenants 15   6.1 Taxes and Liabilities 15   6.2 Further Assurances
15   6.3 Transfer of Title 15   6.4 Obligations with Respect to Employment
Contracts and Consulting Agreements Assigned to Buyer 16   6.5 Financial
Statements 16   6.6 Licenses and Permits 16   6.7 Payment of Additional Buyer
Consideration 16   6.8 Qualification of Buyer as an Operator 16 VII.
Indemnification, Survival 16   7.1a Indemnification by Seller 16   7.1b
Indemnification by Buyer 16   7.2 Defense of Third Party Claims 17   7.3
Indemnification Procedure 17   7.4 Limits on Indemnification 17   7.5 Survival
18 VIII. Miscellaneous Provisions 18   8.1 Amendment 18   8.2 Waiver 18   8.3
Benefit 18   8.4 Costs and Expenses 18   8.5 Attorneys’ Fees 18

ii 

 

 

TABLE OF CONTENTS (cont’d)

Page

  8.6 Headings 18   8.7 Governing Law 18   8.8 Notices 19   8.9 Entire Agreement
19   8.10 Severability 19   8.11 Time of the Essence 19   8.12 Independent
Counsel 20   8.13 Counterparts 20   Index of Defined Terms 22      

Schedules

3.4 Required Consents 3.6 Liens 3.9 Commitments 3.17 Proprietary Assets

 

Exhibit A List of Assets and Obligations A-1 Exhibit B Assignments of Acquired
Assets B-1 Exhibit C Executed Required Consents C-1 Exhibit D Employment
Agreement (Michael Mayell) D-1

iii 

 

 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement, dated as of January 4, 2017 and effective January
1, 2017, is entered into by and among Texas South Energy, Inc., a Texas
corporation (“Buyer”), Sydson Resources, L.P., a Texas limited partnership
(“Sydson Resources”), and Sydson Energy, Inc., a Texas corporation (“Sydson
Energy” and collectively with Sydson Resources, the “Seller”).

RECITALS

A.       

Seller is in the oil and gas business primarily in the states of Texas and
Louisiana (the “Business”).

B.       

Seller desires to sell, transfer and assign to Buyer, and Buyer desires to
purchase from Seller, certain assets of Seller relating to Seller’s Business,
all on the terms and subject to the conditions set forth in this Agreement.

AGREEMENT

In consideration of the mutual promises and covenants contained herein, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:

ARTICLE I
PURCHASE AND SALE OF ASSETS

1.1.       

Acquired Assets. Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase and accept from Seller, the assets
set forth on Exhibit A (collectively, the “Acquired Assets”), subject to any
requirements of notice or consent by any third party thereto (“Required
Consents”). All Assignments have been executed to transfer the Acquired Assets
to Buyer, as attached in Exhibit B. No other assets are being acquired by Buyer.

1.2.       

Assumed Liabilities. The Seller shall not sell or assign to the Buyer, and the
Buyer shall not assume any liabilities or obligations of the Seller, except that
the Buyer will assume and be liable for, and will pay, perform and discharge as
and when due, all liabilities and obligations under the Assigned Assets that, by
their express terms, arise in connection with events or conditions that occur,
or are to be performed, at any time after the Closing Date; provided, however,
that the Buyer shall not assume any liabilities or obligations of the Seller
arising out of any breach of or default under any Assigned Asset that occurs
prior to the Closing Date or as a result of the Closing (collectively, the
“Assumed Liabilities”).

1 

 

 

1.3       

Excluded Liabilities. Notwithstanding any disclosures made to the Buyer or its
agents in the conduct of their due diligence investigations of the Seller or
anything herein to the contrary, the Buyer shall not assume any of the
liabilities or obligations of the Seller other than the Assumed Liabilities, and
the Buyer shall not be or become liable for any claims, demands, liabilities or
obligations of the Seller other than the Assumed Liabilities. Without limiting
the foregoing, the Buyer shall not assume or agree to perform, pay or discharge,
and the Seller shall remain unconditionally liable for and shall pay and satisfy
in due course, all obligations, liabilities and commitments, fixed or
contingent, known or unknown, accrued or unaccrued, direct or indirect, choate
or inchoate, perfected or unperfected, liquidated or unliquidated, of the Seller
other than the Assumed Liabilities (the “Excluded Liabilities”), including but
not limited to the following:

(a)       

any Liabilities of Seller arising or incurred in connection with the
negotiation, preparation, investigation and performance of this Agreement and
the transactions contemplated hereby and thereby, including, without limitation,
fees and expenses of counsel, accountants, consultants, advisers and others;

(b)       

any Liability (i) for Taxes of Seller (or any equity holder or Affiliate of any
of the foregoing), (ii) for Taxes relating to the Business, the Acquired Assets
or the Assumed Liabilities for any pre-Closing Taxes, or (iii) for Taxes that
arise out of the consummation of the transactions contemplated hereby or that
are the responsibility of the Seller;

(c)       

any Liabilities relating to or arising out of the Excluded Assets, as well as
with respect to Sydson Resources and Sydson Energy;

(d)       

any Liabilities in respect of any pending or threatened Action arising out of,
relating to or otherwise in respect of the operation of the Business or the
Acquired Assets to the extent such Action relates to such operation on or prior
to the Closing Date;

(e)       

any Liability based on any claim which arises out of or is based upon any
express or implied representation, warranty, agreement or guaranty made by the
Seller in connection with any of the services provided by Seller or the
Business;

(f)       

any Liabilities of Seller arising under or in connection with any benefit plan
providing benefits to any present or former employee of Seller pre-Closing;

(g)       

any Liabilities of Seller for any present or former employees, officers,
directors, retirees, independent contractors or consultants of Seller,
including, without limitation, any Liabilities associated with any claims for
wages or other benefits, bonuses, accrued vacation, workers’ compensation,
severance, retention, termination or other payments pre-Closing;

(h)       

any pre-Closing trade accounts payable of Seller;

(i)       

any Liabilities of Seller or the Business relating or arising from unfulfilled
commitments, purchase orders, customer orders or work orders entered into,
issued by or otherwise pertaining to Seller or the Business at any time prior to
the Closing (other than leases that have been negotiated but not executed and
relate to the Acquired Assets);

(j)       

any Liabilities to indemnify, reimburse or advance amounts to any present or
former officer, director, employee or agent of Seller (including with respect to
any breach of fiduciary obligations by same);

2 

 

 

(k)       

any Liabilities not arising under the Purchased Assets (i) which are not validly
and effectively assigned to (and expressly assumed by) Buyer pursuant to this
Agreement, (ii) which do not conform to the representations and warranties with
respect thereto contained in this Agreement, or (iii) to the extent such
Liabilities arise out of or relate to a breach by the Seller of a Contract or
other of its obligations prior to the Closing;

(l)       

any Liabilities associated with debt, loans or credit facilities of the Seller
and/or the Business owed or owing to any Person as to any period pre-Closing;
and

(m)       

any Liabilities arising out of, in respect of or in connection with the failure
by any of the Seller or any of its Affiliates to comply with any Law or
Governmental Order.

1.4       

Delivery of Files. Upon request, Seller shall deliver to Buyer a copy of any
and/or all paper and electronic files for the Acquired Assets.

ARTICLE II
PURCHASE PRICE

2.1.       

Purchase Price. The Buyer agrees to pay to Seller (i) at Closing, an aggregate
of 100 million shares of Buyer common stock to be issued to Michael J. Mayell
(“Securities”), (ii) (A) $250,000 evidenced by a promissory note due 60 days
from Closing and (B) $1,250,000 through the payment of Seller’s obligations
attributable to Seller’s retained working interests in oil and gas prospects
conveyed to Buyer hereunder to be paid by Buyer at the time Buyer pays its
associated costs with respect to its acquired working interests in such oil and
gas prospects, (iii) carried interests to casing point for Seller’s working
interests on the first well in each of the West Tuleta prospect, Ray Field
prospect, Wilinda prospect, and in each unit in Bayou Bouillon to be paid by
Buyer at the time it pays its associated costs with respect to its ownership
interests in such oil and gas prospects, and (iv) a payment of $500,000 for the
seismic data at the Magen’s Bay project after completion of the first Magen’s
Bay well. The valuation of the Buyer shares of common stock is $0.005 per share.

2.2       

The Closing. The closing of the transactions contemplated by this Agreement (the
“Closing” or “Closing Date”) shall take place on January 4, 2017 at the offices
of Buyer commencing at 9:00 a.m., or at another place and/or time mutually
agreed upon by the parties, effective as of January 1, 2017.

2.3       

Deliveries at the Closing. At the Closing, (i) the Seller will deliver to the
Buyer the deliverables set forth in Section 5.1 hereof and (ii) the Buyer will
deliver to the Seller and other third parties the deliverables set forth in
Section 5.2 hereof. It is understood and agreed that all deliverables described
in Sections 5.1 and 5.2 have been delivered concurrently.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer that the statements contained in
this Article III are true, correct and complete as of the Closing Date, except
as set forth in the Schedules accompanying this Agreement.

3 

 

 

3.1.       

Organization and Capitalization. Sydson Resources is a limited partnership and
Sydson Energy is a corporation, each of which is duly formed and validly
existing under the laws of the State of Texas, and each has all requisite power
and authority to own and operate the Acquired Assets and to carry on the
Business as now being conducted.

3.2.       

Authorization. Each Seller has full power and authority pursuant to the limited
partnership agreement and articles of incorporation, as applicable, to enter
into and perform this Agreement and the other transactions contemplated hereby
to which it is a party and to consummate the transactions contemplated hereby
and thereby. Seller is duly qualified or licensed to conduct business and is in
good standing in every jurisdiction in which the nature of its business or the
locations of its properties require such qualification or licensing, except for
such jurisdictions where the failure to so qualify or be licensed would not have
any Material Adverse Effect on Seller’s ability to perform fully its obligations
under this Agreement or the other transactions contemplated hereby. This
Agreement is duly and validly executed and delivered by Seller and constitutes
the legal, valid and binding obligations of Seller, enforceable against Seller
in accordance with its terms, except as enforceability may be limited or
affected by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at Law).

3.3.       

No Adverse Consequences. Neither the execution and delivery of this Agreement by
Seller nor the consummation of the transactions contemplated by this Agreement
will:

(a)       

result in the creation or imposition of any Lien on any of the Acquired Assets;

(b)       

violate or conflict with any provision of Sellers’ partnership agreement or
certificate of formation;

(c)       

to the Knowledge of the Seller, violate any judgment, order, injunction, decree,
rule, regulation or ruling of any Governmental or Regulatory Authority or any
other Law applicable to Seller;

(d)       

adversely affect the ability of Seller to consummate the transactions
contemplated hereby or to perform its obligations hereunder; or

(e)       

either alone or with the giving of notice or the passage of time or both,
conflict with, constitute grounds for termination or acceleration of, result in
the breach of the terms, conditions or provisions of, result in the loss of any
benefit to Seller under or constitute a default under any material agreement
(including those set forth in Schedule 3.9), instrument, license or permit to
which either Seller is a party or by which it is bound, except for such
termination, acceleration, breach, loss or default that would not have a
Material Adverse Effect.

4 

 

 

3.4.       

Consents. Except for the Required Consents identified on Schedule 3.4 (the
copies of executed consents are attached as Exhibit C), there are no consents,
authorizations or other orders of, or filing with, any Governmental or
Regulatory Authority or acknowledgment by any third Person required for the
valid execution, delivery and performance of this Agreement by Seller,
assignment of all rights in the Acquired Assets, or consummation of the
transactions contemplated hereby, except where the failure to obtain such
consent, authorization, order or filing would not have a Material Adverse
Effect.

3.5.       

Approval by Shareholders and Partners. The limited and general partners of
Sydson Resources and all of the shareholders of Sydson Energy, being all of the
record and beneficial owners of equity of each Seller, have approved this
Agreement and the consummation of the transactions contemplated by this
Agreement.

3.6.       

Title to and Condition of Acquired Assets. Seller has good, marketable and
assignable title to and/or interest in the Acquired Assets, free and clear of
any and all Liens, other than (i) statutory Liens for current Taxes, assessments
or other governmental charges not yet due and payable or the amount or validity
of which is being contested in good faith by appropriate proceedings; and (ii)
Liens as described on Schedule 3.6. Other than as described on Schedule 3.6, at
Closing none of the Acquired Assets will be subject to any restrictions with
respect to the transferability thereof, Buyer’s title thereto will not be
affected in any way by the transactions contemplated hereby, and there will be
no Liens on any of the Acquired Assets. With respect to the Acquired Assets set
forth in Exhibit A relating to oil and gas prospects and interests, the Seller
represents as follows: (i) with respect to the Bayou Bouillon Project (as
referenced in Exhibit A), the Seller’s ownership interests consist of
opportunity rights arising out of a letter of intent dated November 1, 2016 by
and between Seller and Thyssen Petroleum USA, LLC to acquire working interest in
certain prospects that Buyer has been negotiating; (ii) with respect to the Ray
Field and the West Tuleta Field (both as referenced in Exhibit A), the Seller is
assigning to Buyer a 50% working interest in the undrilled acreage under leases
owned by Seller as further identified in Exhibit A; (iii) with respect to the
Wilinda Project (as referenced in Exhibit A), the Seller’s ownership interests
consist of opportunity rights to acquire working interests in certain prospects
that Seller has negotiated; and (iv) with respect to Magen’s Bay Project (as
referenced in Exhibit A), the Seller’s ownership interests consists of the use
and license rights to the 85 square mile Magen’s Bay 3-D seismic survey and
opportxz unity rights to acquire working interest in certain prospects that
Seller has generated and is now negotiating. With respect to the oil and gas
leases that Seller owns with respect to the Ray Field and West Tuleta Field, the
leases are enforceable obligations of the lessors, the Seller is in material
compliance with such leases, the Seller has not been informed by (or have
knowledge of) any lessor or any third party of an adverse claim or a violation
of any Environmental Law or non-compliance with any Governmental or Regulatory
Authority, and holds a valid leasehold interest free of any Lien. The Seller’s
tangible property and assets are in good condition, except for ordinary wear and
tear, and are suitable for their intended purposes. Seller believes that the
Buyer will be able to enter into appropriate farm-out, participation or other
arrangements with respect to the opportunity rights being transferred hereunder
with respect to oil and gas prospects set forth in Exhibit A.

3.7

Reserved.

3.8

Reserved.

3.9       

Contracts and Commitments. Schedule 3.9 constitutes a list of the following
described material contracts and commitments in which Seller is a party, and
which relate to the Acquired Assets (“Commitments”);

5 

 

 

i.       

partnership, joint venture agreement, farm-in or farm-out agreement, joint
operating or similar agreement, participation agreement or letter of intent;

ii.       

deed of trust or other security agreement;

iii.       

guaranty or suretyship, indemnification or contribution agreement or performance
bond;

iv.       

employment, consulting, independent contractor or compensation agreement or
arrangement for any employee, consultant or independent contractor;

v.       

debt instrument, loan agreement or other obligation relating to indebtedness for
any Assumed Liabilities;

vi.       

deed or other document evidencing an interest in or contract to purchase or sell
real property;

vii.       

agreement with dealers or sales or commission agents;

viii.       

lease of real or personal property, including oil and gas lease, whether as
lessor, lessee, sublessor or sublessee in excess of $10,000;

ix.       

agreement for the acquisition of services, supplies, equipment or other personal
property and involving more than $10,000 in the aggregate;

x.       

powers of attorney;

xi.       

contracts containing noncompetition covenants; or

xii.       

all Proprietary Assets (as defined in Section 3.17), Intellectual Property
Rights (as defined in Section 3.17), owned Software, and leased Software of the
Seller related to the Acquired Assets and the Business.

True, correct and complete copies of the written Commitments described on
Schedule 3.9 are available for delivery by Seller to Buyer upon request. There
are no existing defaults, events of default or events, occurrences or acts that,
with the giving of notice or lapse of time or both, would constitute defaults,
and no penalties have been incurred nor are amendments pending, with respect to
the Commitments, except as described in Schedule 3.9. The Commitments are in
full force and effect and are valid and enforceable obligations of the parties
thereto in accordance with their terms, except as enforceability may be limited
or affected by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at Law), and no defenses, off-sets or counterclaims have
been asserted or, to the best of the Knowledge of Seller may be made by any
party thereto, nor has Seller waived any rights thereunder, except as described
in Schedule 3.9. All consents to the Commitments that are required in order to
transfer the Acquired Assets to Buyer pursuant to this Agreement are identified
in Schedule 3.4 and executed copies of such consents are attached in Exhibit C.

6 

 

 

(b)       

Except as contemplated herein, Seller has not received notice of any plan or
intention of any other party to any Commitment to exercise any right to cancel
or terminate any Commitment or agreement, and Seller does not know of any fact
that will likely cause any such party to exercise such right. Seller does not
currently contemplate, nor does Seller have Knowledge that any other person or
entity currently contemplates, any material amendment or change to any
Commitment. None of the partners, independent contractors, customers or
suppliers of Seller has refused, or communicated that it will or may refuse, to
purchase or supply goods or services to or from Seller, as the case may be, or
has communicated that it will or may substantially reduce the amounts of goods
or services that it is willing to purchase from, or sell to, Seller, in each
case if such refusal would have a Material Adverse Effect.

3.10.       

Labor Matters.  Seller is not a party to any employment contract with any
employee (other than as set forth in Schedule 3.9), or any union, collective
bargaining or other labor agreement with any labor organization, union, group or
association with respect to any of the employees.

3.11.       

Litigation. There is no claim, action, dispute, proceeding or investigation
pending or, to the Knowledge of Seller, threatened against Seller which would
affect the Assets before any federal or state court, Governmental or Regulatory
Authority relating to the Acquired Assets or Business. Seller is not subject to
any outstanding order, writ, injunction or decree that materially and adversely
affects the Acquired Assets and the Seller has not received written notice of
any action, proceeding, suit, investigation or inquiry pending or that would
prevent or hinder the consummation of the transactions contemplated hereby.

3.12.       

Taxes.

(a)       

Seller has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, creditor, independent
contractor, or other third party.

(b)       

There is no unpaid liability for Taxes upon any of the Acquired Assets nor is
any taxing authority in the process of imposing any Liability for Taxes on any
of the Acquired Assets (other than for current Taxes not yet due and payable).

3.13       

Solvency. The Seller’s fair saleable value of its assets (excluding the Acquired
Assets) exceeds the amount that will be required to be paid on or in respect of
the Seller’s existing debts and other liabilities as they mature.

3.14.       

Environmental Matters.

(a)       

To the Knowledge of Seller, Seller is presently and at all times has been in
substantial compliance with all Environmental Laws with respect to the Acquired
Assets that, singularly or in the aggregate, has not and would not have a
Material Adverse Effect.

(b)       

To the Knowledge of Seller, there are no Hazardous Materials on, in, under or
affecting the Acquired Assets in violation of applicable Environmental Laws
which would have a Material Adverse Effect on the Acquired Assets.

(c)       

To the Knowledge of Seller, Seller has no Liability and there is no basis for
any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand against Seller giving rise to any Liability under
the Environmental Laws with respect to the Acquired Assets.

7 

 

 

3.15.       

Compliance with Laws. Seller is not and has not been in violation of any Laws
applicable to the Acquired Assets (including, without limitation, Laws relating
to the civil rights and equal employment opportunities of the employees), other
than violations which singularly or in the aggregate do not and will not have a
Material Adverse Effect on the Acquired Assets. Seller has not been charged
with, or to the Knowledge of Seller, threatened with a charge of, a violation of
any Law that would have a Material Adverse Effect on the Acquired Assets. Seller
has not received any written notice of a charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice filed or commenced
against Seller alleging any failure to comply with any such Law.

3.16       

No Bankruptcy, etc. There has not been filed any petition or application, or any
proceedings commenced, by or against, or with respect to any assets (including
the Acquired Assets) of the Seller under Title 11 of the United States Code or
any other law, domestic or foreign, relating to bankruptcy, reorganization,
compromise, arrangement, insolvency, rehabilitation, conservatorship,
readjustment of debt or creditors’ rights.

3.17       

Intellectual Property.

(a)       

The term “Proprietary Assets” means all material licenses currently owned and/or
used by the Seller or necessary to exploit and/or operate the Acquired Assets.
The Seller owns, or has the right to use under the agreements or upon the terms
described in Schedule 3.17, all of the Proprietary Assets and has taken actions
reasonable to protect the Proprietary Assets.  Except as set forth in Schedule
3.17, the Seller does not require any license or other agreement to use any of
the Proprietary Assets, except for licenses or agreements that can be obtained
in the Ordinary Course of Business without unreasonable effort, delay, cost, or
expense.  Except as set forth in Schedule 3.17, the Seller is not bound by or a
party to any options, licenses, or agreements of any kind with respect to the
Intellectual Property Rights (as defined below) of any other Person and, to the
Seller’s Knowledge, there are no undisclosed outstanding options, licenses, or
agreements of any kind relating to the Proprietary Assets.  With respect to each
item of the Seller’s Proprietary Assets that any third party owns and that the
Seller uses pursuant to license, sublicense, agreement or permission: (i) the
license, as it relates to the Seller is legal, valid, binding, enforceable, and
in full force and effect in all material respects, except as enforceability may
be limited or affected by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and by
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at Law); (ii) the Seller is not, and to the
Seller’s Knowledge, no other party to the license, sublicense, agreement or
permission is in material breach or default, and no event has occurred which
with notice or lapse of time or both would constitute a material breach or
default or permit termination, modification or acceleration thereunder; (iii)
the Seller has not, and to the Seller’s Knowledge, no other party to the
license, sublicense, agreement or permission has repudiated any material
provision thereof; and (iv) the Seller has not granted any sublicense or similar
right with respect to the license, sublicense, agreement or permission other
than as permitted by such license, sublicense, agreement or permission.

8 

 

 

(b)       

The Seller has not violated or infringed, and is currently not violating or
infringing, and neither the Seller nor, to the Seller’s Knowledge, any
managerial employee or consultant of the Seller has received any communications
alleging that the Seller (or any of its employees or consultants) has violated
or infringed or, by conducting its business as presently proposed, would violate
or infringe, any of the patents, trademarks, service marks, trade names,
copyrights, mask-works, licenses, trade secrets, processes, data, know-how, or
other intellectual property rights related to the Acquired Assets, if any
(“Intellectual Property Rights”), of any other Person.  To the Seller’s
Knowledge, no third party is currently materially interfering with, infringing
upon, misappropriating, diluting, constituting the unauthorized use, misuse or
misappropriation of or violating any of the Seller’s currently owned or licensed
Intellectual Property Rights.

(c)       

Reserved.

(d)       

The Seller has maintained the confidentiality and trade secret status of all
Intellectual Property Rights owned by the Seller relating to the Acquired Assets
that are confidential or trade secrets, as applicable.  The Seller has entered
into appropriate written assignment agreements as appropriate or required with
all employees, consultants and independent contractors who have performed
services for the Seller since January 1, 2014.  All Seller employees have agreed
to maintain the confidentiality (other than those which are not confidential)
of, and not to use for any purpose other than on behalf of the Seller, all
Intellectual Property Rights and other confidential and proprietary assets of
the Seller, and all Intellectual Property Rights developed by any employee and
used or proposed to be used by the Seller was developed within such employee’s
scope of work at the Seller. 

3.18       

Fraudulent Transfer. Neither this Agreement nor the transactions contemplated by
this Agreement shall be considered a fraudulent transfer pursuant to the Texas
Uniform Fraudulent Transfer Act.

3.19       

Other Transactions. Other than this Agreement and the transactions contemplated
hereby, the Seller has not entered into any agreement, letter of intent or
understanding to sell or transfer any of the Acquired Assets.

3.20       

Disclosure of Material Facts. To Seller’s Knowledge, there is no fact or
omission of a fact (other than general economic or industry conditions) that
has, or reasonably believes could have, a Material Adverse Effect on the
Acquired Assets that has not been set forth in this Agreement (including
Schedules).

3.21       

Acknowledgments by Sydson Resources and Sydson Energy.

(a)       

The Seller recognizes that the purchase of the Securities involves a high degree
of risk including, but not limited to, the following: (a) the Buyer has a
limited operating history with a history of losses and requires additional funds
to conduct its business; (b) an investment in the Buyer is highly speculative,
and only investors who can afford the loss of their entire investment should
consider investing in the Buyer and the Securities; (c) the Seller may not be
able to liquidate its investment; (d) transferability of the Securities is
extremely limited and the Buyer will not be registering the resale of the
Shares; (e) in the event of a disposition, the Seller could sustain the loss of
its entire investment; (f) the Buyer has not paid any dividends since its
inception and does not anticipate paying any dividends; and (g) the Buyer may
issue additional securities in the future which have rights and preferences that
are senior to those of the Securities. Without limiting the generality of the
representations set forth in Section 1.5 below, the Seller represents that the
Seller has carefully reviewed all of the Buyer’s filings made with the
Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange
Act of 1934, as amended (“Exchange Act”) through the date of execution hereof
(“SEC Filings”) and has had the opportunity to ask management any questions
regarding the SEC Filings.

9 

 

 

(b)       

Sydson Resources and Sydson Energy each represent that it is an “accredited
investor” as such term is defined in Rule 501 of Regulation D (“Regulation D”)
promulgated under the Securities Act of 1933, as amended (“Securities Act”), and
that the Seller is able to bear the economic risk of an investment in the
Securities.

(c)       

The Seller hereby acknowledges and represents that (a) the Seller has knowledge
and experience in business and financial matters, prior investment experience,
or the Seller has employed the services of a “purchaser representative” (as
defined in Rule 501 of Regulation D), attorney and/or accountant to read all of
the documents furnished or made available by the Buyer to the Seller to evaluate
the merits and risks of such an investment on the Seller’s behalf; (b) the
Seller recognizes the highly speculative nature of this investment; and (c) the
Seller is able to bear the economic risk that the Seller hereby assumes.

(d)       

The Seller hereby acknowledges that Seller (a) has carefully reviewed the SEC
Filings, (b) has been furnished by the Buyer with all information regarding the
Buyer, and any additional information that the Seller has requested or desired
to know, and has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers or other representatives of the Buyer
concerning the Buyer and the terms and conditions of the sale of the Securities;
and (c) has received and reviewed the Seller’s draft balance sheet as of October
31, 2016 and income statement for the 12 months ended October 31, 2016 (“October
2016 Financials”).

(e)       

In making the decision to invest in the Securities, the Seller has relied solely
upon the information provided by the Buyer as well as the SEC Filings. To the
extent necessary, the Seller has retained, at its own expense, and relied upon
appropriate professional advice regarding the investment, tax and legal merits
and consequences of this Agreement and the purchase of the Securities hereunder.

(f)       

The Seller represents that (i) the Seller was contacted regarding the sale of
the Securities by the Buyer, and (ii) no Securities were offered or sold to it
by means of any form of general solicitation or general advertising, and in
connection therewith, the Seller did not (A) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio, whether
closed circuit, or generally available; or (B) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.

(g)       

The Seller hereby represents that the Seller, either by reason of the Seller’s
business or financial experience or the business or financial experience of the
Seller’s professional advisors (who are unaffiliated with and not compensated by
the Buyer or any affiliate or selling agent of the Buyer, directly or
indirectly), has the capacity to protect the Seller’s own interests in
connection with the transaction contemplated hereby.

10 

 

 

(h)       

The Seller hereby acknowledges that the offering of the Securities has not been
reviewed by the SEC nor any state regulatory authority since the offering is
intended to be exempt from the registration requirements of Section 5 of the
Securities Act pursuant to Regulation D promulgated thereunder. The Seller
understands that the Securities have not been registered under the Securities
Act or under any state securities or “blue sky” laws and agrees not to sell,
pledge, assign or otherwise transfer or dispose of the Securities unless they
are registered under the Securities Act and under any applicable state
securities or “blue sky” laws or unless an exemption from such registration is
available.

(i)       

The Seller understands that the Securities have not been registered under the
Securities Act by reason of a claimed exemption under the provisions of the
Securities Act that depends, in part, upon the Seller’s investment intention. In
this connection, the Seller hereby represents that the Seller is purchasing the
Shares for the Seller’s own account for investment and not with a view toward
the resale or distribution to others.

(j)       

The Seller understands that the Buyer was a “shell company” as defined in Rule
405 of the Securities Act, and that there is a limited trading market for the
Shares and that an active market may not develop for the Shares. The Buyer filed
its Form 10 type information pursuant to Rule 144(i)(2) in 2014. The Seller
understands and hereby acknowledges that the Buyer is under no obligation to
register any of the Shares under the Securities Act or any state securities or
“blue sky” laws.

(k)       

The Seller understands that the Securities are being offered and sold in
reliance on specific exemptions from the registration requirements of federal
and state securities laws and that the Buyer and the principals and controlling
persons thereof are relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments, and understandings set forth herein in
order to determine the applicability of such exemptions and the undersigned’s
suitability to acquire Securities.

(l)       

The Seller consents to the placement of a legend on any certificate or other
document evidencing the Securities that such securities have not been registered
under the Securities Act or any state securities or “blue sky” laws and setting
forth or referring to the restrictions on transferability and sale thereof
contained in this Agreement. The Seller is aware that the Buyer will make a
notation in its appropriate records with respect to the restrictions on the
transferability of such securities. The legend to be placed on each certificate
shall be in form substantially similar to the following:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR
“BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE BUYER HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE BUYER AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

11 

 

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller, as of the Closing Date, as
follows:

4.1.       

Organization. Buyer is a corporation duly formed and validly existing under the
laws of the State of Nevada, and has all requisite corporate power and corporate
authority to own and operate its properties and to carry on its business as now
being conducted.

4.2.       

Authorization. Buyer has full corporate power and corporate authority to enter
into and perform this Agreement and the other documents contemplated herby to
which it is a party and to consummate the transactions contemplated hereby and
thereby. Buyer is duly qualified or licensed to do business as a foreign
corporation and is in good standing in Texas. This Agreement has been, and at
the Closing the other transactions contemplated hereby to which Buyer is a party
will be, duly and validly executed and delivered by Buyer and constitutes the
legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with its terms, except as enforceability may be limited or affected
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting creditors’ rights generally and by general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at Law).

4.3.       

No Adverse Consequences. Neither the execution and delivery of this Agreement by
Buyer, nor the consummation of the transactions contemplated by this Agreement,
will:

(a)       

violate or conflict with any provision of Buyer’s articles of incorporation or
bylaws; or

(b)       

violate any judgment, order, injunction, decree, rule, regulation or ruling of
any Governmental or Regulatory Authority, or any other Law applicable to Buyer;
or

(c)       

adversely affect the ability of Buyer to consummate the transactions
contemplated hereby or to perform its obligations hereunder; or

(d)       

either alone or with the giving of notice or the passage of time or both,
conflict with, constitute grounds for termination or acceleration of, result in
the breach of the terms, conditions or provisions of, result in the loss of any
benefit to Buyer under or constitute a default under any material agreement,
instrument, license or permit to which either Buyer is a party or by which it is
bound, except for such termination, acceleration, breach, loss or default that
would not have a Material Adverse Effect on Buyer’s ability to consummate the
transactions contemplated hereby.

4.4       

No Conflicts.  The execution, delivery and performance of the Agreement by the
Buyer and the consummation by the Buyer of the transactions contemplated thereby
do not and will not (i) conflict with or violate any provision of the Buyer’s
articles of incorporation or bylaws, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a debt or
otherwise) or other understanding to which the Buyer is a party or by which any
property or asset of the Buyer is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Buyer is
subject (including federal and state securities laws), or by which any property
or asset of the Buyer is bound or affected.

12 

 

 

4.5       

Filings, Consents and Approvals.  The Buyer is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Buyer of the Agreement , other than (i) filings
required by state securities laws, if applicable, or (ii) the filing of a Notice
of Sale of Securities on Form D with the SEC under Regulation D of the
Securities Act, if applicable.

4.6       

Issuance of the Securities.  The Securities have been duly authorized and, when
issued and paid for in accordance with the Agreement, will be duly and validly
issued, fully paid and non-assessable, free and clear of all Liens. Assuming the
accuracy of the representations and warranties of the Seller made herein, the
issuance by the Buyer of the Securities is exempt from registration under the
Securities Act and all applicable state securities laws.

4.7       

SEC Reports; Financial Statements.  The Buyer has filed all SEC Filings required
to be filed by it under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the twenty-four months preceding
the date hereof. Since January 1, 2015, the SEC Filings have complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the SEC promulgated thereunder, and none of
the SEC Filings, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.  The financial statements of the Buyer
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing.  Such financial statements have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the Buyer as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.

4.8       

Litigation.  There is no Action which adversely affects or challenges the
legality, validity or enforceability of any of the Agreement or the Securities. 
Neither the Buyer nor any director or officer thereof (in his or her capacity as
such with respect to the Buyer), is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty.  To the knowledge of the Buyer,
there is not pending any investigation by the SEC involving the Buyer or any
current director or officer of the Buyer (in his capacity as such).  The SEC has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Buyer under the Exchange Act or the
Securities Act.

4.9       

Absence of Certain Changes. Since October 31, 2016, as reflected on the October
2016 Financials, Buyer has not:

13 

 

 

(a)       

suffered any material adverse effect or otherwise experienced a material adverse
change in its financial condition or its business operations;

(b)       

mortgaged, pledged or subjected any of its material assets to any Lien;

(c)       

suffered any damage or destruction to or loss of any assets (whether or not
covered by insurance) that will likely or does materially and adversely affect
the financial condition of Buyer;

(d)       

acquired or disposed of any of the material assets or incurred any material
Liabilities or obligations, except in the Ordinary Course of Business;

(e)       

written up or written down the carrying value of any of its assets; or

(f)       

entered into any other material commitment or transaction or experienced any
other material event resulting in a material adverse effect on the financial
condition of Buyer, other than this Agreement.

4.10       

Compliance with Laws. Buyer is not and has not been in violation of any Laws
applicable to its operations (including, without limitation, Laws relating to
the civil rights and equal employment opportunities of the employees), other
than violations which singularly or in the aggregate do not and will not have a
material adverse effect on Buyer’s financial condition. Buyer has not been
charged with a violation of any Law that would have a material adverse effect on
Buyer’s financial condition. Buyer has not received any written notice of a
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice filed or commenced against Buyer alleging any failure to
comply with any such Law.

ARTICLE V
CLOSING

5.1.       

Seller’s Deliverables. Seller shall deliver on Closing the following:

(a)       

Each Seller shall have delivered a certificate, executed on its behalf by its
general partner or chief executive officer, as appropriate, dated as of the
Closing Date, certifying the resolutions adopted by the Seller approving the
transactions contemplated by this Agreement and the other documents contemplated
herein;

(b)       

Each Seller shall have physically delivered to Buyer the Acquired Assets as set
forth on Exhibit A;

(c)       

Each Seller shall have delivered to Buyer satisfactory executed Assignments, as
set forth in Exhibit B, executed by each Seller as appropriate;

(d)       

Each Seller shall have delivered to Buyer copies of the Required Consents set
forth on Schedule 3.4, which executed consents are attached hereto as Exhibit C;

(e)       

Michael J. Mayell shall have delivered to Buyer an executed employment agreement
in the form attached as Exhibit D; and

14 

 

 

(f)       

Executed copies of the joint development agreement and joint operating agreement
with Thyssen Petroleum USA, LLC (or affiliate hereof).

5.2       

Buyer’s Deliverables. Buyer shall deliver on Closing the following:

(a)       

Buyer shall have delivered (i) issuance instructions to its transfer agent for
the issuance of common stock certificates of Buyer in the name of Michael J.
Mayell in the amount of 100 million shares of common stock, and (ii) a
promissory note to pay $250,000 to Seller within 60 days of the Closing.

(b)        Buyer shall have delivered to Buyer executed Assignments, as set
forth in Exhibit B;

(c)       

Buyer shall have delivered a certificate, executed on behalf of the Buyer by its
Secretary, dated as of the Closing Date, certifying the resolutions adopted by
the Buyer approving the transactions contemplated by this Agreement and the
other documents contemplated herein;

(d)       

Buyer shall deliver to Mr. Mayell an executed employment agreement in the form
attached hereto as Exhibit D;

(e)       

Buyer shall deliver a board resolution increasing the number of board members to
three and appointing Michael J. Mayell and John B. Connally as new directors to
fill the increased board positions; and

(f)       

Buyer shall wire $325,000 to Thyssen Petroleum USA, LLC (or its affiliate)
concurrent with receipt of the deliverables set forth in Section 5.1(f).

5.3       

Deliveries at Closing. It is understood and agreed that all deliverables
described in Sections 5.1 and 5.2 have been delivered concurrently.

ARTICLE VI
ADDITIONAL COVENANTS

Buyer and Seller covenant and agree that they will act in accordance with the
following:

6.1       

Taxes and Liabilities. Seller shall be responsible to pay any and all of its
Liabilities and Taxes owed by Seller prior to the Closing and as resulting from
the transaction contemplated in this Agreement. Buyer shall be responsible to
pay any and all of its Liabilities and Taxes owed by Buyer resulting from the
transaction contemplated in this Agreement.

6.2       

Further Assurances. Each party agrees to perform any further acts and to execute
and deliver such further documents which may be reasonably necessary to carry
out the terms of this Agreement and the transactions contemplated hereby.

6.3       

Transfer of Title. Seller agree to take any and all further action reasonably
necessary to transfer title of, or rights or opportunities to, any of the
Acquired Assets to Buyer.

15 

 

 

6.4       

Obligation with respect to Employment Contracts and Consulting Agreements
Assigned to Buyer. Buyer agrees for at least six months to honor the employment
and consulting arrangements to the employees and consultants identified on
Exhibit A.

6.5.       

Financial Statements. In the event that Buyer is required to prepare audited
financial statements with respect to the Acquired Assets, Seller agrees to
cooperate with Buyer in preparing and providing the necessary financial data in
order to assist Buyer in preparing such audited and pro-forma financial
statements to be filed with the SEC pursuant to Form 8-K.

6.6       

Licenses and Permits. The Seller shall transfer to Buyer or assist Buyer in
obtaining the necessary licenses, permits, consents, approvals, orders,
certificates and authorizations pertaining to or required by the Buyer to
operate the Acquired Assets in accordance with applicable Legal Requirements and
Commitments.

6.7       

Payment of Additional Buyer Consideration. Buyer shall undertake and be diligent
in the payment to Seller of the post-Closing consideration as set forth in
Section 2.1(ii)(B), (iii), and (iv).

6.8       

Qualification of Buyer as an Operator. Seller shall assist Buyer in obtaining
the necessary qualification and permits to allow Buyer to serve as “operator” of
the Acquired Assets.

ARTICLE VII
INDEMNIFICATION; SURVIVAL

7.1(a)       

Indemnification by Seller. On and after the Closing Date, Seller shall
indemnify, hold harmless and defend Buyer and its agents for, from and against
any and all losses incurred by Buyer arising out of or in connection with:

(i)       

Any breach or inaccuracy of any representation or warranty of Seller made in
this Agreement or in the Schedules attached hereto or in a certificate delivered
by Seller hereunder including but not limited to, claims arising under the Texas
Uniform Fraudulent Transfer Act, claims arising with respect to Taxes, claims
arising with respect to workman’s compensation or severance payments, and claims
relating to the Excluded Liabilities of Seller; or

(ii)       

Any failure by Seller to fulfill any of its covenants or other agreements
hereunder.

(b)       

Indemnification by Buyer. On and after the Closing Date, Buyer shall indemnify,
hold harmless and defend Seller and its agents for, from and against any and all
losses incurred by Seller arising out of or in connection with:

(i)       

Any breach or inaccuracy of any representation or warranty of Buyer made in this
Agreement or in the Schedules attached hereto or in a certificate delivered by
Buyer hereunder including but not limited to, claims arising with respect to
Taxes; or

(ii)       

Any failure by Buyer to fulfill any of its covenants or other agreements
hereunder.

16 

 

 

7.2       

Defense of Third-Party Claims. The indemnifying party shall have the right to
conduct and control at its own cost, through its own counsel, the defense,
compromise or settlement of any third-party claim, action or suit involving the
indemnified party or the Acquired Assets as to which indemnification is sought,
and the indemnified party shall reasonably cooperate at no cost and furnish any
records, information and testimony and attend any conferences, discovery
proceedings, hearings, trials and appeals as the indemnifying party may
reasonably request. The indemnified party shall be entitled at any time to
participate in (but not direct) the defense of any such claim, action or
proceeding through its own counsel and at its own expense. The indemnified party
shall not compromise or settle any third party claim that is subject to
indemnification under this Agreement without the prior written consent of the
indemnifying party.

7.3       

Indemnification Procedure.

(a)       

Procedure. Promptly after receipt by the indemnified party of notice of any
action, suit, proceeding, audit, claim or potential claim (any of which is
hereinafter individually referred to as a “Circumstance”), which could give rise
to a right to indemnification pursuant to Section 7.1 or 7.2, the indemnified
party shall give the indemnifying party written notice describing the
Circumstance in reasonable detail; provided, that failure of indemnified party
to give such notice to the indemnifying party shall not relieve the indemnifying
party from any of its indemnification obligations hereunder unless (and then
only to the extent) that the failure to give such notice prejudices the
indemnifying party or the defense of the Circumstance by the indemnifying party.
Indemnifying party shall pay such obligation and assume such Liability in full
within twenty (20) days of the date indemnified party provides written notice of
the Circumstance, unless indemnifying party disputes such Circumstance or its
obligation to indemnify the indemnified party in connection with such
Circumstance in writing within twenty (20) days from the date of written notice
of such Circumstance provided to indemnifying party. If the indemnifying party
timely delivers such a written objection to the indemnified party, the
indemnified party and the indemnifying party shall use commercially reasonable
efforts to resolve any such objections, but if a final resolution is not
obtained within twenty (20) days after the receipt of the written objections,
the indemnified party and the indemnifying party shall submit the matter to
binding arbitration pursuant to paragraph (b) of this Section, unless they
mutually agree to extend their negotiations.

(b)       

Arbitration. If any dispute should arise between Buyer and Seller under this
Agreement, all claims, disputes, controversies, differences or other matters in
question arising out of this Agreement shall be resolved by binding arbitration
in Houston, Texas, in accordance with the rules for expedited, documents only
proceedings of the American Arbitration Association. This provision to arbitrate
shall be enforceable in district court.

7.4       

Limits on Indemnification. In no event shall either Buyer’s or Seller’s
aggregate Liabilities for all claims for indemnification hereunder exceed
$200,000. Notwithstanding anything herein to the contrary, in no event shall
either Buyer or Seller have any liability or obligation to indemnify the other
hereunder unless and until the aggregate value of all liabilities incurred by
the party for which indemnification hereunder is sought exceeds an amount equal
to Twenty Thousand Dollars ($20,000), and then only to the extent of such
excess. Notwithstanding anything in this Agreement to the contrary, the
Liabilities of either Buyer or Seller in connection with any of its
indemnification obligations hereunder shall be reduced on a dollar for dollar
basis by any insurance proceeds actually received by the indemnified party with
respect to such Liabilities. Notwithstanding anything herein to the contrary, in
no event shall either Buyer or Seller be obligated to indemnify any Person
hereunder for any punitive or consequential damages.

17 

 

 

7.5.       

Survival. The representations and warranties contained in this Agreement or in
any document delivered pursuant to or in connection with the Closing shall
survive the Closing for a period of eighteen months thereafter (the “Survival
Date”). If notice of any claim subject to indemnification is given on or before
the Survival Date, the indemnification right hereunder shall survive until such
claim has been finally resolved and all indemnification rights have been
satisfied.

ARTICLE VIII
MISCELLANEOUS PROVISIONS

8.1.       

Amendment. This Agreement may be amended, modified or supplemented only by
written agreement of Seller and Buyer.

8.2.       

Waiver. The failure by either party to enforce at any time or for any period of
time any provision of this Agreement shall not be construed as a waiver of that
provision or the right thereafter to enforce that provision. No waiver by either
party of any of the terms or conditions of this Agreement or any of their
respective rights under this Agreement shall be effective unless such waiver is
in writing and signed by the party charged with the waiver.

8.3.       

Benefit. This Agreement shall be binding upon and shall inure solely to the
benefit of the parties and their respective successors and assigns.

8.4.       

Costs and Expenses. Except as otherwise expressly provided in this Agreement
each party shall be solely responsible for all costs and expenses incurred by it
in connection with the negotiation, preparation, execution, and performance of
this Agreement and the transactions contemplated hereby.

8.5.       

Attorneys’ Fees. Except as otherwise expressly provided in this Agreement, if
any action or proceeding is commenced by either party to enforce their rights
under this Agreement or to collect damages as a result of the breach of any of
the provisions of this Agreement, the prevailing party in such action or
proceeding, including any bankruptcy, insolvency or appellate proceedings, shall
be entitled to recover all reasonable costs and expenses, including, without
limitation, reasonable attorneys’ fees and court costs, in addition to any other
relief awarded by the court.

8.6.       

Headings. The Article and Section headings contained in this Agreement are for
convenience only, and shall not control or affect the meaning or construction of
this Agreement.

8.7.       

Governing Law. This Agreement and all transactions contemplated hereby shall be
governed, construed and enforced in accordance with the laws of the State of
Texas, without giving effect to the conflict of laws provisions thereof, and any
action or proceeding seeking to enforce any provision of this Agreement. The
venue shall be Harris County, Texas.

18 

 

 

8.8.       

Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the applicable
facsimile number or via email at the email address specified in this Section
prior to 5:30 p.m. (Houston time) on a business day, (b) the next business day
after the date of transmission, if such notice or communication is delivered via
facsimile at the applicable facsimile number or via email at the email address
specified in this Section on a day that is not a business day or later than 5:30
p.m. (Houston time) on any business day, (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or
(d) upon actual receipt by the Party to whom such notice is required to be
given. Notices shall be addressed to:

(a)       

If to Seller, to:

Sydson Resources, L.P.

4550 Post Oak Place Dr., Suite 300

Houston, Texas 77027

Email: mmayell@sydson.com

Sydson Energy, Inc.

4550 Post Oak Place Dr., Suite 300

Houston, Texas 77027

Email: mmayell@sydson.com

(b)       

If to Buyer, to:

Texas South Energy, Inc.

3 Riverway, Suite 1800

Houston, Texas 77056

Email: jaskew@asconnenergy.com

8.9.       

Entire Agreement: This Agreement and the Schedules, exhibits, index of defined
terms, and certificates referred to herein or attached hereto embody the entire
agreement and understanding of the parties with respect to the transactions
contemplated by this Agreement and supersede all prior agreements and
understandings relating to matters provided for herein.

8.10.       

Severability. If any provision of this Agreement or application thereof to any
person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Agreement (including the application of such provision to
persons or circumstances other than those to which it is held invalid or
unenforceable) shall not be affected thereby, and each provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.

8.11.       

Time of the Essence. Time is of the essence of this Agreement.

19 

 

 

8.12.       

Independent Counsel. Buyer and Seller each acknowledge that: (a) they have been
represented by independent counsel in connection with this Agreement, (b) they
have executed this Agreement with the advice of such counsel, and (c) this
Agreement is the result of negotiations between the parties hereto and the
advice and assistance of their respective counsel.

8.13.       

Counterparts. This Agreement may be executed in any number of counterparts, each
of which will be deemed an original, but all of which together will constitute
one and the same instrument.

20 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers as of the date first above written.

BUYER:

TEXAS SOUTH ENERGY, INC. By:        /s/   James M. Askew Name:    James M. Askew
Title: Chief Executive Officer SELLER: SYDSON RESOURCES, L.P. By:  
     /s/   Michael J. Mayell Name: Michael J. Mayell SYDSON ENERGY, INC. By:  
     /s/   Michael J. Mayell Name: Michael J. Mayell Title: Chief Executive
Officer

21 

 

 

INDEX OF DEFINED TERMS

As used in this Agreement, the following defined terms have the meanings
indicated below:

“Action” means any action, cause of action (whether at law or in equity),
arbitration, claim or complaint by any Person alleging potential liability,
wrongdoing or misdeed of another Person, or any administrative or other similar
proceeding, criminal prosecution or investigation by any Governmental Authority
alleging potential liability, wrongdoing or misdeed of another Person.

“Affiliate” means any Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person specified. For purposes of this definition, control of a Person means the
power, direct or indirect, to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.

“Agreement” means this Asset Purchase Agreement, the exhibits and Schedules
hereto, the Index of Defined Terms and the certificates required to be delivered
hereunder.

“Acquired Assets” has the meaning ascribed to it in Section 1.1 of this
Agreement.

“Assignments” shall refer to the agreement attached hereto as Exhibit B that are
required in order to transfer the Acquired Assets to Buyer.

“Business” has the meaning ascribed to it in Recital “A” of this Agreement.

“Buyer” has the meaning ascribed to it in the first paragraph of this Agreement.

“Circumstance” has the meaning ascribed to it in Section 7.3 of this Agreement.

“Closing” has the meaning ascribed to it in Section 2.3 of this Agreement.

“Closing Date” shall mean the close of business on the date of the Closing.

“Commitments” has the meaning ascribed to in Section 3.9(a) of this Agreement.

“Environmental Laws” means any environmental law, regulation, rule, ordinance,
by-law or order or determination of any governmental or judicial authority at
the federal, state, or local level, applicable to the Business which is existing
as of the date of this Agreement.

“GAAP” means generally accepted accounting principles, consistently applied
throughout the specified period and in the immediately prior comparable period.

“Governmental or Regulatory Authority” means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United
States, any foreign country, or any domestic or foreign state, county, city or
other political subdivision.

“Hazardous Material” means any hazardous or toxic substance or waste as defined
in applicable Environmental Laws.

22 

 

 

“Knowledge” in connection with any representation or warranty given by the
Seller, shall mean the actual knowledge of Michael J. Mayell, and the knowledge
that Michael J. Mayell would have, after due inquiry; and “knows” or “is aware”
shall have a correlative meaning.

“Laws” means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country, or any domestic or foreign state, county, city, or other political
subdivision or of any Governmental or Regulatory Authority.

“Legal Requirements” shall mean all statutes, laws, ordinances, codes, rules,
regulations or other legal requirement enacted, adopted, promulgated or applied
by any Governmental Authority.

“Liabilities” or “Liability” means any and all of Seller’s debts, losses,
liabilities, offsets, claims, damages, fines, commitments, obligations, payments
and accounts payable (including, without limitation, those arising out of any
award, demand, assessment, settlement, judgment or compromise relating to any
Action), and accruals for out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses incurred in investigating,
preparing or defending any Action) of any kind or nature whatsoever, whether
absolute, accrued, contingent or other, and whether known or unknown.

“Lien” means any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (statutory or otherwise), preference,
priority, charge or other encumbrance, adverse claim (whether pending or, to the
knowledge of the Person against whom the adverse claim is being asserted,
threatened) or restriction of any kind affecting title or resulting in an
encumbrance against property, real or personal, tangible or intangible, or a
security interest of any kind, including, without limitation, any easement,
servitude, encroachment, conditional sale or other title retention agreement,
any right of first refusal on real property, and any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or equivalent
statute) of any jurisdiction (other than a financing statement which is filed or
given solely to protect the interest of a lessor).

“Material Adverse Effect” means an adverse effect, event, violation, inaccuracy
or circumstance of Ten Thousand Dollars and 00/100 ($10,000) or more on any
representation, warranty, condition (financial or otherwise), operating results,
business, prospects, assets, operations, employee relations or customer or
supplier relations of the Seller.

“Ordinary Course of Business” means the ordinary course of business, materially
consistent with past custom and practice (including with respect to quantity and
frequency).

“Person” means any natural person, corporation, general partnership, limited
partnership, proprietorship, limited liability company, limited liability
partnership, other business organization, trust, union, association, or
Governmental or Regulatory Authority.

“Purchase Price” has the meaning ascribed to it in Section 2.1 of this
Agreement.

“Required Consents” means the consents set forth in Schedule 3.4, of which
executed copies are set forth in Exhibit C.

“Schedule” means the disclosure schedules which are referred to through this
Agreement.

“Seller” has the meaning ascribed to it in the first paragraph of this
Agreement.

23 

 

 

“Software” shall mean all software, including without limitation data files,
source code, object code, application programming interfaces, computerized
databases and other software-related specifications and documentation.

“Survival Date” has the meaning ascribed to in Section 7.5 of this Agreement.

“Taxes” or “Tax” means all taxes, charges, fees, levies and other assessments,
including, without limitation, income, excise, property, payroll, sales, use,
franchise and other taxes, imposed by any federal, state, local or foreign
taxing authority, including any interest, penalties or additions.

 

24