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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
 
BRIAN MAHOOD
Businessman, residing in the City of Calgary, Province of Alberta
(“Mahood”)
 
and
KERRISDALE RESOURCES LTD.
a corporation incorporated under the laws of Alberta,
having an office in the City of City of Calgary, Province of Alberta
that is the wholly owned subsidiary of Scout
(“Corporation”)
 
and
 
KERRISDALE CONSULTING INC.
a corporation incorporated under the laws of Alberta,
having an office in the City of City of Calgary, Province of Alberta
that is owned, controlled and managed by Mahood
(“Kerrisdale”)
 
WHEREAS:
 
A.
The Parties hereto are parties to a Share Purchase Agreement dated effective
January 1, 2008, under which Scout as “Purchaser” agreed with Mahood as “Vendor”
to purchase all the issued securities of the Corporation that were owned by
Mahood alone – 100 Class “A” Common Voting Shares – the “Shares” for a purchase
price of Cdn $775,000.00 – the “Purchase Price” – the “Agreement”.  Scout paid
$425,000 of the Purchase Price to the closing of the Agreement.

 
B.
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.

 
C.
The Parties agreed to amend the Agreement under the “Share Purchase Agreement –
Amendment Agreement” entered into amongst the Parties effective December 31,
2008, under which the Purchase Price was increased by $10,000.00 to $785,000.00,
and the Corporation for Scout, paid Mahood $35,000.00 of the balance of the
Purchase Price, the balance remaining to be paid over time under the Agreement
then being reduced to $325,000.00, the portion of the Purchase Price having been
paid by Scout and the Corporation to Mahood being $460,000.00 – such agreements
shall be referred to collectively as the “Agreements”.

 

 
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D.
Pursuant to the Agreements and as security to Mahood for the payment in full of
the balance of the Purchase Price, the Corporation issued to Mahood a General
Security Agreement over and in respect of its assets, for the balance owing
under the Purchase Price obligation of Scout to Mahood, registered in Alberta
under the Personal Property Security Act as Registration 08061834982 on June 18,
2008 – the “GSA”.

 
E.
The cash flow from operations of the Corporation have not been sufficient to
fund the obligations of Scout and the Corporation as joint obligors to Mahood
under the Agreements for the payment of the balance of the Purchase Price, to
enable the Corporation to keep current on its term payments under the Agreements
and the GSA.

 
F.
Mahood has agreed with Scout and the Corporation to forego his right to collect
the balance of the Purchase Price owing to him under the Agreements on the
condition that Scout sell him the Shares for $1.00; and that all Parties
involved in the Agreements release each other.

 
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.
“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.

 
2.
“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.

 
3.
“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.

 
4.
“Rental Arrangement” means the agreement entered into between the Corporation
and Kerrisdale and contained in the Agreements, wherein Kerrisdale has agreed to
provide the use of space to the Corporation in premises that Kerrisdale leases
in the building with an address of 600, 600 – 6th Avenue S.W. Calgary Alberta
T2P 0S5.

 
5.
“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.

 
6.
“Three Parties” means jointly and severally, Scout, the Corporation and Mahood;

 
7.
“Unpaid Purchase Price” means that portion of the Purchase Price payable by
Scout and the Corporation to Mahood under the Agreements and the GSA remaining
for them to pay Mahood to the Effective Date for the purchase of the Shares,
plus all interest that shall have accrued due for payment on such amount from
and after April 1, 2009 as provided in the Agreements, the principal portion of
which is $325,000.00.

 
8.
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.
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

 
MERGER OF AGREEMENTS, RIGHTS AND OBLIGATIONS OF THE PARTIES
 
10.
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.

 
SETTLEMENT & DISCHARGE OF RIGHTS & OBLIGATIONS
 
11.
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:

 
 
(a)
The Three Parties agree that the Agreements, the GSA, the Management Agreement
and are terminated;

 
 
(b)
Kerrisdale and Scout agree that the Rental Arrangement is terminated;

 
 
(c)
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;

 
 
(d)
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;

 
 
(e)
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;

 
 
(f)
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;

 
 
(g)
Mahood fully and absolutely releases Scout and the Corporation jointly and
severally, their officers, directors, employees, agents, professional advisors,
contractors, associated and affiliated corporations, their successors and
assignees, from any and all claims, liabilities or obligations in relation to
all prior association and conduct between them whatsoever and however arising
and for all work, services and products rendered or delivered by and between
them under the Agreements and the GSA, including any and all claims in contract,
in equity and in quantum meruit;

 
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  (h) Scout and the Corporation jointly and severally fully and absolutely
release Mahood, his employees, agents, professional advisors, contractors,
associated and affiliated corporations, their successors and assignees, from any
and all claims, liabilities or obligations in relation to all prior association
and conduct between them whatsoever and however arising and for all work,
services and products rendered or delivered by and between them under the
Agreements and the GSA, including any and all claims in contract, in equity and
in quantum meruit;      

 
(i)
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;

 
 
(j)
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;

 
 
(k)
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;

 
 
(l)
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;

 
 
(m)
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.
At the closing on the Closing Date and as of the Effective Date:

 
 
(a)
Scout’s Performance Obligations

 
 
(i)
Scout shall sign and deliver to Mahood a Transfer of the Shares for
consideration payable by Mahood to Scout of $1.00;

 
 
(ii)
Scout shall cause to be signed and delivered to Mahood a Resignation of Mr.
Jason Walsh, 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;

 
 
(iii)
Scout shall cause the Board of Directors of the Corporation to sign Consent
Resolutions to conduct the following business for the Corporation;

 
 
(A)
To approve the transfer of the Shares from Scout to Mahood and to issue a
replacement Share certificate therefor in the name of Mahood;
        (B) To approve the change of counsel, auditors, accountants and
registered and records office of the Corporation to:

 
 
(1)
Counsel – Colin Q. Winter Professional Corporation, 240, 600 – 6th Avenue S.W.
Calgary Alberta T2P 0S5;

 
(2)
Accountants – Jim Robinson C.A.

 
(3)
Registered & Records Office – c/o Colin Q. Winter Professional Corporation, 240,
600 – 6th Avenue S.W. Calgary Alberta T2P 0S5;

 
 
(iv)
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 Mahood on the Effective Date for 100 Class “A” Common Shares of the
Corporation;

 
 
(v)
Scout shall cause counsel of its choice for Scout, to issue an opinion letter to
Mahood, 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;

 
 
(vi)
Scout shall cause all counsel for both Scout and the Corporation, including
Hemsworth Schmidt Barristers & Solicitors of Vancouver, B.C., and Hustwick
Hodgson & Payne 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;      
 
(viii)
Board of Directors of the Corporation to sign and deliver a replacement
certificate for the certificate for the Shares, issued in the name of Mahood on
the Effective Date for 100 Class “A” Common Shares of the Corporation;

 
 
(ix)
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, Mahood 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 Mahood, any person related or
associated with Mahood or to any legal entity in which Mahood holds any legal or
beneficial rights, unless and until Mahood obtains the written consent of a
representative of Scout so to do) and Mahood 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;

 
 
(x)
No later than 48 hours before the agreed time for the closing on the Closing
Date, Scout shall deliver to counsel for Mahood a copy of Scout’s proposed Press
Release and Mahood shall have an opportunity to comment on the content of that
Release;

 
 
(xi)
Scout shall cause to be delivered to Mahood the Closing Book and Seal for the
Corporation.

 
13.
At the closing on the Closing Date and as of the Effective Date:

 
 
(a)
Mahood’s Performance Obligations

 
 
(i)
Mahood shall deliver to counsel for Scout a Discharge of Security Interest from
Mahood to the Corporation under the GSA; and immediately following the closing,
Mahood 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 Mahood as
Secured Party against the Corporation as Debtor 08061834982 that Mahood 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

 
 
(ii)
Mahood shall accept delivery of Scout’s and where applicable, the Corporation’s,
obligations for delivery at the closing.

 
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14.
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, Mahood 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 Mahood
on the Closing Date.

 
15.
Mahood, 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 Mahood, 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 Mahood and the Corporation may require for
the completion of such financial statements and the preparation and filing of
that return.

 
TERMS AND CONDITIONS FOR THE TRANSFER OF THE SHARES
 
16.
At the closing on the Closing Date and as of the Effective Date:

 
 
(a)
Scout’s Representations, Warranties & Covenants

 
 
(i)
Scout by this instrument represents and warrants to Mahood the same
representations and warranties Mahood, 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:

 
 
(A)
All references to “the Company” shall be to the Corporation;

 
 
(B)
Clause 4.1(cc) shall be deleted;

 
 
(C)
Clause 4.1(dd) shall have inserted for “Brian Mahood – President, Secretary and
Director” – “Jason Walsh – President, Secretary Treasurer and Director”;

 
 
(ii)
Scout by this instrument makes the covenants to Mahood that Mahood, 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:

 
 
(A)
All references to “the Company” shall be to the Corporation;

 
 
(B)
In Clause 4.2(b) vi) “thirty (30) days” shall be replaced with “fifteen (15)
days”;

 
 
(C)
In Clause 4.6 “$700,000.00” shall be replaced with “$50,000.00”;

 
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(b)
Mahood’s Representations, Warranties & Covenants

 
 
(i)
Mahood 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 Mahood 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:

 
 
(A)
All references to “the Company” shall be to the Corporation;

 
 
(B)
Clause 5.1(a) shall be deleted;

 
 
(C)
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.

 
 
(c)
Scout & Mahood Conditions Precedent and Closing Arrangements

 
 
(i)
Mahood 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 Mahood as
“Vendor” in the Agreement, with such terms and conditions to apply to Scout and
Mahood 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:

 
 
(A)
All references to “the Company” shall be to the Corporation;

 
 
(B)
In Clause 7.1, The time for closing on the Closing Date shall be as agreed in
this Settlement Agreement;

 
 
(C)
Clause 7.2(e) shall be deleted;

 
 
(D)
Clauses 7.3(a) to 7.3(e) shall be deleted

 
17.
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.

 
CONFIDENTIALITY
 
18.
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.

 
GENERAL PROVISIONS
 
19.
This Settlement Agreement shall be binding upon the Parties hereto and their
successors and assignees where applicable.

 
20.
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.
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.

 
23.
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.

 
24.
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.

 
25.
The headings utilized in this Settlement Agreement are for convenience only and
are not to be covenants and agreements contained in this Settlement Agreement.

 
26.
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.

 
IN WITNESS WHEREOF the parties have executed this Settlement Agreement as of the
day and year first above written.

SCOUT EXPLORATION INC.
 
Per:     ____________________
KERRISDALE RESOURCES LTD.
 
Per:     ____________________
           Duly Authorized Officer             Duly Authorized Officer      
KERRISDALE CONSULTING INC.
 
Per:     ____________________
              Brian Mahood, President         ________________________________
________________________________
Witness to the signature of Brian Mahood
Brian Mahood

 
 
 
 
 
 

 

 
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