ex10-1.htm


    Exhibit
      10.1

     

    Acquisition
      & Participation Agreement

    


    


    1.          In
      2006 Polaris Holdings, Inc. of 2411 Fountainview Drive Suite
      120, Houston TX 77057 (“Polaris” or the “Seller”) purchased
      various oil and gas leases (the “Leases”) from Sunray Operating Company
      LLC (“Sunray” or the “Operator”).

    


    2.          Velocity
      Oil & Gas, Inc., a company incorporated in Nevada with offices at
      595 Howe Street, Suite 323, Vancouver BC Canada V6C 2T5 (“Velocity”, the
“Company” or the “Buyer”), agrees to purchase from Polaris,
      individually or jointly referred to as the Party or Parties, specific interests
      in the Leases and secure participation in the further development of the Leases
      as detailed in Section 5 and Exhibit “A” of this Agreement (“the
      Properties”).

    


    3.          The
      agreed total consideration payable by Buyer to Seller for the Properties is
      FOUR
      MILLION (4,000,000) common shares in Velocity (the “Purchase Shares”) and SIXTY
      THOUSAND United States dollars ($ 60,000) (the “Purchase Cash”) (together the
“Consideration”). The Buyer hereby agrees to tender to the Seller the
      Consideration as follows:

    


    
      	
               

            	
              (i)

            	
              Upon
                execution of this Agreement the Buyer will issue to the Seller the
                Purchase Shares which will be credited against the Consideration.
                These
                shares are non-returnable and for the Seller to keep even if the
                Buyer
                doesn’t complete the transaction as contemplated under this Agreement
                other than for reasons relating to Clauses 4 and 6 of this
                Agreement;

            


    

    


    
      	
               

            	
              (ii)

            	
              At
                Closing TWENTY THOUSAND United States dollars ($
                20,000);

            


    

    


    
      	
               

            	
              (iii)

            	
              On
                or before January 1, 2008 the balance of the Purchase Cash FOURTY
                THOUSAND
                United States dollars ($ 40,000). If the balance of $40,000 is not
                paid on
                or before January 1, 2008 the Seller can elect to convert the debt
                into
                stock at a conversion price of $0.01 per share or the lowest price
                quoted
                for the stock in the last six months – whichever is lower. Alternatively,
                the Seller can elect to take the “Leases” back and forfeit the $40,000 or
                the stock but keep the original $20,000 payment as
                compensation.

            


    

    


    


    4.          The
      “Effective Date” shall be September 1, 2007 and the “Closing Date” of the sale
      and purchase shall be September 1, 2007. Closing shall occur at a mutually
      agreed location on the Closing Date. At Closing the Buyer shall tender, as
      hereinafter set forth, the part-Consideration detailed in Section 2 (ii).
      Simultaneously, Seller, as Assignor, shall execute and deliver to the Buyer
      two
      counterpart originals of an assignment or assignments conveying the Property
      to
      the Buyer as of the Effective Date. Buyer agrees to execute the assignment
      as
      Assignee therein. One set of the original and fully executed assignment shall
      be
      sent for recording in the relevant county in Texas immediately following
      Closing. Buyer shall retain the other set of the original executed assignment.
      Seller shall prepare and submit to Buyer for its review the proposed form of
      assignment at least 5 days prior to the Closing Date.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.          Buyer
      will acquire and participate as follows:

    


    
      	
               

            	
              (i)

            	
              A
                ten percent (10%) Working Interest (“WI”) in the Davis No. 1 well;
                and

            


    

    
      	
               

            	
              (ii)

            	
              A
                ten percent (10%) WI in the Express No. 1 Fite
                well.

            


    

    


    The
      specific interests in the Properties are detailed in Exhibit “A” of this
      Agreement.

    


    6.          Buyer
      will acquire the Properties on the following conditions:

    


    
      	
               

            	
              (i)

            	
              A
                satisfactory review of the technical and commercial data substantiating
                the Consideration paid for the Properties under this Agreement to
                the
                satisfaction of the Buyer;

            


    

    


    
      	
               

            	
              (ii)

            	
              A
                satisfactory review of the Joint Venture Operating Agreement by the
                Buyer.

            


    

    


    Buyer,
      and its representatives, shall be entitled to conduct a due-diligence review
      of
      the Leases at the sole risk and expense of Buyer. Such due-diligence review
      must
      be completed by Buyer not less than five days prior to Closing. Seller shall
      provide Buyer and its representatives access to all data pertaining to the
      Leases. Buyer shall satisfy itself as to title and physical condition of the
      Leases including the environmental condition.

    


    7.          On
      June 30, 2007 the total issued capital of Velocity was 10,882,000 shares. The
      Purchase Shares increase the issued capital to 14,882,000 and represents 26.9%
      of the shares of Velocity. If, on or before September 1, 2009 (a period of
      two
      years), the number of issued shares increases, Velocity shall issue such number
      of additional shares to Polaris as to keep Polaris shareholding at a minimum
      of
      25% of the total issued shares of the Company.

    


    8.          All
      expenses incurred by Buyer in connection with or related to the submission
      of
      this offer, the contemplated transaction, and all other matters relevant to
      Closing, including without limitation, all fees and expenses of counsel,
      accountants and financial advisors employed by the Buyer shall be borne solely
      and entirely by the Buyer.

    


    9.          Buyer
      and Seller agree that the terms and conditions of this Agreement as well as
      all
      data and information provided to Buyer by Seller shall be treated as
      confidential and shall not be disclosed to any third party without the prior
      written consent of the parties hereto, except as may be required by law. In
      the
      event Closing does NOT occur or this Agreement otherwise becomes null and void
      Buyer agrees to return to Seller any and all information regarding the Leases
      that were provided to Buyer by Seller.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.          The
      Buyer of the Properties shall be based solely on the Buyer’s evaluation of the
      Leases within the agreed period and Seller warrants no other disclosure. The
      election to complete the acquisition and funding of the Leases shall reside
      in
      the sole election of the Buyer.

    


    11.          This
      Agreement shall be interpreted under the Laws of the State of
      Texas.

    


    12.          This
      Agreement and the exhibits hereto constitute the full and entire understanding
      and agreement between the Parties and no Party shall be liable or bound to
      any
      other in any manner by any representations, warranties, covenants and agreements
      except as specifically set forth herein.

    


    13.          The
      parties hereto agree to comply with any and all applicable laws, rules and
      regulations affecting the Properties and the contemplated
      transaction.

    


    


    Agreed
      to
      and accepted this 8th day of
      August,
      2007

    


    for
      Buyer:

    


    Velocity
      Oil & Gas, Inc.

    


    


    By:          
      /S/ Frank A. Jacobs

    Frank
      A. Jacobs, President &
CEO

    


    


    


    Agreed
      to
      and accepted this 8th day of
      August,
      2007

    


    for
      Seller:

    


    Polaris
      Holdings, Inc.

    


    


    


    


    


    By:          
      /S/ Ingolf Grinde, August 20, 2007

    


    Ingolf
      Grinde, President &
CEO

     

    Agree
      to contract only Exhibit "A" to be verified.

    It
      looks ok, but the operator Sunray would have to
      verify the correct names.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      “A”

    


    Attached
      to and made a part of that certain Agreement between Velocity Oil & Gas,
      Inc, as Buyer, and Polaris Holdings, Inc., as Seller, regarding the purchase
      and
      sale of the hereinafter described “Leases.”

    


    The
      Leases:

    


    
      	
               

            	
              o

            	
              Manvel
                Field - Davis No. 1 well

            


    

    
      	
               

            	
              Leases
                covering approximately 80 acres of land in Brazoria County, Texas.
                Buyer
                will acquire an undivided 10% interest in the leases, subject to
                existing
                overriding royalty interests equal to 25% of 8/8.  Additionally,
                Gulf Coast Energy is entitled to a 25% working interest after the
                payout
                of the Davis No. 1 well on the
                leases.

            


    

    


    
      	
               

            	
              o

            	
              Sandy
                Point – Express No. 1 Fite
                well

            


    

    
      	
               

            	
              Leases
                covering approximately 160 acres of land in Brazoria County, Texas.
                Buyer
                will acquire an undivided 10% interest in the leases, subject to
                existing
                overriding royalty interests equal to 25% of 8/8.  Additionally,
                Sunray is entitled to a one-eighth of eight-eights (12.50% of 8/8)
                working
                interest, proportionally reduced at
                payout.