Document:

petro8k100307ex10-3.htm

    
      

      

    

    

    ASSIGNMENT
      AGREEMENT

    

    

    This
      Assignment Agreement is entered into this 30th day of
      August,
      2007, by and between:

    

    PetroSouth
      Energy Corporation – Sucursal Colombia, (hereinafter PetroSouth) the Colombian
      branch office of a foreign corporation duly incorporated by Public Deed No.
      00657 or 2007 of Notary 35 of Bogota, acting herein through its legal
      representative Mr. Felipe Pimienta Barros with C.C.79.785.924; and

    

    Petroleum
      Equipment International Ltda. – PEI Ltda.  (hereinafter PEI) a
      Colombian Company duly incorporated by Public Deed No. 4.533 or 1989 of Notary
      25 of Bogota, acting herein through its legal representative Mr. Omar Leal
      Quiroz with C.C.91.241.011.

    

    

    WHEREAS

    

    

    A
      Contract for the Exploration and Exploitation of the Buenavista Sector was
      entered into by Tecnicontrol S.A. and PEI (with a joint and several liability
      by
      reason of an “Union Temporal” agreement- Union Temporal Omega Energy) with the
      Agencia Nacional de Hidrocarburos (the ANH) on November 8, 2004 (the Buenavista
      Contract).

    

    The
      Buenavista Contract is actually in the Third Exploration Phase, and the actual
      Parties thereto have committed to continue with the exploration obligations
      under the Minimum Exploration Program at least through the year
      2008.

    

    Under
      the
      Buenavista contract the Bolivar -1 well was drilled with it a Discovery was
      made
      causing Contractor to apply for an Exploitation Area and the presentation of
      a
      Development Plan currently under consideration of the ANH.

    

    Bolivar
      -1 well is currently producing 19.1° API crude at an average monthly rate of
      approx. 3,725 Bbls, and production is currently being sol
      domestically.

    

     

     

     

     

     

    
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    Through
      successive assigns and changes in ownership the Participating Interests in
      the
      Buenavista Contract, in front of the ANH, today appear to be distributed as
      follows:

    

    

    
      	
              Tecnicontrol

            	
              50%

            
	
              Bohemia

            	
              25%

            
	
              PEI

            	
              25%

            

    

    

    

    Through
      private agreements to be effective among the Parties, the Participating
      Interests in the Buenavista Contract today appear to be:

    

    

    
      	
              TC
                Oil and Services, S.A. (TCOil)

            	
              50%

            
	
              Quality
                Services and Investments – QSI

            	
              12.5%

            
	
              PEI

            	
              37.5%

            

    

    

    

    On
      April
      20, 2007, TCOil and PEI (as Members of the UTOE) have entered into a Heads
      of
      Agreement with the officers of Burgan Energy PTY, Ltd (hereinafter “Burgan”), a
      company of Australia, whereby these investors agree to certain financial and
      operational obligations, (as described in the Annex 1 to this MoU) namely to
      pay
      in full the AFE’s for the drilling, completion and short tests of:

    

    
      	
               

            	
              (i)

            	
              1
                exploration well in the Bolivar structure (inside the Exploitation
                Area)

            

    

    
      	
               

            	
              (ii)

            	
              1
                exploration well to satisfy the 4th
                Phase of the
                Minimum Exploration Program under the Buenavista
                Contract.

            

    

    
      	
               

            	
              (iii)

            	
              1
                development well.

            

    

    

    On
      June
      7, 2007, PEI and PetroSouth entered into a Memorandum of Understanding (the
      MoU), whereby PEI agreed to sell and assign 16% of its unencumbered
      Participating Interests in the Buenavista Contract to PetroSouth, provided
      PetroSouth had complied with its payment obligations thereunder.  This
      MoU was also executed by TCOil in its capacity as Operator for the Buenavista
      Contract and as creditor and titleholder of encumbrances upon PEI’s
      Participating Interest.

    

    On
      June
      7, 2007, PetroSouth paid PEI as good and valuable consideration, the amount
      of
      Five hundred thousand US dollars (USD 500,000).

    

     

     

    

       

      
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    On
      July
      2nd, 2007,
      PetroSouth paid PEI or its designated beneficiaries, as good and valuable
      consideration, the amount established on the MoU; thus earning the right to
      begin to receive sixteen percent (16%) of distributable production originated
      in
      the Bolivar -1 well accrued as July 1st, 2007,
      and in any
      other wells within the Buenavista contract Area as of that date.

    

    On
      July
      10, 2007, TCOil issued a certification indicating that “as of July 2nd, 2007,
      PEI has
      paid in full any and all liabilities for TC Oil “...and” as of that date there is
      no hindrance, limitation, lien nor any other form of encumbrance on the 16%
      Participating Interest that PEI is assigning to PetroSouth”.

    

    The
      same
      TC Oil certification warrants that “Because of the assignment by PEI to
      PetroSouth, the Participating Interests in the Buenavista Contract shall be
      distributed as follows:

    

    

    
      	
              TC
                Oil

            	
              50%

            
	
              PEI
                LTDA

            	
              21.5%

            
	
              Quality
                Services and Investors S.A.

            	
              12.5%

            
	
              PetroSouth

            	
              16%

            

    

    

    

    PetroSouth
      desires to acquire sixteen percent (16%) of the total Participating Interests
      in
      the Buenavista Contract, actually belonging to PEI, and to have full, clear
      and
      unencumbered title to such 16%, including 16% of any production, under any
      public and private agreements.

    

    NOW
      THEREFORE, in consideration of the premises and of the payments, mutual
      covenants and agreements set forth in the MoU and under this Assignment
      Agreement and other good and valuable consideration, the receipt and sufficiency
      of which is acknowledged hereby, the Parties hereto agree as
      follows:

    

     

     

    

       

      
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    DEFINITIONS
      AND INTERPRETATION

    

    
      	
              1.1

            	
              Definitions

            

    

    

    When
      used in this Assignment Agreement,
      the following terms and expressions shall have the following
      meanings:

    

    
      	
              (a)

            	
              “Accounting
                Procedure” means the procedure attached as exhibit “A” to the Joint
                Operating Agreement;

            

    

    

    
      	
              (b)

            	
              “AFE”
                means Authority for Expenditure to include all costs, surface and
                down-hole related to the drilling, completion and short term tests
                of a
                given well;  and “Drilling AFE” means for the purpose of this
                Assignment Agreement, the Authorization for Expenditure regarding
                only the
                down hole costs including the drilling, completion and short term
                tests
                for a given well.  This definition will apply to the obligations
                under the “Heads of Agreement” entered into with the Burgan
                Energy.

            

    

    

    
      	
              (c)

            	
              “Agreed
                Interest Rate” means the maximum interest rate allowable under Colombian
                law (maxima tasa de interes
                moratorio).

            

    

    

    
      	
              (d)

            	
              “Agreement”
                means this Assignment Agreement.

            

    

    

    
      	
              (f)

            	
              “Applicable
                Law” means, the Laws of Colombia.

            

    

    

    
      	
              (e)

            	
              “Assignment
                Approval” means the consent by ANH required for the assignment of the
                Earned Interest by PEI to
                PetroSouth;

            

    

    

    
      	
              (f)

            	
              Burgan
                means Burgan Energy PTY Ltd. a company of Australia, in the process
                of
                establishing its Colombian branch office which has agreed to perform
                the
                obligations and responsibilities described in Annex 1
                hereto.  Should Burgan sell or assign or change its name or
                change of control, when used in this Assignment Agreement or in the
                JOA
                the term shall be construed to apply to any successor, purchaser,
                and
                assignee or Burgan.

            

    

    

    
      	
              (g)

            	
              “Business
                Day” means any day on which banks are open to transact commercial business
                generally in both Houston, Texas and bogota, D.C., Colombia, but
                specifically excluding any Saturday, any Sunday or any other day
                of the
                week that is a legal or statutory holiday in either Houston, Texas
                USA or
                Bogota, D.C., Colombia;

            

    

    

     

    

       

      
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              (h)

            	
              “Claim”
                means any claim, demand, lawsuit, proceeding, hearing, arbitration
                or
                governmental investigation;

            

    

    

    
      	
              (i)

            	
              “Contract”
                or ‘Buenavista Contract” means the Contract executed on November 8, 2004,
                Tecnicontrol S.A. and PEI, jointly as Union Temporal Omega Energy
                with the
                “Agencia Nacional de Hidrocarburos – ANH – “, for the Exploration and
                Exploitation of Hydrocarbons for the Buenavista Sector, (hereinafter
                the
                Buenavista Contract) which is currently valid and
                enforceable;

            

    

    

    
      	
              (j)

            	
              “Earned
                Interest” means and undivided 16% Participating Interest calculated as of
                the Earning Date

            

    

    

    
      	
              (k)

            	
              “Earning
                Date” has the meaning given thereto in Section
                2.1.

            

    

    

    
      	
              (l)

            	
              “Earning
                Obligations” has the meaning given thereto in Section
                2.1;

            

    

    

    
      	
              (m)

            	
              “Encumbrance”
                means any lien, pledge, option to sale or purchase, or agreement
                in favour
                of a third party, guaranteeing payment obligations and impeding the
                free
                and clear transfer of the participation interests.  In the
                context of this Assignment Agreement and without prejudice to any
                other
                cases, Encumbrance shall mean the penalties and guarantees offered
                by PEI
                to TC Oil as collateral for its investment and as described in the
                “Convention Unico de Pages, and any amendments thereto, or to any
                “Fiduciaria” in regard to its share of
                production.

            

    

    

    
      	
              (n)

            	
              “Joint
                Property” means any of the facilities, property, equipment, materials and
                other assets, rights and interests that would be “Joint Property” under
                the Operating Agreement if the Operating Agreement were to have come
                in to
                effect and governed operations on the Contract Area from and after
                the
                date of this Agreement;

            

    

    

    
      	
              (o)

            	
              “Liabilities”
                means all liabilities and obligations, under other Applicable Law,
                under
                contract or otherwise, whether contractual, statutory or otherwise,
                whether absolute or contingent and whether based on fault, strict
                liability or otherwise;

            

    

    

    
      	
              (p)

            	
              “Minimum
                Exploration Program” has the meaning given thereto in the
                Contract.

            

    

    

    
      	
              (q)

            	
              “Operating
                Agreement or Joint Operation Agreement or JOA” means the joint operating
                agreement to be entered into among the TCOil, PEI, Quality Services
                and
                Investors S.A. and PetroSouth and as a condition precedent for the
                third
                payment by PetroSouth.  The Operating Agreement shall be based
                on the AIPN (International Association of Petroleum Negotiators)
                most
                recent form;

            

    

     

    
 

    
       

      
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              (r)

            	
              “Participating
                Interest” means an undivided beneficial and legal interest in and to the
                Contract, the Contract Area and the Joint Property and which shall
                be
                expressed as a percentage of the total interests of all Parties
                therein;

            

    

    

    
      	
              (s)

            	
              “Party”
                means a party to this Assignment
                Agreement;

            

    

    

    
      	
              (t)

            	
              “Phase”
                means a phase of the exploration period as defined in the Contract
                and,
                when “Phase” is followed by a numeral, means the similarly numbered phase
                under the Contract;

            

    

    

    
      	
              (u)

            	
              Quality
                Services and Investors S.A., (QSI) a company of Colombia established
                by
                public deed number 1734 of 2003, from Notary 34 of
                Bogota.

            

    

    

    
      	
              (v)

            	
              TC
                Oil and Services S.A. (TC OIL), a company of Colombia established
                by
                public deed 2.492 or 2.004, from Notary 39 of
                Bogota.

            

    

    

    All
      definitions contained n the Buenavista Contract and in the JOA are adopted
      and
      incorporated into this Assignment Agreement by reference.

    

    
      	
              2.

            	
              Schedule
                of Payments:

            

    

    

    
      	
              2.1

            	
              PetroSouth
                has paid to PEI or to PEI designated beneficiaries and to PEI’s
                satisfaction:

            

    

    

    
      	
               

            	
              (i)

            	
              Five
                hundered thousand dollars (SD 500,000) on June 7, 2007, upon the
                signature
                of the MoU.

            

    

    

    
      	
               

            	
              (ii)

            	
              Nine
                hundred fify thousand US dollars (USD 950,000) on July 2nd,
                2007.  (This payment had the 5% discount, because was paid
                before July 10, 2007).

            

    

    

    
      	
              2.2

            	
              PetroSouth,
                have to pay to PEI the next following
                payments:

            

    

    

    
      	
               

            	
              (iii)

            	
              One
                million US Dollars (USD 1,000,000) on September 10,
                2007.

            

    

    

    
      	
               

            	
              (iv)

            	
              One
                million US Dollars (USD 1,000,000) on the 31st
                of May
                2008.

            

    

    

     

    

       

      
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    Upon
      making these payments to PEI, PetroSouth shall have complied with its Earning
      Obligations.

    

    
      	
              3.

            	
              Content/Scope
                of the Payments by PetroSouth.

            

    

    

    
      	
              3.1

            	
              PEI
                understands, agrees and accepts that the Payments made by PetroSouth
                (irrespective of the destination of such Payments) constitute a full
                complensation for the 16% Participating Interest, a compensation
                for any
                costs incurred to date (“sunk costs”) and a payment in advance of any and
                all operational (capex and opex) and administrative costs of the
                petroleum
                operations related to the performance
                of:

            

    

    

    (i)  One
      (1) exploration well required to comply with Phase 3 of the Minimum Exploration
      Plan;

    

    (ii)  One
      (1) exploration well scheduled to be drilled within the Exploitation Area,
      designated as Bolivar 2 or Buenavista -1 and

    

    (iii)  the
      exploration well required to comply with Phase 4 of the Minimum Exploration
      Plan; the spudding date expected to be no later than 17th October
      of 2008,
      which implies payment by PetroSouth no later then 31st March of
      2008.

    

    Any
      Operation other than the Operations described in this section 4.1, shall be
      decided, and paid for according to the general rules and practices of the oil
      industry as contained in the JOA to be entered into among all the Parties having
      Participating Interests in the Buenavista contract.

    

    
      	
              3.2

            	
              Payments
                by PetroSouth are considered sufficient and timely to cover PetroSouth’s
                share in any and all administrative and operational costs and expenses
                (capex and opex) related to the operations and activities described
                in
                4.1, (irrespective of the actual costs and irrespective of payments
                received from other investors) and PEI shall instruct the Operator
                to
                refrain from requesting any further funding from PEI in regard to
                the
                activities and operations described in section
                4.1.

            

    

    

    
      	
              3.3

            	
              Should
                PetroSouth delay any of the payments described in 2.2 (i) or (ii)
                hereinabove, PetroSouth agrees to pay the Agreed Interest Rate which
                shall
                accrue during no more than 30 days.  Should delay continue after
                this 30 day period and without prejudice to the Agreed Interest rate,
                PetroSouth shall be considered in Default and section 7 of this Assignment
                Agreement shall apply.

            

    

    

     

    

       

      
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              4.

            	
              Effective
                of Earning Obligations.

            

    

    

    
      	
              4.1

            	
              On
                the Day when PetroSouth has met its Earning Obligations, it shall
                acquire
                the right to 16% of Joint Property, including the right to receive
                16% of
                Distributable Production (total production minus royalties), originated
                in
                the Bolivar -1 well.

            

    

    

    
      	
              4.2

            	
              PetroSouth
                shall be entitled to receive from Operator all the information
                (operational, financial, commercial or otherwise) regarding the Buenavista
                Contract.

            

    

    

    
      	
              4.3

            	
              PetroSouth
                shall be entitled to receive in kind and dispose of 16% of the
                Distributable Production originated in the Bolivar -1 well and any
                other
                well that becomes productive within the Buenavista Contract
                Area.  PEI shall release this portion of production from any
                “fiducia” or any other form of Encumbrance, in such a way that PetroSouth
                shall be free to sell its share of production independently, from
                the
                rest.

            

    

    

    
      	
              4.4

            	
              PEI
                shall advise Burgan of this Assignment Agreement and PetroSouth
                requirement that any JOA should include PetroSouth as legal holder
                of 16%
                of Participating Interests in the Buena Vista
                Contract.

            

    

    

    
      	
              5.

            	
              PEI’s
                obligations in regard to PetroSouth’s
                share.

            

    

    

    
      	
              5.1

            	
              In
                the event Burgan does not perform (by default or otherwise), and
                the
                remaining Parties -TCOIL, PEI, QSI and PetroSouth- become liable
                for the
                Operations described in 4.1, then PEI, in addition to paying its
                own share
                of all administrative and operational costs and expenses (opex and
                capex)
                under the appropriate AFEs, shall also make all payments that would
                have
                otherwise become payable by PetroSouth’s on account of its 16% share of
                the Operations described in 4.1, for which it has already received
                payment
                in advance.

            

    

    

    
      	
              5.2

            	
              Should
                PEI delay or default in making any such payments, it shall be considered
                in Default under section 8 of this Assignment
                Agreement.

            

    

    

    
      	
              5.3

            	
              PEI
                agrees to grant as collateral and guarantee for the performance of
                its
                obligation to PetroSouth under this Assignment Agreement.  Such
                guarantee shall consist namely in the establishment of and Encumbrance
                or
                PEI’s Participating Interests in any other E&P contract, preferably a
                contract where production is originated or in the Talora Contract,
                at
                PetroSouth’s option, and to be finally determined in a “Guarantee
                Agreement” to be executed no later than August 20, 2007.  Should
                PEI fail to execute the Guarantee, then it shall become obligated
                to
                reimburse PetroSouth for any and all money received from PetroSouth
                to
                that day plus the Agreed Interest Rate and no other obligations shall
                be
                due by PetroSouth under this Assignment Agreement and the
                JOA.  PetroSouth shall be entitled to initiate legal action
                against PEI based on the MoU or based on this Assignment
                Agreement.  “PEI le reconoce pleno merito ejecutivo a este
                documento y sin necesidad de protesto podra proceder al cobro
                ejecutivo”.

            

    

    

     

    

       

      
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    Such
      Guarantee shall foresee that per every One hundred million pesos (ColPs 100MM)
      of outstanding indebtedness towards the Buenavista Operations, PEI shall
      automatically assign in favour of PetroSouth a one percentage point of its
      participating interests in the chosen Contract.  The Guarantee
      Agreement shall describe in detail the conditions for such
      assignment.

    

    
      	
              6.

            	
              Assignment
                Agreement, Guarantee Agreement and
                JOA

            

    

    

    
      	
              6.1

            	
              The
                Parties agree to enter into this Assignment Agreement, a Guarantee
                Agreement and a JOA no later than September, 10, 2007 and as condition
                precedent for the payment of the third installment described in 4.1
                hereinabove.

            

    

    

    
      	
              6.2

            	
              Upon
                the execution of the Assignment Agreement, PEI shall begin and shall
                cause
                TCOil to begin the proceedings described in Clause 25 of the Buenavista
                Contract and all parties agree to mutually cooperate in satisfying
                the
                requirements established by the ANH for the recognition of PetroSouth
                as
                assignee of 16% of the Participating
                Interests.

            

    

    

    
      	
              7.

            	
              Default.

            

    

    

    
      	
              7.1

            	
              Not
                whithstanding any other remedies described herein, if PEI incurs
                in
                Default hereunder, PEI shall be penalized with a default fee of 30%;
                therefore, PEI will return all monies received from PetroSouth plus
                a
                thirty percent (30%) no later than 90 days following the day of
                Default.

            

    

    

    
      	
              7.2

            	
              If
                PetroSouth incurs in Default hereunder, PetroSouth shall be penalized
                with
                a default foee of 30%; therefore, PEI will return all monies received
                from
                PetroSouth minus a thirty percent (30%) no later than 90 days following
                the day of Default.

            

    

     

    
 

    
       

      
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              8.

            	
              Governing
                Law

            

    

    

    
      	
              (a)

            	
              This
                Agreement shall in all respects be subject to and be interpreted
                and
                construed in accordance with the laws of
                Colombia

            

    

    

    
      	
              (b)

            	
              The
                parties hereto expressly waive the requirement of a court declaration
                that
                either one is in default when it has failed to perform its obligations
                hereunder.  Therefore, each party hereto hereby expressly
                accepts that another party hereto may exercise its rights simply
                by a
                written notice forwarded in the event of a default
                hereunder.

            

    

    

    
      	
              9.

            	
              Dispute
                Resolution and Arbitration

            

    

    

    
      	
              (a)

            	
              Direct
                Negotiation between the Parties

            

    

    
      	
               

            	
              Any
                conflict or dispute arising between PEI and PetroSouth in regard
                to this
                Assignment Agreement and the subsequent agreements shall be first
                submitted to the highest officer of the Parties in Dispute and they
                shall
                attempt a direct solution within eight (8) days following the advice
                of
                the controversy.  Should the Parties in the dispute fail to
                reach a direct agreement on the matter, section (b) below shall
                apply.

            

    

    

    
      	
              (b)

            	
              Arbitration

            

    

    
      	
               

            	
              Any
                dispute arising between PEI and PetroSouth which has been solved
                directly
                as set-forth above, shall be submitted to the decision of an Arbitration
                Tribunal according to the Colombian law following the rules and procedures
                of the Chamber of Commerce of Bogota.  The tribunal shall be
                formed by a single arbitrator or three arbitrators as the case maybe
                under
                Colombian law, all chosen by the mutual agreement of the
                Parties.  The arbitrators should be duly licensed Colombian
                Lawyers with more then 15 years experience in the international oil
                industry, and fully bilingual in the English and Spanish
                languages.  The venue shall be city of
                Bogota.

            

    

    

    
      	
              10.

            	
              Taxes.

            

    

    

    
      	
               

            	
              PEI
                and PetroSouth declare to be knowledgeable and agree to comply with
                the
                Colombian Tax system applicable to this Assignment Agreement and
                the
                subsequent agreements; therefore PEI accepts any withholdings on
                account
                of stamp tax and purchases that may be
                applicable.

            

    

     

    
 

    
       

      
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                  12

              

      

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    
      	
              11.

            	
              Third
                Party Beneficiary.

            

    

    

    
      	
               

            	
              This
                Assignment Agreement and the subsequent agreements are also executed
                by
                TCOil and Quality Services S.A., to indicate its knowledge and acceptance
                of the terms and conditions herein set-forth, and namely to recognize
                that
                by the payments made by PetroSouth it shall free any
                encumbrance.

            

    

    

    
      	
              12.

            	
              Representations
                and Warranties by PEI:  13.1 PEI hereby represents and warrants
                that it has all the appropriate corporate authorities and power under
                their by-laws to enter into this Agreement and any other agreements
                that
                may derive herefrom;

            

    

    
      	
              12.1

            	
              PEI
                hereby represents and warrants that it has obtained from the other
                parties
                in and to the Buenavista Contract the appropriate authorities and
                power
                for the negotiation and execution of this Agreement and any other
                agreements that may derive
                herefrom;

            

    

    
      	
              12.2

            	
              PEI
                hereby represents and warrants that by the execution and performance
                of
                this Agreement it is not in violation of any law nor any other contract
                or
                agreement, public nor private;

            

    

    
      	
              12.3

            	
              PEI
                hereby represents and warrants that no other person nor entity, nor
                public
                nor private has any interest, right nor obligation in the Buenavista
                contract and that such interests, rights and obligation are free
                of any
                limitation, lien, or restriction other than the ones arising from
                the
                Buenavista Contract or Colombian Law, and is assigning them free
                of any
                such lien or encumbrance to PetroSouth.  In any case, PEI shall
                be bound to the reparations under the Law.  (“opligacion de
                salir al saneamiento conforme a la
                ley”)

            

    

    
      	
              12.4

            	
              PEI
                hereby represents and warrants that the Buenavista Contract is valid
                and
                in good standing and that it shall continue to adopt all measures
                and
                conducting all actions as may be necessary for the Buenavista Contract
                to
                remain effective and enforceable.

            

    

    

    
      	
              13

            	
              Representations
                and Warranties by PetroSouth:

            

    

    

    
      	
              13.1

            	
              PetroSouth
                represents and warrants that it has all the appropriate corporate
                authorizations according to its by-laws to enter into this Agreement
                and
                in any other agreements that may derive
                herefrom;

            

    

    
      	
              13.2

            	
              PetroSouth
                represents and warrants that by the execution and performance of
                the
                Agreement it is not in violation of any law now any other contract
                or
                agreement, public or private;

            

    

    

     

    

       

      
        	 PS-Buenavista
                ASSIGNMENT AGREEMENT 12 08 07	
                 Página
                  11 de
                  12

              

      

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    
      	
              13.3

            	
              PetroSouth
                represents and warrants that no other person or entity has any interests,
                rights or obligations hereunder or in the contracts that may derive
                herefrom.

            

    

    

    In
      witness of the above, the Parties hereto execute this Assignment Agreement
      on
      the day first above written.

    

    Signature

    

    

    
      	
              By:

            	
              PETROLEUM
                EQUIPMENT INTERNATIONAL, LTDA.

            

    

    

    

    
      	
            	
               

            	
              /s/
                Omar Leal
                Quiroz                                    
                

            

    

    
      	
               

            	
              Omar
                Leal Quiroz

            

    

    
      	
               

            	
              C.C.91.241.011
                de Bogota

            

    

    

    

    

    
      	
              By:

            	
              PETROSOUTH
                ENERGY CORPORATION – SUCURSAL
                COLOMBIA

            

    

    

    

    
      	
               

            	
              /s/
                Felipe Pimienta
                Barrios                             
                

            

    

    
      	
               

            	
              Felipe
                Pimienta Barrios

            

    

    
      	
               

            	
              C.C.79.795.924

            

    

    

    

     

     

     

    
 

     

    
 

     

    
       

      
        	 PS-Buenavista
                ASSIGNMENT AGREEMENT 12 08 07	
                 Página
                  12 de
                  12bancroft8k092807ex10-1.htm

    
      

      

    

    

      Closing
        Memorandum

       

      This
        Closing Memorandum (“Agreement”) is entered into between 2146281 Ontario
        Limited, an Ontario corporation (“Ontario Limited”), Bancroft Uranium Inc., a
        Nevada Corporation (“Bancroft” or the “Company”), Andrew Hamilton and P. Leslie
        Hammond as of October 3, 2007.

       

      
        	
                 

              	
                1.

              	
                Closing.  The
                  Parties acknowledge that concurrently with the execution of this
                  Agreement, Ontario Limited and the Company have closed a purchase
                  transaction whereby the Company has acquired 100% of the issued
                  and
                  outstanding shares of Ontario Limited (the “Closing”).  There
                  are certain conditions precedent to the Closing which have not
                  yet
                  occurred.  In order to close the transaction, the parties are
                  entering into this Closing Memorandum as a means of closing this
                  transaction prior to the completion of the conditions
                  precedent.   The Company has declared a 52 for 1 forward
                  stock split effective October 1, 2007 (“Forward Stock
                  Split”).

              

      

       

      
        	
                 

              	
                2.

              	
                Andrew
                  Hamilton Covenants.  Andrew Hamilton agrees to rescind 9,106,000
                  of his shares in the Company on a pre-Forward Stock Split basis
                  no later
                  than the October 5, 2007 (the “Settlement Date”).  Andrew
                  Hamilton also agrees to sell to P. Leslie Hammond 461,000 of his
                  shares in
                  the Company on a pre-Forward Stock Split basis for $30,000 USD
                  by the
                  Settlement Date.  Andrew Hamilton agrees to resign all offices
                  of the Company and appoint P. Leslie Hammond as the Company’s director,
                  President and Chief Executive Officer by the Settlement Date. Andrew
                  Hamilton also agrees not to engage in any business whatsoever or
                  make any
                  commitment, sign any agreement or issue any shares or options in
                  the
                  Company or otherwise bind the Company in any way accept in order
                  to
                  facilitate post-Closing items or this
                  Agreement.

              

      

       

      
        	
                 

              	
                3.

              	
                Waiver.  In
                  consideration of the Andrew Hamilton Covenants listed above, Ontario
                  Limited consents to the Closing and waives the conditions precedent
                  thereto.  However, if the Andrew Hamilton Covenants listed above
                  are not fulfilled by the Settlement Date, Andrew Hamilton is in
                  default
                  (“Andrew Hamilton Default”).  He must cure such default without
                  notice by 5:00 PM October, 14, 2007 or Ontario Limited may rescind
                  the
                  transactions of the Closing immediately thereafter without advance
                  notice.  This is the sole remedy for Ontario Limited or P.
                  Leslie Hammond in the event of an Andrew Hamilton
                  Default.

              

      

       

      
        	
                 

              	
                4.

              	
                Miscellaneous.  Each
                  party represents that they have the proper authority to enter into
                  this
                  Agreement and that this Agreement does not conflict with the rights
                  of any
                  third parties.  This agreement shall be governed by the laws of
                  the State of Nevada without respect to its conflict of laws
                  provisions.  This Agreement may be signed in counterparts,
                  together which constitute one instrument.  If any provision of
                  this Agreement is determined to be illegal by a tribunal of competent
                  jurisdiction, such a provision can be severed from this Agreement
                  and the
                  remainder enforceable.  This Agreement represents the full
                  understanding of the parties with respect to the subject matter
                  of the
                  Agreement.

              

      

       

      

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Accepted
        and agreed to as of the date first written above by:

       

       

      BANCROFT
        URANIUM INC.

      A
        Nevada
        corporation

       

       

      X          /s/
        Andrew Hamilton

      Andrew
        Hamilton

      President
        and CEO

       

       

      2146281
        ONTARIO LIMITED,

      an
        Ontario corporation

      

       

      X          /s/
        P. Leslie Hammond

      P.
        Leslie Hammond

      President

       

       

      ANDREW
        HAMILTON

      An
        Individual

       

       

      X          /s/
        Andrew Hamilton

      Andrew
        Hamilton

      

       

      P.
        LESLIE
        HAMMOND

      An
        Individual

      

       

      X          /s/
        P. Leslie Hammond

      P.
        Leslie Hammond

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