ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT made on this 1s` day of
September, 2006 (the "Effective Date").
BETWEEN:
QUANTUM ENERGY INC., a company duly incorporated under the
laws of Nevada and having its mailing address at #1880 - 1066
West Hastings Street, Vancouver, British Columbia.
(the "Transferee");
OF THE FIRST PART
AND:
NITRO PETROLEUM INCORPORATED, a company duly incorporated under
the laws of Nevada and having an address for notice and
delivery located at #29 - 3800 Pinnacle Way, Gallaghers Canyon,
Kelowna, British Columbia.
(the "Transferor");
OF THE SECOND PART
WHEREAS:
A. The Transferor is the owner of certain interests in the Corsicana Fields
Project, Barnet Shale Formation, McKinney, Blackburn, in Texas (collectively,
the "Assets"), a complete listing of such Assets of the Transferor being set
forth in Schedule "A" which is attached to this Agreement and which forms a
material part hereof;
B. The Transferee is desirous of acquiring the Assets of the Transferor.
NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the mutual
covenants and provisos herein contained, THE PARTIES HERETO AGREE AS FOLLOWS:
Article I
DEFINITIONS
1.1 Definitions
-----------
For all purposes of, this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, the following words and phrases shall
have the following meanings:
(a) "Agreement" means this Asset Purchase Agreement as entered into
between the Transferor and the Transferee herein, together with any
amendments and any Schedules;
<page>
2
(b) "Assets" has the meaning ascribed to it in recital "A" hereinabove,
and which Assets are particularly described in Schedule "A" which
is attached hereto;
(c) "Confidential Information" has the meaning ascribed to it in section
"9.1" hereinbelow;
(d) "Defaulting Party" and "Non-Defaulting Party" have the meanings
ascribed to them in section "12.1" hereinbelow;
(e) "Indemnified Party" has the meaning ascribed to it in section "13.1"
hereinbelow;
(f) "Parties" or "Party" means, respectively, the Transferor and/or the
Transferee hereto, as the case may be, together with their
respective successors and permitted assigns as the context so
requires.
Article 2
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale
-----------------
The Transferee hereby purchases and the Transferor hereby sells the Assets in
consideration of FOUR HUNDRED THOUSAND (400,000) US Dollars to be paid by the
Transferee to the Transferor according to terms and conditions as set out in the
promissory note attached hereto as a Schedule "B".
Article 3
ACCOUNTING AND INSPECTION
3.2 Accounting
----------
It is hereby also acknowledged and agreed by the Parties hereto that the
Transferee, or its subsidiary as the case may be, will maintain, at its
principal place of business, separate accounts, and records thereto, of business
and activities conducted pursuant to this Agreement and that such accounts and
records are to be in sufficient detail. In this regard the Transferee shall
retain the accounts, and records in relation thereto, for at least one year
after the date upon which they were made and presented to the Transferor. The
Transferee shall furnish such reasonable evidence as the Transferor deems
necessary to verify the accounting and will permit the Transferor's respective
representatives to make copies of or extracts from such accounts and records.
3.3 Inspection
----------
The Transferor shall have, on at least five business days' notice, unimpeded
right and authority to enter on the premises of the Transferee, its
representatives, its agents, its counsel or any other party having control or
possession of records or premises of the Transferee or in relation to its
production or sales or distribution of the Products, for the purpose of all such
investigations as the Transferor may require to assure themselves as to the
compliance by the Transferee with appropriate accounting provisions of this
Agreement. In this regard the Transferee covenants to allow and assist the
Transferor, and the Transferor's duly authorized representatives, access to all
the aforesaid premises and locations and access to all such personnel and other
persons as the Transferor may require, and the Transferee shall make such
premises, records and persons available within five business days of notice by
the Transferor. In the event that any aforesaid party refuses or delays or omits
to give the Transferor entry and access to premises or records, the Transferee
warrants to give the Transferor all reasonable assistance to effect such end.
<page>
3
Article 4
REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE TRANSFEROR
4.1 Representations, Warranties and Covenants by the Transferor
-----------------------------------------------------------
In order to induce the Transferee to enter into and consummate this Agreement,
the Transferor represents to and warrants to the Transferee that, to the best of
the informed knowledge, information and belief of the Transferor:
(a) the Transferor is duly incorporated under the laws of its
jurisdiction of incorporation and is validly existing and in
good standing with respect to all statutory filings required by
the applicable corporate laws;
(b) the Transferor is qualified to do business in those
jurisdictions where it is necessary to fulfill its obligations
under this Agreement and the Transferor has the full power and
authority to enter into this Agreement and any agreement or
instrument referred to or contemplated by this Agreement;
(c) the Transferor is the registered and beneficial owner of its
interests in the Assets as set out in the Agreements referred to
in Schedule "A" and has the requisite power, authority and
capacity to own and use the Assets and the Transferor owns the
right to develop and maintain the Assets subject the terms of
the Agreements as referred to in Schedule "A";
(d) no person, firm or corporation has any written or oral
agreement, option, understanding or commitment, or any right or
privilege capable of becoming an agreement, for the purchase
from the Transferor any of the Assets except as set out in the
Agreements referred to in Schedule "A";
(e) the Transferor has not experienced, nor is the Transferor aware
of, any occurrence or event which has had, or might reasonably
be expected to have, a materially adverse affect on the Assets;
(f) the Transferor is not in breach of any provision or condition
of, nor has the Transferor done or omitted to do anything that,
with or without the giving of notice or lapse or both, would
constitute a breach of any provision or condition of, or give
rise to any right to terminate or cancel or accelerate the
maturity of any payment under, any deed of trust, contract,
certificate, consent, permit, license or other instrument to
which the Transferor is a party, by which the Transferor is
bound or from which the Transferor derives benefit, or any
judgment, decree, order, rule or regulation of any Court or
governmental authority to which the Transferor is subject, or
any statute or regulation applicable to the Transferor, to an
extent that, in the aggregate, has a material adverse affect on
the Transferor or the Assets;
(g) the Transferor has not committed to sell, license, distribute,
option, or otherwise dispose of or grant any interest in all or
any part of the Assets or agree to do or perform any act or
enter into any transaction or negotiation which could reasonably
be expected to interfere with this. Agreement or which would
render inaccurate any of the representations, warranties or
covenants set forth in this Agreement;
<page>
4
(h) the execution and delivery of this Agreement and the agreements
contemplated hereby have been duly authorized by all necessary
action, corporate or otherwise, or will have been so authorized
at the relevant time;
(i) this Agreement constitutes a legal,valid and binding obligation
of the Transferor enforceable against it in accordance with its
terms, except as enforcement may be limited by laws of general
application affecting the rights of creditors and the
discretionary authority of courts of law;
(j) no proceedings are pending for,and the Transferor is unaware of,
any basis for the institution of any proceedings leading to its
respective dissolution or winding up, or the placing of it in
bankruptcy or subject to any other laws governing the affairs of
insolvent companies;
(k) the making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and
compliance with the terms hereof does not and will not:
(i) conflict with or result in a breach of or violate any of the
terms, conditions or provisions of the Transferor's
constating documents;
(ii) give to any party the right of termination, cancellation or
acceleration in or with respect to any agreement,contract or
commitment to which the Transferor is a party;
(iii) give to any government or governmental authority, or any
municipality or any subdivision thereof, including any
governmental department, commission, bureau, board or
administration agency,any right of termination, cancellation
or suspension of, or constitute a breach of or result in a
default under, any permit, license, control or authority
issued to the Transferor which is necessary or desirable in
connection with the conduct and operations of its respective
Business and the ownership or leasing of its respective
Assets or other assets; or
(l) the Transferor will employ good faith, due diligence, and best
efforts to perform its obligations of this Agreement and will
enter into such additional or collateral agreements as may be
reasonably required by the Transferee to effect and complete the
objects and intent of this Agreement.
4.2 Continuity of the Representations. Warranties and Covenants by the
------------------------------------------------------------------
Transferor
----------
The representations, warranties and covenants by the Transferor contained in
this Article, or in any certificates or documents delivered pursuant to the
provisions of this Agreement or in connection with the transactions contemplated
hereby, will be true at and as of the Effective Date. Subject to any
investigations or inquiries made by the Transferee or by the Transferee's
professional advisors, or the waiver of any condition by the Transferee, the
representations, warranties and covenants of the Transferor contained in this
Article shall continue in full force and effect for a period of twelve (12)
months from the Effective Date; provided, however, that the Transferor shall not
be responsible for the breach of any representation, warranty or covenant of the
Transferor contained herein caused by any act or omission of the Transferee. In
the event that any of the representations, warranties or covenants of the
Transferor are found by a Court of competent jurisdiction to be incorrect and
such incorrectness results in any loss or damage sustained, directly or
indirectly, by the Transferee, then the Transferor will pay the amount of such
loss or damage to the Transferee within 30 calendar days of receiving notice of
judgment therefor, provided that the damages will be limited to the
consideration paid upon closing.
<page>
5
Article 5
WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE TRANSFEREE
5.1 Warranties, Representations and Covenants by the Transferee
-----------------------------------------------------------
In order to induce the Transferor to enter into and consummate this Agreement,
the Transferee hereby warrants to and represents to the Transferor that, to the
best of the informed knowledge, information and belief of the Transferee, after
having made due inquiry:
(a) the Transferee is duly incorporated under the laws of its
jurisdiction of incorporation and is validly existing and in
good standing with respect to all statutory filings required
by the applicable corporate laws;
(b) the execution and delivery of this Agreement and the
agreements contemplated hereby has been duly authorized by all
necessary corporate action on its part;
(c) there are no consents,approvals or conditions precedent to the
performance of this Agreement;
(d) this Agreement constitutes a legal, valid and binding
obligation of the Transferee enforceable against the
Transferee in accordance with its terms, except as enforcement
may be limited by laws of general application affecting the
rights of creditors;
(e) no proceedings are pending for, and the Transferee is unaware
of, any basis for the institution of any proceedings leading
to the dissolution or winding up of the Transferee or the
placing of the Transferee in bankruptcy or subject to any
other laws governing the affairs of insolvent companies;
(f) the Transferee is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which
it is subject or which apply to it;
(g) there has been and there will be prepared and filed on a
timely basis all federal and state income tax returns,
elections and designations, and all other governmental
returns, notices and reports of which the Transferee had, or
ought reasonably to have had, knowledge required to be or
reasonably capable of being filed with respect to the
operations of the Transferee, and no such returns, elections,
designations, notices or reports contain or will contain any
material misstatement or omit any material statement that
should have been included, and each such return, election,
designation, notice or report, including accompanying
schedules and statements, is and will be true, correct and
complete in all material respects;
(h) the making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and
compliance with the terms hereof does not and will not:
(i) conflict with or result in a breach of or violate any of
the terms, conditions or provisions of the constating
documents of the Transferee;
(ii) conflict with or result in a breach of or violate any of
the terms, conditions or provisions of any law, judgment,
order, injunction, decree, regulation or ruling of any
Court or governmental authority, domestic or foreign, to
which the Transferee is subject, or constitute or result
in a default under any agreement,contract or commitment to
which the Transferee is a party;
<page>
6
(iii) give to any party the right of termination,
cancellation or acceleration in or with respect to any
agreement, contract or commitment to which the Transferee
is a party;
(iv) give to any government or governmental authority,
or any municipality or any subdivision thereof, including
any governmental department, commission, bureau, board or
administration agency, any right of termination,
cancellation or suspension of,or constitute a breach of or
result in a default under, any permit, license, control or
authority issued to the Transferee which is necessary or
desirable in connection with the conduct and operations
of its business and the ownership or leasing of its
business assets; or
(v) constitute a default by the Transferee,or any event which,
with the giving of notice or lapse of time or both, might
constitute an event of default, under any agreement,
contract, indenture or other instrument relating to any
indebtedness of the Transferee which would give any party
to that agreement,contract, indenture or other instrument
the right to accelerate the maturity for the payment of
any amount payable under that agreement, contract,
indenture or other instrument;
(i) neither this Agreement nor any other document, certificate
or statement furnished to the Transferor by or on behalf of
the Transferee in connection with the transactions
contemplated hereby knowingly or negligently contains any
untrue or incomplete statement of material fact or omits to
state a material fact necessary in order to make the
statements therein not misleading;
(j) the Transferee is not aware of any fact or circumstance which
has not been disclosed to the Transferor which should be
disclosed in order to prevent the representations, warranties
and covenants contained in this section from being misleading
or which would likely affect the decision of the
Transferor to enter into this Agreement; and
(k) the Transferee will employ good faith, due diligence, and best
efforts to perform its obligations of this Agreement and
will enter into such additional or collateral agreements as
may be reasonably required to effect and complete the objects
and intent of this Agreement.
(l) the Shares represented in this transaction are duly issued and
fully paid, valid, and nonassessable.
5.2 Continuity of the Representations, Warranties and Covenants by
--------------------------------------------------------------
the Transferee
--------------
The representations, warranties and covenants of the Transferee contained in
this Article, or in any certificates or documents delivered pursuant to the
provisions of this Agreement or in connection with the transactions contemplated
hereby, will be true at and as of the Effective Date. Notwithstanding any
investigations or inquiries made by the Transferor or by the Transferor's
respective professional advisors prior to the Effective Date, or the waiver of
any condition by the Transferor, the representations, warranties and covenants
of the Transferee contained in this Article shall survive the Effective Date and
shall continue in full force and effect for a period of twelve (12) months from
the Effective Date; provided, however, that the Transferee shall not be
responsible for the breach of any representation, warranty or covenant of the
Transferee contained herein caused by any act or omission of the Transferor. In
the event that any of the said representations, warranties or covenants are
found by a Court of competent jurisdiction to be incorrect and such
incorrectness results in any loss or damage sustained, directly or indirectly,
by the Transferor, then the Transferee will pay the amount of such loss or
damage to the Transferor within 30 calendar days of receiving notice of judgment
therefor; provided that the
<page>
7
Transferor will not be entitled to make any claim unless the loss or damage
suffered may exceed the amount of $10,000.
Article 6
OBTAINING APPROVAL
6.1 Approval
--------
The Transferor shall, prior to closing, obtain the requisite approval if any to
effect the terms contemplated within this agreement, and to obtain waivers,
consents, and rights of first refusal if required to effectively transfer the
Assets as set out in Schedule "A".
Article 7
ADDITIONAL TERMS
7.1 Due Diligence
-------------
Each of the Parties hereto may conduct such further due diligence examination of
the other Parties hereto as it deems appropriate. In that regard the Parties
agree that each shall have full and complete access to the other Parties' books,
records, financial statements and other documents, articles of incorporation,
bylaws, minutes of Board of Directors' meetings and its committees, investment
agreements, material contracts and as well such other documents and materials as
the Parties hereto, or their respective counsel, may deem reasonable and
necessary to conduct an adequate due diligence investigation of each Party, its
respective operations and financial condition prior to the Closing.
7.2 Opinions, Reports and Advice of the Transferor
----------------------------------------------
The Transferor hereby acknowledges and agrees that all written and oral
opinions, reports, advice and materials provided by the Transferor to the
Transferee in connection with the Assets hereunder are intended solely for the
Transferee's benefit and for the Transferee's use only, and that any such
written and oral opinions, reports, advice and information are the exclusive
property of the Transferee. In this regard the Transferor hereby covenants and
agrees that the Transferee. may utilize any such opinion, report, advice and
materials for any other purpose whatsoever and, furthermore, may reproduce,
disseminate, quote from and refer to, in whole or in part, at any time and in
any manner, any such opinion, report, advice and materials in its sole and
absolute discretion.
7.3 Additional Documents and Acts by Transferor
-------------------------------------------
The Transferor will also cause or deliver, or cause to be delivered, to the
Transferee, at the times stipulated, the following:
(a) upon the request of the Transferee, all documentation as may be
necessary and as may be required by counsel for the Transferee,
acting reasonably, to ensure that all of the Assets have been
duly transferred, assigned and are registerable in the name of
and for the benefit of the Transferee under applicable corporate
laws and including, without limitation, all necessary deeds,
conveyances, bills of sale, assurances, transfers, contract
assignments, sales agreement assignments, development agreement
assignments, royalty assignments, license assignments,
manufacturing agreement assignments, supply agreement
assignments, consents and any other documents necessary or
reasonably _required effectively to transfer all of the Assets
and the business of the Assets to the Transferee with a good and
marketable title, free and clear of all mortgages, liens,
charges, pledges, claims, security interests or encumbrances
whatsoever;
<page>
8
(b) within 10 days of the Closing Date, a certified copy of the
resolutions of the directors and . shareholders of the
Transferor authorizing the transfer by the Transferor to the
Transferee of all of the Assets in accordance with the terms of
this Agreement;
(c) within 30 days of the Closing Date, all necessary consents and
approvals in writing to the completion of the transactions
contemplated herein and including, without limitation, approval
from all Regulatory Authorities having jurisdiction over the
Transferor and the Assets or a certificate of counsel of the
Transferor that no such consents are required; and
(d) within 30 days of the Closing Date all records, engineering
specifications and reports, patents, books, and other
documentation pertinent to the Assets and all molds, inventory,
customer lists, supply contracts, manufacturing contracts, and
all and every part of such matters pertaining to the Assets.
Article 8
NON-DISCLOSURE
8.1 Non-disclosure
--------------
The Parties hereto, for themselves, their officers, directors, shareholders,
consultants, employees and agents, agree that they each will not disseminate or
disclose, or knowingly allow, permit or cause others to disseminate or disclose
to third parties who are not subject to express or implied covenants of
confidentiality, without the other Parties' express written consent, either: (i)
the fact or existence of this Agreement or discussions and/or negotiations
between them involving, inter alia, possible business transactions; (ii) the
possible substance or content of those discussions; (iii) the possible terms and
conditions of any proposed transaction; (iv) any statements or representations
(whether verbal or written) made by either Party in the course of or in
connection with those discussions; or (v) any written material generated by or
on behalf of any Party and such contacts, other than such disclosure as may be
required under applicable securities legislation or regulations, pursuant to any
order of a Court or on a "need to know" basis to each of the Parties' respective
professional advisors. Disclosure will be required to the other parties as set
out in the agreements as set out in Schedule "A".
Article 9
PROPRIETARY INFORMATION
9.1 Confidential Information
------------------------
Each Party hereto acknowledges that any and all information which a Party may
obtain from, or have disclosed to it, about the other Parties constitutes
valuable trade secrets and proprietary confidential information of the other
Parties (collectively, the "Confidential Information"). No such Confidential
Information shall be published by any Party without the prior written consent of
the other Parties hereto, however, such consent in respect of the reporting of
factual data shall not be unreasonably withheld, and shall not be withheld in
respect of information required to be publicly disclosed pursuant to applicable
securities or corporation laws. Furthermore, each Party hereto undertakes not to
disclose the Confidential Information to any third party without the prior
written approval of the other Parties and to ensure that any third party to
which the Confidential Information is disclosed shall execute an agreement and
undertaking on the same terms as contained herein.
9.2 Impact of Breach of Confidentiality
-----------------------------------
The Parties hereto acknowledge that the Confidential Information is important to
the respective businesses of each of the Parties and that, in the event of
disclosure of the Confidential Information,
<page>
9
except as authorized hereunder, the damage to each of the Parties hereto, or to
either of them, may be irreparable. For the purposes of the foregoing sections
the Parties recognize and hereby agree that a breach by any of the Parties of
any of the covenants therein contained would result in irreparable harm and
significant damage to each of the other Parties that would not be adequately
compensated for by monetary award. Accordingly, the Parties agree that in the
event of any such breach, in addition to being entitled as a matter of right to
apply to a Court of competent equitable jurisdiction for relief by way of
restraining order, injunction, decree or otherwise as may be appropriate to
ensure compliance with the provisions hereof, any such Party will also be liable
to the other Parties, as liquidated damages, for an amount equal to the amount
received and earned by such Party as a result of and with respect to any such
breach. The Parties also acknowledge and agree that if any of the aforesaid
restrictions, activities, obligations or periods are considered by a Court of
competent jurisdiction as being unreasonable, the Parties agree that said Court
shall have authority to limit such restrictions, activities or periods as the
court deems proper in the circumstances. In addition, the Parties further
acknowledge and agree that all restrictions or obligations in this Agreement are
necessary and fundamental to the protection of the respective businesses of each
of the Parties and are reasonable and valid, and all defenses to the strict
enforcement thereof by either of the Parties are hereby waived by the other
Parties.
Article 10
CLOSING AND TRANSFER OF INTEREST
10.1 Closing
-------
Closing date and the adjustment date shall be the Effective Date. Closing
documentation shall be the documentation as required to carry out the intent of
this Agreement.
10.2 Assumption of Obligations
-------------------------
Any transfer of all or any part of the Transferor's licence shall be
accompanied by the written agreement of any such transferee to assume the
obligations of the Transferor under the licence and to be bound by the terms
and conditions thereof.
Article 11
FORCE MAJEURE
11.1 Events
------
If any Party hereto is at any time prevented or delayed in complying with any
provisions of this Agreement by reason of strikes, walk-outs, labour shortages,
power shortages, fires, wars, acts of God, earthquakes, storms, floods,
explosions, accidents, protests or demonstrations by environmental lobbyists or
native rights groups, delays in transportation, breakdown of machinery,
inability to obtain necessary materials in the open market, unavailability of
equipment, governmental regulations restricting normal operations, shipping
delays or any other reason or reasons beyond the control of that Party, then the
time limited for the performance by that Party of its respective obligations
hereunder shall be extended by a period of time equal in length to the period of
each such prevention or delay.
11.2 Notice
------
A Party shall, within seven calendar days, give notice to the other Party of
each event of force majeure under section-"14.1" hereinabove, and upon cessation
of such event shall furnish the other Party with notice of that event together
with particulars of the number of days by which the obligations of that Party
hereunder have been extended by virtue of such event of force majeure and all
preceding events of force majeure.
<page>
10
Article 12
DEFAULT AND TERMINATION
12.1 Default
-------
The Parties hereto agree that if any Party hereto is in default with respect to
any of the provisions of this Agreement (herein called the "Defaulting Party"),
the non-defaulting Party (herein called the "NonDefaulting Party") shall give
notice to the Defaulting Party designating such default, and within 10 calendar
days after its receipt of such notice, the Defaulting Party shall cure such
default, or commence proceedings to cure such default and prosecute the same to
completion without undue delay.
Article 13
INDEMNIFICATION AND LEGAL PROCEEDINGS
13.1 Indemnification
---------------
The Parties hereto agree to indemnify and save harmless the other Party hereto,
including its respective affiliates and their respective directors, officers,
employees and agents (each such party being an "Indemnified Party") from and
against any and all losses, claims, actions, suits, proceedings, damages,
liabilities or expenses of whatever nature or kind, including any investigation
expenses incurred by any Indemnified Party, to which an Indemnified Party may
become subject by reason of an act or inaction of the other Party.
13.2 Claim of Indemnification
------------------------
The Parties hereto agree to waive any right they might have of first requiring
the Indemnified Party to proceed against or enforce any other right, power,
remedy, security or claim payment from any other person before claiming this
indemnity.
13.3 Notice of Claim
---------------
In case any action is brought against an Indemnified Party in respect of which
indemnity may be sought against any of the Parties hereto, the Indemnified Party
will give the relevant Party hereto prompt written notice of any such action of
which the Indemnified Party has knowledge and such Party will undertake the
investigation and defense thereof on behalf of the Indemnified Party, including
the prompt retaining of counsel acceptable to the Indemnified Party affected and
the payment of all expenses. Failure by the Indemnified Party to so notify shall
not relieve any Party hereto of such Party's obligation of indemnification
hereunder unless (and only to the extent that) such failure results in a
forfeiture by any Party hereto of substantive rights or defenses.
13.4 Settlement
----------
No admission of liability and no settlement of any action shall be made without
the consent of the Indemnified Party affected, such consent not to be
unreasonably withheld.
13.5 Legal Proceedings
-----------------
Notwithstanding that the relevant Party hereto will undertake the investigation
and defense of any action, an Indemnified Party will have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel will be at the expense of the Indemnified
Party unless:
<page>
11
(a) such counsel has been authorized by the relevant Party hereto;
(b) the relevant Party hereto has not assumed the defense of the
action within a reasonable period of time after receiving
notice of the action;
(c) the named parties to any such action include that any Party
hereto and the Indemnified Party shall have been advised by
counsel that there may be a conflict of interest between any
Party hereto and the Indemnified Party; or
(d) there are one or more legal defenses available to the
Indemnified Party which are different from or in addition to
those available to any Party hereto.
Article 14
NOTICE
14.1 Notice
------
Each notice, demand or other communication required or permitted to be given
under this Agreement shall be in writing and shall be sent by prepaid registered
mail addressed to the Party entitled to receive the same, or delivered to such
Party, at the address for such Party specified above. The date of receipt of
such notice, demand or other communication shall be the date of delivery thereof
if delivered, or, if given by registered mail as aforesaid, shall be deemed
conclusively to be the third calendar day after the same shall have been so
mailed, except in the case of interruption of postal services for any reason
whatsoever, in which case the date of receipt shall be the date on which the
notice, demand or other communication is actually received by the addressee.
14.2 Change of Address
-----------------
Either Party may at any time and from time to time notify the other Party in
writing of a change of address and the new address to which notice shall be
given to it thereafter until further change.
Article 15
GENERAL PROVISIONS
15.1 Entire Agreement
----------------
This Agreement constitutes the entire agreement to date between the Parties
hereto and supersedes every previous agreement,-communication, expectation,
negotiation, representation or understanding, whether oral or written, express
or implied, statutory or otherwise, between the Parties hereto with respect to
the subject matter of this Agreement.
15.2 Enurement
---------
This Agreement will enure to the benefit of and will be binding upon the Parties
hereto, their respective heirs, executors, administrators and assigns.
15.3 Schedules
---------
The Schedules to this Agreement are hereby incorporated by reference into this
Agreement in its entirety.
<page>
12
15.4 Time of the Essence
-------------------
Time will be of the essence of this Agreement.
15.6 Applicable Law
--------------
The situs of this Agreement is Vancouver, British Columbia, and for all purposes
this Agreement will be governed exclusively by and construed and enforced in
accordance with the laws and Courts of the Province of British Columbia.
15.7 Further Assurances
------------------
The Parties hereto hereby, jointly and severally, covenant and agree to
forthwith, upon request, execute and deliver, or cause to be executed and
delivered, such further and other deeds, documents, assurances and instructions
as may be required by the Parties hereto or their respective counsel in order to
carry out the true nature and intent of this Agreement.
15.8 Currency
--------
Unless otherwise stipulated, all payments required to be made pursuant to the
provisions of this Agreement and all money amount references contained herein
are in lawful currency of the U.S.A.
15.8 Severability and Construction
-----------------------------
Each Article, section, paragraph, term and provision of this Agreement, and any
portion thereof, shall be considered severable, and if, for any reason, any
portion of this Agreement is determined to be invalid, contrary to or in
conflict with any applicable present or future law, rule or regulation in a
final unappealable ruling issued by any court, agency or tribunal with valid
jurisdiction in a proceeding to any of the Parties hereto is a party, that
ruling shall not impair the operation of, or have any other effect upon, such
other portions of this Agreement as may remain otherwise intelligible (all of
which shall remain binding on the Parties and continue to be given full force
and agreement as of the date upon which the ruling becomes final).
15.9 Captions
--------
The captions, section numbers and Article numbers appearing in this Agreement
are inserted for convenience of reference only and shall in no way define,
limit, construe or describe the scope or intent of this Agreement nor in any way
affect this Agreement.
15.10 Counterparts
------------
This Agreement may be signed by the Parties hereto in as many counterparts as
may be necessary and, if required, by facsimile, each of which so signed being
deemed to be an original, and such counterparts together shall constitute one
and the same instrument and notwithstanding the date of execution will be deemed
to bear the Execution Date as set forth on the front page of this Agreement.
<page>
13
15.12 Consents and Waivers
--------------------
No consent or waiver expressed or implied by either Party hereto in -respect off
any breach or default by any other Party in the performance by such other of its
obligations hereunder -shall:
(a) be valid unless it is in writing and stated to be a consent or
waiver pursuant to this section;
(b) be relied upon as a consent to or waiver of any other breach or
default of the same or any other obligation;
(c) constitute a general -waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver
pursuant to this section in any other or subsequent instance.
IN WITNESS WHEREOF each of the Parties hereto has set their
respective hands and seals in 'the presence of their duly authorized signatories
as of, the Effective Date determined hereinabove.
The COMMON SEAL of
QUANTUM ENERGY INC.
the Transferor herein,
was hereunto affixed in the presence of:
/s/
- ----------------------------
Authorized Signatory
The COMMON SEAL of
NITRO PETROLEUM INC.
the Transferee herein,
was hereunto affixed in the presence of:
/s/
- ----------------------------
Authorized Signatory
<page>
================================================================================
SCHEDULE "A"
THIS IS SCHEDULE "A" to the Asset Purchase Agreement dated the 1st day of
September, 2006.
The Assets
----------
Fifty (50%) percent of the Transferror's working interest in the following
wells:
1. 10% working interest in Inglish 4 well;
2. 10% working interest in Inglish 5 well;
3. 10% working interest in lnglish Dl well & Inglish D2 well;
4. 5% working interest in Craig Muncaster 6 well; and
5. 5% working interest in Craig Muncaster 7 well.
As defined in the agreements, to which the Transferor is a party, copies of
which are attached as Schedule C.
<page>
SCHEDULE "B"
PROMISSORY NOTE
$400,000.00 (USD) DUE: November 01, 2006
Vancouver, British Columbia.
Dated: September 01, 2006
FOR VALUE RECEIVED, QUANTUM ENERGY, INC. (hereinafter referred to as the
"Borrower"), of 1880 -1066 West Hastings Street, Vancouver, British Columbia,
HEREBY PROMISES TO PAY to the order of NITRO PETROLEUM INCORPORATED
(hereinafter referred to as the "Lender"), of #29-3800 Pinnacle Way, Gallaghers
Canyon, Kelowna, British Columbia, the principal sum of Four Hundred Thousand
($400,000.00) Dollars of lawful money of the United States.
1. The Borrower will repay the principal sum outstanding on or before November
01, 2006, at the offices of the Lender; and
2. The Borrower, if it duly observes and performs all of the covenants on
its part to be observed and performed, is at liberty from time to time to
pay off all or any part of the principal as remains unpaid or any part of
it, without notice or bonus.
THE BORROWER HEREBY waives demand and presentment for payment and notices of
nonpayment or protest of this Note.
THE CORPORATE SEAL OF QUANTUM ENERGY, INC.
was affixed hereto in the presence of: )
)
)
/s/ ) c/s
- --------------------------------------- )
Authorized Signatory )
)
)
- --------------------------------------- )
Authorized Signatory )
)
)
THE CORPORATE SEAL OF )
NITRO PETROLEUM INCORPORATED )
was affixed hereto in the presence )
)
)
/s/ ) c/s
- --------------------------------------- )
Authorized Signatory )
)
)
)
- --------------------------------------- )
Authorized Signatory )