Purchase and Sale Agreement dated January 16, 2008, by and among Jayhawk Energy, Inc., and JED Oil (USA) Inc

 

Each capitalized term used in this Head Agreement will have the meaning given to it in the 2000 CAPL Property Transfer Procedure (hereinafter referred to as the “Property Transfer Procedure”). In addition:

(a)  

“Closing Date” means 3:00 p.m. on January 25th, 2008, or such other time and date as may be agreed upon in writing by the Parties.

(b)  

“Effective Date” means January 1, 2008.

 

The following Schedules are attached hereto and made part of this Agreement:

(a)  

Schedule “A”, which is the Land Schedule, and identifies:

 

         (i)

the Lands;

 

        (ii)

the Leases;

 

        (iii)

  any other agreements, documents or data that are to be excluded from the Miscellaneous Interests under that definition;

(iv)  

   any encumbrances;

(v)  

   any Rights of First Refusal;

(vi)  

   production sale agreements;

 (vii)  

   other agreements, penalties or restrictions by contract on the use of the Assets required to be included in the Land Schedule under the definition of Permitted Encumbrances or the definition of Title and Operating Documents;

 (viii)  

   any Facilities required to be included in the Land Schedule under the definition of Facilities, any other Tangibles described in Paragraph (c) of the definition of Tangibles and any assets otherwise falling within the definition of Tangibles that are specifically excluded therefrom; and

(ix)  

    the Wells;

(x)  

   any lawsuits and claims;

(xi)  

   any default notices;

(xii)  

   any outstanding AFE’s;

(xiii)  

   any knowledge of environmental matters under Clause 6.02(k) of the Property Transfer Procedure;

(xiv)  

   any areas of mutual interest; and

(xv)  

   any commitments to deliver under Clause 6.02(t) of the Property Transfer Procedure.

(b)  

Schedule “B”, which is the Property Transfer Procedure, including the Exhibit thereto that is the form of the General Conveyance.  For clarity, this Schedule “B” to the Agreement includes a summary sheet that indicates the elections and rates in the Property Transfer Procedure that have been agreed to by the Parties.  A blank copy of the Property Transfer Procedure, including the Exhibit thereto that is the form of the General Conveyance, is attached to such summary sheet of the elections and rates for the Property Transfer Procedure.  The Parties shall deem that such summary sheet of the elections and rates of the Property Transfer Procedure shall operate as having the same effect as if such elections and rates were physically typed into the copy of the Property Transfer Procedure included in Schedule “B”.

 

(a)

The Transferor agrees to dispose of the Assets to the Transferee and the Transferee agrees to purchase the Assets from the Transferor on the terms and conditions set forth in this Agreement.

 

(b)

Subject to the modifications that may be made under the Property Transfer Procedure, the consideration payable by the Transferee to the Transferor for the Assets is $ 3,500,000.00, plus any interest that accrues under Clause 2.04 of the Property Transfer Procedure.  The Purchase Price shall be allocated among the Assets as follows:

 

 

 

         (i) To Petroleum and Natural Gas Rights

$     2,799,990.00

 

(ii)    (ii) To Tangibles

$        700,000.00

 

(iii)   (iii) To Miscellaneous Interests

 

Total

 

 

     The GST payable on the Tangibles and Miscellaneous Interests totals

 

     $ NOT APPLICABLE

(c)  

The Transferee will pay the Purchase Price to the Transferor as

(i)  

the delivery of ten percent (10%) of the Purchase Price, representing a Deposit towards the Purchase Price, payable on or before January 18, 2008; and

(ii)  

at Closing, the delivery of the remainder of the Purchase Price (ie. the Purchase Price less the Deposit made under Clause 3(c)(i) hereof), any interest that accrues under Clause 2.04 of the Property Transfer Procedure.

(a)  

The following additional condition precedent is included for the benefit of the

 

 

 

 

 

 

 

 

 

Transferor’s Representations and Warranties (Clause 6.02).  Those representations and warranties in that Clause that apply are indicated by a Y below.

 

__   (a) Residency for Tax Purposes

_Y_ (b) Lawsuits and Claims

_Y_ (c) No Default Notices

_Y_ (d) Compliance with Leases

_Y_ (e) Payment of Royalties

_Y_ (f) Encumbrances

_Y_ (g) No Reduction

_Y_ (h) Sale Agreements

_Y_ (i) Provision of Documents

_Y_ (j) Authorized Expenditures

_Y_ (k) Environmental Matters

_Y_ (l) Condition of Wells

 

 

_Y_ (m) Abandonment of Wells

_Y_ (n) Condition of Tangibles

_Y_ (o) Well/Tangibles Lic. Transfers

_  _ (p) Reg. Production Penalties

__   (q) Reg. Production Allowables

_Y_ (r) Area of Mutual Interest

___ (s) No Offset Obligations

_Y__ (t) Commitment to Deliver

___ (u) ARTC

_Y_ (v) Quiet Enjoyment

___ (w) Additional Representations

 

JED OIL (USA) INC.

Box 1420

1601-15^th Avenue

Didsbury, Alberta

T0M 0W0

 

Attention:  Land Department

 

Fax No. (403) 335-8391

 

 

Jayhawk Energy Inc.

370 Interlocken Blvd Suite 400

Broomfield, CO 80021

 

 

 

Attention:  Land Department

 

Fax No. (303) 327-1574