Letter of Intent This Memorandum of January 28, 2008, is a Letter of Intent between: Scout Exploration Inc., a Nevada (USA) corporation, and Kerrisdale Resources Ltd, an Alberta (Canada) corporation, Witnesseth That:
Exhibit 10.1
Letter of Intent
This Memorandum of January 28, 2008, is a Letter of Intent between:
Scout Exploration Inc., a Nevada (USA) corporation, and
Kerrisdale Resources Ltd, an Alberta (Canada) corporation,
Witnesseth That:
Whereas, Scout Exploration Inc. (SCXN) and Kerrisdale Resources Ltd (“KR”) have discussed terms in which SCXN would purchase a 100% interest in the outstanding shares of KR owned by Brian Mahood and,
Whereas, both parties now wish to reduce the terms of such discussion to this Memorandum;
Now, therefore, for and in consideration of the premises, and of the mutual terms and covenants herein contained, SCXN and KR agree as follows:
- SCXN can purchase a 100% of the outstanding shares of KR, which owns the following assets (see attachment ‘A’) upon accomplishing the following:
- Payment to Brian Mahood of $25,000.00 CAD non-refundable upon signing of this agreement for an exclusive 90 day due diligence period.
- Payment of $375,000.00 upon completion of an independent engineering report to be commissioned and paid by SCXN to be finished within 90 days of signing this Letter on Intent.
- Issuing to Brian Mahood a debenture in the amount of $300,000.00 bearing 6.75% interest for a term of three years. Interest on the principal of $300,000.00 at 6.75% (annual) to be paid quarterly, commencing with the effective date of Jan. 1, 2008. The first interest payment will be April 1, 2008. After 1 year, Scout will have the option of paying a sinking fund payment of one third of the principal ($100,000.00) and continue to pay the interest quarterly on the outstanding principal or paying the entire principal ($300,000.00) with a 6 month interest penalty. After 2 years, if the entire principal is not paid at the end of the first year, Scout will have the option of paying a sinking fund payment of one third of the principal ($100,000.00) and continuing to pay the interest quarterly on the outstanding principal or paying the entire remaining principal with a 3 month interest penalty. After 3 years, the entire remaining principal is payable. The debenture will be secured by the purchased assets and properties of Kerrisdale Resources Ltd.
- Payment to Mr. Brian Mahood $1,000 per month for a period of one year, commencing January 1, 2008, to consult to SCXN in the smooth transition of operatorship of KR and the consolidation of the remaining approximate 57% interest of the operating gas fields.
- Payment of $500 per month office lease for a period of one year, commencing January 1, 2008, to Kerrisdale Consulting Inc. This can be renewed at SCXN’s choice.
- Any net net cash in the bank up to and including December 31, 2007 will be removed.
- Current contracting services (accounting, engineering, etc ) will remain in place as long as they still market competitive.
- The effective date of the sale shall be January 1, 2008.
- SCXN shall be the operator under Brian Mahood’s direction.
- This Letter of Intent shall be superseded, prior to closing on the definitive agreement between SCXN and Brian Mahood, by a Purchase and Sales Agreement between SCXN and Brian Mahood. The parties shall work in good faith to draft and execute such Purchase and Sales Agreement with 90 days from the signing hereof.
- This Letter of Intent must be accepted by Brian Mahood and returned to SCXN no later than noon (PT), Tuesday, January 29, 2008. A signed document, returned by fax, will be considered an execution of this Letter of Intent.
Witness the following signatures and seals:
Scout Exploration Inc. Kerrisdale Resources Ltd.
By _/s/ Jason Walsh _____ By _/s/ Brian Mahood ______
Authorized Signatory Authorized Signatory
