EXHIBIT 4.8
HEADS OF AGREEMENT,
BY AND BETWEEN
HALO RESOURCES LTD.,
AND
W. ▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED NPL
DATED
FEBRUARY 9, 2006
THIS OPTION AGREEMENT dated as of the 18th day of April, 2006.
BETWEEN:
HALO RESOURCES LTD.
a corporation continued under the laws
of British Columbia
("HALO")
OF THE FIRST PART
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W. ▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED NPL and W. ▇▇▇▇▇ ▇▇▇▇▇▇
(collectively, "DUNLOP")
OF THE SECOND PART
WHEREAS Dunlop is the registered or recorded and beneficial owner of certain
unpatented mining claims located in the Sherridon area of Manitoba known as the
▇▇▇ ▇▇▇▇ Claim, the Batty Claim and the ▇▇▇▇ 1 Claim, as outlined and more
particularly described in Schedule "A" attached hereto (the "PROPERTY");
AND WHEREAS Dunlop has agreed to grant Halo an exclusive option (the "OPTION")
to acquire an undivided 100% legal and beneficial interest in the Property, in
accordance with and subject to the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants, conditions and premises herein contained, the sum of Two Dollars now
paid by each of the Parties (as hereinafter defined) to the other and for other
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by each of the Parties) the Parties do hereby covenant and agree as
follows:
1. DEFINITIONS
1.1 DEFINITIONS. In this Agreement:
(a) "THIS AGREEMENT", "HEREIN", "HEREBY", "HEREOF", "HEREUNDER" and similar
expressions shall mean or refer to this Agreement and all schedules
hereto and any and all written agreements or instruments supplemental
or ancillary hereto and the expression "section" followed by a number
means and refers to the specified section of this Agreement.
(b) "AGENTS" means consultants (including financial advisors), servants,
employees, agents, workmen, contractors and subcontractors.
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(c) "EARN-IN DATE" shall have the meaning set forth in section 6.1.
(d) "EFFECTIVE DATE" means the date of this Agreement set forth on the
first page hereof.
(e) "ENCUMBRANCES" means any and all mortgages, pledges, security
interests, liens, charges, encumbrances, contractual obligations and
rights and claims of others, whether recorded or unrecorded, registered
or unregistered.
(f) "EXPENDITURES" means all expenditures, expenses, obligations and
liabilities of whatever kind or nature reasonably spent or incurred by
Halo in doing Work from and after the Effective Date, including for
greater certainty and without limitation, moneys expended in
maintaining the Property in good standing, expenses paid for or
incurred in connection with any program of surface or underground
prospecting, exploring, geological, geophysical and geochemical
surveying, diamond drilling, drifting, raising and other underground
work, assaying, metallurgical testing, environmental studies,
submissions to any Governmental Authority and other agencies with
respect to all required Exploration or production and other permits,
licenses and approvals, moneys expended in acquiring or constructing
facilities and in exploring, developing and mining the Property and all
field costs incurred by employees and Agents with respect to Work
conducted on the Property, together with all administrative and
overhead costs directly incurred by the Operator and relating directly
to the administration of the Property or Work done on the Property,
provided that in no event shall such administrative and overhead costs
exceed ten percent of all other Expenditures directly related to the
Property or Work done on the Property and directly incurred or
performed by Halo or five percent of the contract price in respect of
all other Expenditures directly related to the Property or Work done on
the Property performed by any Agent, contractor or subcontractor of
Halo and provided always that in no event shall such costs include
non-project related overhead or legal or other consultants' fees
related to the negotiation (including the conduct of due diligence)
execution and delivery of this Agreement.
(g) "EXPENDITURE DATE" means each date upon which Expenditures must have
been incurred as provided in the schedule set out in section 5.1.
(h) "EXPLORATION" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits
of minerals on the Property.
(i) "GOVERNMENTAL AUTHORITY" means any federal, provincial or municipal
governmental department, commission, board, bureau, agency, state owned
corporation or instrumentality, or any court, including, for greater
certainty, any stock exchange or securities regulatory commission or
agency having jurisdiction.
(j) "OPERATOR" means the operator of the Property during the term of this
Agreement.
(k) "OPTION" has the meaning set forth in the preambles to this Agreement.
(l) "OPTION PERIOD" means the period during which the Option is in full
force and effect as provided herein.
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(m) "PARTY" means Halo or Dunlop, as the case may be.
(n) "PERSON" means any natural person, partnership, company, corporation,
unincorporated association, Governmental Authority or other agency,
trust, trustee or other entity howsoever designated or constituted.
(o) "PROPERTY" shall have the meaning ascribed thereto in the preambles to
this Agreement.
(p) "WORK" means Exploration or other mining and milling work performed
exclusively on or directly in relation to the Property.
2. SCHEDULES, GENDER AND CANADIAN DOLLARS
2.1 SCHEDULES. The following are the schedules attached to and incorporated
in this Agreement by reference and deemed to be a part hereof:
Schedule "A" - Description of the Property
Schedule "B" - Net Smelter Returns Royalty Agreement
Schedule "C" - Forms of Release
Schedule "D" - Current Holdings of Halo in the Sherridon Area
Schedule "E" - Halo Claims Within the Sherridon Community Boundary
Schedule "F" - Rules for Arbitration
2.2 GENDER AND EXTENDED MEANINGS. In this Agreement all words and personal
pronouns relating thereto shall be read and construed as the number and gender
of the Party or Parties referred to in each case require and the verb shall be
construed as agreeing with the required word and pronoun. In this Agreement
words importing the singular number include the plural and vice versa.
2.3 CANADIAN DOLLARS. All references to currency in this Agreement
including "dollars" and "$" are in Canadian funds.
2.4 BUSINESS DAYS. All references in this Agreement to business days are to
days excluding Saturdays, Sundays and banking holidays in the Province of
Manitoba.
2.5 PERIOD OF TIME. When calculating the period of time within which or
following which any act is to be done or step is to be taken pursuant to this
Agreement, the date which is the reference date in calculating such period shall
be excluded. If the last day of such period is a non-business day, the period in
question shall end on the next business day. Time is of the essence of this
Agreement.
2.6 SECTION HEADINGS. The section and other headings contained in this
Agreement or in the Schedules are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
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3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATION AND WARRANTIES OF THE PARTIES. Halo hereby represents
and warrants in respect of itself to Dunlop and W. ▇▇▇▇▇ ▇▇▇▇▇▇ Limited NPL and
W. ▇▇▇▇▇ ▇▇▇▇▇▇ hereby jointly and severally represent and warrant to Halo in
respect of W. ▇▇▇▇▇ ▇▇▇▇▇▇ Limited NPL and W. ▇▇▇▇▇ ▇▇▇▇▇▇ (as applicable) and
each of Halo and Dunlop acknowledges that the other Party is relying on such
representations and warranties in entering into this Agreement:
(a) It is a company duly incorporated under the laws of the jurisdiction of
its incorporation and it is duly organized and validly subsisting under
such laws.
(b) It has full corporate power, authority and capacity to carry on its
business and to enter into this Agreement and to carry out and perform
all of its obligations and duties hereunder.
(c) It has duly obtained all corporate and regulatory authorizations for
the execution, delivery and performance of this Agreement and, except
as expressly set out in this Agreement, such execution, delivery and
performance and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any
covenants or agreements contained in or constitute a default under or
result in the creation of any Encumbrance under the provisions of its
constating documents or any shareholders' or directors' resolution or
any indenture, agreement or other instrument whatsoever to which it is
a Party or by which it is bound and does not contravene any applicable
laws.
(d) This Agreement has been duly executed and delivered by it and is valid,
binding and enforceable against it in accordance with its terms.
(e) There is no Person acting or purporting to act at its request who is
entitled to any brokerage or finder's fee in connection with the
transactions contemplated herein.
(f) It has not committed an act of bankruptcy, is not insolvent, has not
proposed a compromising arrangement to its creditors generally, has not
had any petition for a receiving order in bankruptcy filed against it,
has not made a voluntary assignment in bankruptcy, has not taken any
proceedings with respect to a compromise or arrangement, has not taken
any proceeding to have itself declared bankrupt or wound-up, has not
taken any proceeding to have a receiver appointed of any part of its
assets, has not had any encumbrancer take possession of any of its
property and has not had any execution or distress become enforceable
or become levied upon any of its property.
3.2 REPRESENTATIONS AND WARRANTIES OF DUNLOP. W. ▇▇▇▇▇ ▇▇▇▇▇▇ Limited NPL
and W. ▇▇▇▇▇ ▇▇▇▇▇▇ hereby jointly and severally represent and warrant to Halo
as follows and acknowledges that Halo is relying on such representations and
warranties in entering into this Agreement:
(a) upon the exercise of the Option, Halo will be entitled to and will
receive by transfer from Dunlop a 100% undivided legal and beneficial
interest in and to the Property;
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(b) Dunlop is the 100% undivided legal and beneficial owner of all right,
title and interest in and to the mining claims that comprise the
Property and has good and marketable title thereto;
(c) there are no significant (over $5,000) outstanding tax or other
liabilities or other Encumbrances on or in respect of the Property;
(d) the condition of the Property is in material compliance with all
applicable laws, regulations and orders of all Governmental Authorities
having jurisdiction, including in respect of any environmental
liability related to or arising out of the Property;
(e) there are no outstanding, pending or threatened, actions, suits or
claims affecting or in respect of the Property or any part thereof,
including in respect of any environmental liability related to or
arising out of the Property; and
(f) Dunlop has delivered to Halo all material information in their
possession or control relating to the Property. Such deliveries are for
the information and convenience of Halo only and Dunlop does not
represent the accuracy or completeness of such deliveries and shall not
be liable for any errors or omissions with respect thereto or contained
therein.
4. GRANT OF OPTION
4.1 GRANT. In consideration of the covenants and agreements of Halo set
forth herein, Dunlop does hereby give and grant to Halo an exclusive option to
acquire an undivided 100% legal and beneficial interest in and to the Property
free and clear of all Encumbrances, by Halo satisfying within the time limits
therefor, those obligations set forth in Article 5. The Option shall commence on
the Effective Date and shall terminate on the date that is the 4th annual
anniversary of the Effective Date (the "Option Period") unless exercised,
extended or otherwise terminated, in accordance with the terms of this
Agreement.
5. OPTION PAYMENTS
5.1 MAINTAINING OPTION. In order to maintain the Option in good standing,
Halo shall:
(a) issue to Dunlop the following common shares in the capital of Halo on or
before the following respective dates:
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DATE NUMBER OF COMMON SHARES
--------------------------------------------------------------------------------
Effective Date 25,000
--------------------------------------------------------------------------------
First Anniversary of Effective Date 50,000
--------------------------------------------------------------------------------
Second Anniversary of Effective Date 75,000
--------------------------------------------------------------------------------
Third Anniversary of Effective Date 100,000
--------------------------------------------------------------------------------
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(b) pay to Dunlop the following amounts on or before the following
respective dates:
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DATE AMOUNT (CANADIAN DOLLARS)
--------------------------------------------------------------------------------
Effective Date $15,000
--------------------------------------------------------------------------------
First Anniversary of Effective Date $20,000
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Second Anniversary of Effective Date $25,000
--------------------------------------------------------------------------------
Third Anniversary of Effective Date $30,000
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; and
(c) incur Expenditures on Exploration Work (other than on the ▇▇▇▇ 1 Claim)
in the following minimum amounts on or before the respective
Expenditure Dates set out below (per year on a non-cumulative basis):
--------------------------------------------------------------------------------
EXPENDITURE DATE MINIMUM EXPENDITURE AMOUNT
(CANADIAN DOLLARS)
--------------------------------------------------------------------------------
On or before the First Anniversary $10,000
of the EffectiveDate
--------------------------------------------------------------------------------
On or before the Second Anniversary $10,000
of the EffectiveDate
--------------------------------------------------------------------------------
On or before the Third Anniversary $50,000
of the EffectiveDate
--------------------------------------------------------------------------------
On or before the Fourth Anniversary $100,000
of the EffectiveDate
--------------------------------------------------------------------------------
5.2 ISSUE OF SHARES. All shares, warrants, units and other securities
issued or to be issued by Halo to Dunlop under and pursuant to this Agreement
(the "HALO SECURITIES") shall be subject to all applicable hold periods required
by applicable securities laws, by any Governmental Authority and by any stock
exchange having jurisdiction, including the TSX Venture Exchange.
5.3 RELEASES. In consideration of the execution and delivery of this
Agreement, Dunlop shall execute and deliver to and unto Halo and its successors
and assigns and to and unto the Government of Manitoba, a complete,
unconditional and irrevocable release of any claim to any right title or
interest in and to any current or future mining claim staked and recorded by
Halo, or in which it acquires any direct or indirect interest, in or around the
Sherridon area of Manitoba (including, without limitation, those claims set out
on Schedule "D" attached hereto), such release shall be in the form attached as
Schedule "C" and shall be against and binding upon Dunlop, his estate, his
executors, administrators and heirs and all other persons or legal entities
associated with or under the control of Dunlop or in which Dunlop has a direct
or indirect interest (including, without limitation, all corporations, joint
ventures and partnerships).
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5.4 REQUIRED APPROVALS. Halo's obligation to issue the shares pursuant to
section 5.1 and to otherwise complete the transactions herein, shall be subject
to receipt of all approvals from all Governmental Authorities and all stock
exchanges having jurisdiction and the receipt of any required consent from any
third party.
6. EXERCISE OF OPTION
6.1 OPTION EXERCISE. If Halo has made the payments, incurred the
Expenditures and issued the shares in accordance with the provisions of section
5.1, Halo shall provide a written notice of exercise of the Option to Dunlop
stating the amount of Expenditures incurred and an itemized detailed statement
of such Expenditures. Following receipt of such notice of exercise of the
Option, and subject to the rights of Dunlop to request more information, to
dispute the accuracy of any item in the statutory declaration or itemized
statement of Expenditures and to receive an audited report of such Expenditures
prepared by the statutory auditor of Halo, Halo shall be deemed to have
exercised the Option as at the date of such written notice of exercise (the
"Earn-In Date") and Halo shall have earned an undivided 100% legal and
beneficial interest in the Property free and clear of all Encumbrances, subject
to any Encumbrance which has arisen as a result of Work carried out on the
Property by Halo.
6.2 NSR ROYALTY. On the Earn-in Date, Dunlop and Halo will enter into a net
smelter returns royalty agreement (the "NET SMELTER RETURNS ROYALTY AGREEMENT")
in the form set out in Schedule "B", pursuant to which Halo will grant to
Dunlop:
(a) a 3% net smelter returns ("NSR") royalty on the ▇▇▇ ▇▇▇▇ Claim, Batty
Claim and ▇▇▇▇ 1 Claim calculated and payable in accordance with the
terms of the Royalty Agreement;
(b) a 2% NSR royalty on two mining claims owned by Halo and lying adjacent
to the ▇▇▇ ▇▇▇▇ Claim and known as Halo 6 (MB6189) and Halo 3 (MB6186)
calculated and payable in accordance with the terms of the Royalty
Agreement (provided that such 2% NSR royalty on such claims shall
terminate and be void in respect of either of such claims in the event
that such royalty has received in aggregate $1 million from the
production of minerals from each of such claims); and
(c) a 1/2% NSR royalty on all claims owned by Halo and located within the
Sherridon Community Boundary (as defined and set out on Schedule "E"
attached hereto) calculated and payable in accordance with the terms of
the Royalty Agreement (provided that such 1/2% NSR royalty shall
terminate and be void in respect of all such claims in the event that
such royalty has received in aggregate $2.5 million from the production
of minerals from any of such claim or claims).
6.3 The Royalty Agreement shall provide that Halo has the right to buy back
one third of the 3% NSR royalty on the ▇▇▇ ▇▇▇▇ Claim, Batty Claim and ▇▇▇▇ 1
Claim so that such royalty is a 2 % NSR royalty on such claims, for a purchase
price of $500,000.00 per half of one percent bought back.
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7. DELIVERY OF DATA AND PROPERTY
7.1 DATA. Dunlop hereby covenants that it has or will forthwith deliver to
Halo all maps, reports, results of surveys and drilling and any other reports of
information Dunlop may have prepared or caused to be prepared with respect to
the Property, provided that all such maps, reports, results of surveys and
drilling and other reports of information shall be kept confidential by Halo as
provided in Article 13 and further provided that Dunlop shall retain exclusive
title thereto until Halo has exercised the Option, at which time title to such
information shall transfer to Halo. Such deliveries are for the information and
convenience of Halo only and Dunlop does not represent the accuracy or
completeness of such deliveries and shall not be liable for any errors or
omissions with respect thereto.
7.2 TITLE TO PROPERTY. Title to the Property shall remain registered and/or
recorded in the name of Dunlop until such time as Halo shall have duly and
properly exercised the Option in accordance with the terms of this Agreement,
whereupon title to the Property shall be transferred and assigned to, and
registered or recorded in the name of, Halo, and Dunlop shall deliver to Halo
such transfers or other documents of conveyance as required to transfer the
Property to and into the name of Halo. Halo shall be entitled to register,
record or file notice of this Agreement in all appropriate government offices
upon the due execution and delivery of this Agreement by the Parties provided
that, in the event that Halo does not exercise the Option or this Agreement is
otherwise terminated prior to the exercise of the Option, Halo shall forthwith
discharge and remove such registrations, recordings or filings from such
government offices, and in the event Halo does not complete such discharge and
removal within 30 days of its obligation to do so arising, Dunlop shall be
entitled to complete and register, record or file such discharges and remove all
such filings and for such limited purposes Halo hereby appoints Dunlop as its
attorney with full power of substitution.
8. OPERATOR OF THE PROPERTY
8.1 HALO AS OPERATOR. Halo shall act as Operator during the Option Period
and as such, Halo shall be responsible in its sole discretion for carrying out
and administering Work on the Property, including the completion of all
activities necessary to fulfill its obligations under this Agreement. Halo shall
be entitled to carry out its activities as Operator through its Agents and Halo,
as Operator, and its Agents shall have the right to enter upon, explore, develop
and mine the Property and have possession of the Property, including sample,
examine, diamond drill, prospect, explore, develop and mine the Property in such
manner as Halo may determine (subject to the applicable laws, regulations,
policies or orders of all Governmental Authorities having jurisdiction),
including without limitation, the right to erect, bring and install thereon all
buildings, machinery, equipment and supplies as they shall deem necessary and
proper and to remove therefrom reasonable quantities of ores, minerals or metals
for assay, testing and milling purposes. Halo shall be responsible for obtaining
and/or maintaining in good standing all permits and licenses and other approvals
from all Governmental Authorities having jurisdiction as are necessary in order
to conduct Work on the Property.
8.2 MAINTENANCE OF PROPERTY. During the Option Period, Halo shall do,
record and/or pay when due or in advance, all such matters and amounts as are
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necessary, including assessment work on the Property, and shall pay such taxes,
fees and rents, as are required to keep the Property in good standing.
8.3 WORK ON CLAIMS. All Work by Halo or its Agents on the Property as
Operator during the Option Period shall be done in a prudent and workmanlike
manner in accordance with good mining practice and in compliance with all laws
of all Governmental Authorities having jurisdiction.
8.4 INSURANCE. During the Option Period, Halo, as Operator shall maintain
adequate insurance coverage in accordance with normal industry standards and
practice protecting the interests of the Parties (including from third party
claims) and shall cause its Agents to obtain and maintain similar adequate
insurance. For greater certainty and without limitation, Halo shall acquire
public liability and property damage insurance in accordance with normal
industry standards naming the Parties as insureds, with severability of interest
and protecting the interests of the Parties (including from third party claims).
8.5 REMOVAL OF LIENS. During the Option Period, Halo as Operator shall pay
or cause to be paid all Agents including, without limitation, workers or wage
earners employed by Halo on the Property and for all material purchased by Halo
in connection with Work on the Property which might give rise to a lien or
privilege thereon. Should any such lien or privilege be recorded against the
Property in consequence of any Work done thereon by or for Halo, Halo shall
forthwith take all such actions, including initiating proceedings, as may be
necessary to have such lien or privilege removed and/or discharged from the
Property and shall have the same removed and/or discharged with all reasonable
dispatch provided, however, that upon such removal or discharge of such lien or
privilege, Halo may proceed to contest any such claim of lien or privilege in
good faith and diligently.
8.6 REPORTS AND INSPECTION. During the Option Period, Halo as Operator
shall, when Work is being conducted, provide Dunlop with: (i) quarterly reports
indicating the status of Exploration Work on the Property and any significant or
potentially significant results obtained or received by Halo in connection with
Work in respect of the Property; (ii) annual reports within 60 days of each
anniversary of each Expenditure Date indicating any results obtained or received
by Halo in connection with Work on the Property and the compilation and
interpretation thereof as well as a breakdown of the Expenditures incurred in
carrying out such Work and conclusions of tonnages of ore and waste rock and
mineral resource calculations; and (iii) timely current reports and information
forthwith upon the occurrence of any material results or other events, supported
by copies of relevant data in respect of such material results or events.
8.7 ACCESS. During the Option Period, Halo shall permit Dunlop and its
Agents at their own risk and expense, access to the Property at reasonable
times, and with advance prior notice to Halo and to all information obtained,
results produced, samples, core and data collected from the Property and
records, maps, sections and reports prepared by Halo in connection with any Work
done on or with respect to the Property. All such information shall be subject
to the confidentiality provisions set out in Article 13.
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9. TERMINATION OF OPTION
9.1 TERMINATION EVENTS. Subject to the obligations of the Parties which
expressly survive the termination of this Agreement in accordance with its
terms, this Agreement shall terminate:
(a) if Halo fails to deliver notice to Dunlop in accordance with section
6.1, fails to make the deliveries to Dunlop on a timely basis pursuant
to section 5.1 or fails to incur the required Expenditures (or to make
payments to Dunlop in lieu thereof) on or before the relevant
Expenditure Dates as set forth in section 5.1, upon the date
immediately following the date such notice or other deliveries were
deliverable or the date immediately following such relevant Expenditure
Date, as the case may be;
(b) upon receipt by Dunlop of notice from Halo given prior to the exercise
of the Option that Halo will not incur the Expenditures, make the
payments or issue the shares in accordance with section 5.1;
(c) if Halo does not exercise the Option on or before the date that is the
4th anniversary of the Effective Date; or
(d) upon exercise of the Option by Halo,
provided that for greater certainty, and without limitation, sections 9.2
through 9.6 inclusive as well as Article 13 shall survive the termination of
this Agreement.
9.2 RELEASE AND QUITCLAIM OF PROPERTY. If the Option is terminated, Halo
shall forthwith, and in any event within 30 days of such termination, deliver to
Dunlop a release and quitclaim in form and content satisfactory to Dunlop, with
respect to the Property and this Agreement.
9.3 PROPERTY IN GOOD STANDING. Upon termination of the Option, Halo shall
ensure that the Property remains in good standing for not less than 6 months
after termination.
9.4 DELIVERY OF DATA. Upon termination of the Option, Halo shall deliver to
Dunlop within 30 days of the date of termination all originals or copies of
maps, reports, results of surveys and drilling and all other reports of
information provided to Halo by Dunlop as well as copies of any assay plans,
diamond drill records, information, maps and other pertinent exploration reports
produced by Halo or its Agents and related to the Property.
9.5 REMOVAL OF LIENS. Upon termination of the Option, if at that time or
subsequently thereafter a lien on the Property shall arise in connection with
work done thereon by Halo or its Agents and Halo shall wish to contest such
lien, Halo shall post security sufficient to permit such lien to be discharged
and shall forthwith take all such measures as are necessary in order to
discharge such lien.
9.6 REMOVAL OF BUILDINGS AND ENVIRONMENTAL MATTERS. Upon termination of the
Option:
(a) All buildings, plant, equipment, machinery, tools, appliances and
supplies which may have been brought upon the Property by or on behalf
of Halo as Operator shall be removed by Halo at any time not later than
twelve months after termination unless other arrangements on terms
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satisfactory to Dunlop are made between Halo and Dunlop and if not so
removed, such buildings, plant, equipment, machinery, tools, appliances
and supplies shall, at the sole option of Dunlop, become the property
of Dunlop or may be removed by Dunlop or its Agents at the expense of
Halo.
(b) Halo shall perform all rehabilitation, reclamation or pollution control
on the Property which is required as a result of Halo's or its Agent's
activities thereon, to the standard required in accordance with all
applicable laws as approved by the appropriate Governmental Authorities
having jurisdiction.
10. ARBITRATION
10.1 BINDING ARBITRATION. Any matter in this Agreement in dispute between
the Parties which has not been resolved by the Parties within fifteen (15) days
of the delivery of notice by either Party of such dispute may be referred by
either Party to binding arbitration. Such referral to binding arbitration shall
be to a qualified single arbitrator pursuant to the Arbitrations Act, 1991
(Ontario) and its successor legislation, which act shall govern such arbitration
proceeding in accordance with its terms except to the extent modified by the
rules for arbitration set out in Schedule "F". The determination of such
arbitrator shall be final and binding upon the Parties hereto and the costs of
such arbitration shall be as determined by the arbitrator. The Parties covenant
that they shall conduct all aspects of such arbitration having regard at all
times to expediting the final resolution of such arbitration.
11. FORCE MAJEURE
11.1 FORCE MAJEURE. Time shall be of the essence of this Agreement, provided
however that notwithstanding anything to the contrary contained herein, if
either Party should at any time or times during the currency of this Agreement
be delayed in or prevented from complying with this Agreement by reason of wars,
acts of God, strike, lockouts or other labour disputes, inability to access its
place of business or the Property, acts of public insurrection, riots, fire,
storm, flood, explosion, government restriction, failure to obtain any approvals
required from any Governmental Authority having jurisdiction, including
environmental protection agencies, interference of persons primarily concerned
about environmental issues or native rights groups or other causes whether of
the kind enumerated above or otherwise which are not reasonably within the
control of the applicable Party, but excluding for greater certainty,
unavailability of funds, the period of all such delays resulting from such
causes or any of them, shall be excluded in computing the time within which
anything required or permitted by the applicable Party to be done, is to be done
hereunder, and the time within which anything is to be done hereunder shall be
extended by the total period of all such delays. Nothing contained in this
Article shall require the applicable Party to settle any labour dispute or to
test the constitutionality of any enacted law. In the event that any Party
asserts that an event of force majeure has occurred, it shall complete such
reasonable actions or cause such reasonable actions to be completed as may be
necessary to correct or terminate the alleged event of force majeure and give
notice in writing to the other Party specifying the following:
(a) the cause and nature of the alleged event of force majeure;
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(b) a summary of the action it or its Agents have taken to the date of such
notice to correct the alleged event of force majeure;
(c) confirmation as to all acts, actions and things done by it or its
Agents to terminate the event of force majeure; and
(d) the reasonably expected duration of the period of force majeure.
Any Party asserting an event of force majeure shall provide ongoing periodic
notice in writing to the other Party with respect to such events of force
majeure, including the matters set out above, within 15 days of the end of each
calendar month during the period of force majeure and shall provide prompt
notice in writing to the other Party upon the termination of the event of force
majeure.
12. RELATIONSHIP AND OTHER OPPORTUNITIES
12.1 RELATIONSHIP OF PARTIES. The rights, privileges, duties, obligations
and liabilities, as between Halo and Dunlop, shall be separate and not joint or
collective and nothing herein contained shall be construed as creating a
partnership, an association, agency or subject as herein specifically provided,
a trust of any kind or as imposing upon either of the Parties any partnership
duty, obligation or liability. No Party is liable for the acts, covenants and
agreements of any other Party. Notwithstanding the foregoing, the duties,
obligations and liabilities of W. ▇▇▇▇▇ ▇▇▇▇▇▇ Limited NPL and W. ▇▇▇▇▇ ▇▇▇▇▇▇
shall be joint and several and each is liable for the acts, failures to act,
covenants, agreements and representations and warranties of the other.
12.2 OTHER OPPORTUNITIES. Each of the Parties shall have the free and
unrestricted right independently to engage in and receive the full benefits of
any and all business endeavours of any sort whatsoever whether or not
competitive with the endeavours contemplated herein without consulting the other
Party or inviting or allowing the other Party to participate therein. No Party
shall be under any fiduciary or other duty to the other Party which shall
prevent it from engaging in or enjoying the benefits of competing endeavours
within the general scope of endeavours contemplated by this Agreement.
13. CONFIDENTIALITY
13.1 CONFIDENTIALITY. All information received by any Party as a result of
or in connection with the Property or this Agreement shall be confidential,
shall be treated as confidential and shall not be disclosed to any other Person
without the prior written consent of the other Party, which consent shall not be
withheld unless such other Party can reasonably establish that it would suffer
material damage or would be in violation of any laws or regulations of any
Governmental Authority to which it is subject as a result of such disclosure.
Where disclosure is required by law or a regulatory authority having
jurisdiction, a copy of the information required to be disclosed including,
without limitation, any press release, shall be provided to the other Party in
advance of its disclosure. The consent required by this Article 13 shall not
apply to a disclosure: (i) to an Agent that has a bona fide need to be informed;
and (ii) to any third Person to whom the disclosing Party bona fide and in good
faith contemplates a transfer of all or any part of its interest in or to the
Property and this Agreement. Only such confidential information as such third
Person shall have a legitimate business need to know shall be disclosed and such
- 13 -
third Person shall first agree in writing to protect the confidential
information from further disclosure to the same extent as the Parties are
obligated under this Article 13. The provisions of this Article 13 shall
continue to apply to any Party notwithstanding any termination of the Option.
Where disclosure is required in connection with a third Person transfer, any
intended third Person transferee must sign a confidentiality agreement with the
other non-disclosing Party containing provisions similar to this Article 13. No
Party shall be liable to the disclosing Person in respect of any
interpretations, opinions, findings, conclusions or other non-factual
information included by the disclosing Person in any report or other document
provided to the other Party whether included by negligence or otherwise. Each
disclosing Person shall jointly and severally indemnify and save harmless the
other Party from and against all Losses actually incurred by the other Party in
respect of the release by the disclosing Person of such non-factual information
to third Persons, irrespective of whether such release was consented to by the
other Party.
14. NOTICE - GENERAL
14.1 NOTICES. All notices, requests, demands or other communications which
by the terms hereof are permitted to be given by either Party to the other shall
be given in writing by personal delivery or by fax, addressed to such other
Party or delivered to such other Party as follows:
(i) to Halo at:
▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
Attention: Marc Cernovitch
Fax No.: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Scotia Plaza, Suite 2100
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) to Dunlop at:
▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other addresses and to such other Person that may be given by any of
them to the others in writing from time to time on 10 days' prior written notice
and such notices, requests, demands or other communications shall be deemed to
have been received when delivered.
- 14 -
15. MISCELLANEOUS - GENERAL
15.1 ▇▇▇▇▇ ▇▇▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ hereby acknowledges and agrees that he, and
his estate, executors, administrators, and heirs and any legal entity associated
with or under the control of ▇▇▇▇▇ ▇▇▇▇▇▇ or in which he owns a direct or
indirect interest, are subject to and bound by the terms of this Agreement and
the terms of the releases contemplated in subsection 5.3 hereof, as evidenced by
his due execution of this Agreement.
15.2 EXPENSES. Halo and Dunlop agree that all out-of-pocket expenses and
disbursements incurred in connection with this Agreement and the transactions
contemplated herein, including fees and expenses relating to legal, tax,
accounting matters and financial advisor fees, will be paid by the Party
incurring such expenses.
15.3 ACTS IN GOOD FAITH. The Parties shall at all times during the currency
of this Agreement and after the termination of the Option, act in good faith
with respect to the other Party and shall do or cause to be done all things
within their respective powers which may be necessary or desirable to give full
effect to the provisions hereof.
15.4 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable shall not effect any other provision and shall be deemed to be
severable herefrom.
15.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
15.6 FURTHER ASSURANCES. The Parties shall sign such further and other
documents and do such further acts or things as may be necessary or desirable in
order to give full force and effect to this Agreement and every part hereof.
15.7 AMENDMENT. This Agreement may not be amended or modified in any respect
except by written instrument signed by the Parties.
15.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof. The execution of
this Agreement has not been induced by nor do the Parties rely upon or regard as
material, any covenants, representations or warranties whatsoever not
incorporated herein and made a part hereof.
15.9 ENUREMENT. This Agreement shall enure to the benefit of and be binding
upon the Parties and each of their respective heirs, executors, administrators,
successors and permitted assigns. Any assignment of a party's interest hereunder
may be assigned only with the consent of the other Party which consent shall not
be unreasonably withheld, and which consent will be conditional upon the
assignee agreeing in writing with the non-assigning Party to be bound by the
terms of this Agreement.
- 15 -
15.10 COUNTERPARTS. This Agreement may be executed in counterparts and by
facsimile transmission, each of which so executed shall be deemed to be an
original and such counterparts together shall constitute one and the same
document.
IN WITNESS WHEREOF the Parties have executed these presents as of the Effective
Date.
HALO RESOURCES LTD.
Per: /s/ MARC CERNOVITCH
-------------------------------
Marc Cernovitch
W. ▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED NPL
Per /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
W. ▇▇▇▇▇ ▇▇▇▇▇▇
SIGNED, SEALED & DELIVERED
IN THE PRESENCE OF:
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------- ------------------------------------
WITNESS: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ NAME: ▇▇▇▇▇ ▇▇▇▇▇▇
SIGNED, SEALED & DELIVERED
IN THE PRESENCE OF:
/s/ ▇▇▇▇▇ GIULANE /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ GIULANE NAME: ▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE "A"
THE PROPERTY
Those unpatented mining claims located in the Province of Manitoba and known as
▇▇▇ - MB2318, Batty 1 - MB4786, ▇▇▇▇ 1 - MB4934, as such claims are shown on the
map below.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Omitted graphic is a map of the Sherridon VMS Project showing the claims covered
under Schedule A and the Halo claims subject to NSR under Schedule B
SCHEDULE "B"
NET SMELTER RETURNS ROYALTY
THIS NET SMELTER RETURN ROYALTY DATED WITH EFFECT AS OF , ▇▇▇▇
▇ ▇ ▇ ▇ ▇ ▇ ▇:
HALO RESOURCES LTD.
(the "Owner")
- and -
W. ▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED NPL
(the "Holder")
In consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, it
is agreed as follows:
1. Definitions
(a) "MINERALS" means all naturally occurring metallic and non-metallic
minerals that are mined, produced or otherwise recovered from the
Property by or on behalf of the Owner, whether in the form of dore
bars, concentrates or otherwise including, without limitation, gold,
silver, copper, lead or zinc, and all beneficiated or derivative
products thereof.
(b) "NET SMELTER RETURNS" and "NSR" means the gross proceeds received by or
payable to the Owner from the sale or other disposition of Minerals
(other than in the circumstances of a sale of Minerals by the Owner
after such Minerals have been credited to the account of the Owner at
the Processor) or, in the event that the account of the Owner at the
Processor is credited with Minerals refined by the Processor, the gross
value of such Minerals so credited to the Owner calculated on the basis
of the aggregate quantity of such Product so credited during the
relevant time period multiplied by the Spot Price (if applicable), less
the following expenses:
(i) all taxes based directly on or assessed against the value or
quantity of Minerals produced from the Property, including the
following:
(a) direct sales tax;
(b) use taxes;
(c) gross receipts taxes;
- 2 -
(d) severance taxes; and
(e) crown royalties;
but excluding any and all taxes based upon the net or gross
income of the Owner or other operator of the Property, the
value of the Property or the privilege of doing business and
other taxes assessed on a similar basis; and
(ii) all transportation costs, including related insurance costs,
for transportation of Minerals from the Property to the
Processor, and all direct charges and/or costs charged by any
smelter, refiner, mint and/or other Processor of the Minerals,
including sales costs and penalties, if any. Provided that if
the smelting, refining, minting and/or further processing is
carried out at facilities owned or controlled, in whole or in
part, by the Owner, then the charges and costs for such
smelting, refining, minting and/or further processing of such
Minerals shall be the lesser of: (A) the charges and costs the
Owner would have incurred if such smelting, refining, minting
and/or further processing was carried out at facilities that
are not owned or controlled by the Owner and that are offering
comparable services for comparable products; and (B) the
actual charges and costs incurred by the Owner with respect to
such smelting, refining, minting and/or further processing;
(c) "PLACE OF DELIVERY" means in the case of payment of the Royalty, the
deposit account of the Holder as the Holder shall direct in writing.
(d) "PROPERTY" means certain unpatented mining claims located in the
Sherridon area of Manitoba known as the ▇▇▇ ▇▇▇▇ Claim, the Batty
Claim, the ▇▇▇▇ 1 Claim, Halo 6 (MB 6189) and Halo 3 (MB 6186) Claims
and those claims referenced in section 2 (c) of this Agreement.
(e) "PRIME" means at any particular time, the reference rate of interest,
expressed as a rate per annum, that the Toronto-Dominion Bank
establishes as its prime rate of interest in order to determine
interest rates that it will charge for demand loans in Canadian dollars
to its most credit worthy Canadian customers.
(f) "PROCESSOR" means collectively any smelter, refiner, mint or processor
or other purchaser or user of the Minerals.
(g) "ROYALTY" means the payments to the Holder described in Section 2 of
this Agreement.
(h) "SPOT PRICE" means (i) in respect of Minerals that is gold, the price
of gold in U.S. Dollars on the London Bullion Market Afternoon Fix on
the day that Product that is Refined Gold is sold by the Owner (other
than in the circumstances of a sale of Product by the Owner after
Product has been credited to the account of the Owner at the Processor)
or credited to the account of the Owner by the Processor, (ii) in
respect of Minerals that is silver, the price in U.S. dollars
determined by the Processor in purchasing such silver from the Owner or
crediting such silver to the account of the Owner, and (iii) for any
- 3 -
other Minerals other than gold or silver, the price of such Mineral
quoted in U.S. dollars at the close of business on a specified day by
the New York Commodity Exchange. If for any reason the London Bullion
Market or the New York Commodity Exchange is no longer in operation or
the spot price of a particular Mineral is not quoted by the London
Bullion Market or the New York Commodity Exchange, the "Spot Price" of
such Mineral shall be determined by reference to the price of such
Mineral on another similar commercial exchange entity having the
largest volume of trading in such Mineral on such day. The exchange
rate used to convert a "Spot Price" for any Minerals from U.S. dollars
to any other currency on a particular date shall be determined on the
basis of the Bank of Canada noon exchange rate for U.S. dollars on such
day.
2. RESERVATION AND GRANT OF ROYALTY
Subject to the terms of this Agreement, the Owner, for and in
consideration of the sum of TEN DOLLARS ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the Owner, hereby grants and agrees to pay to the Holder the following:
(a) 3% of the Net Smelter Returns from that part of the Property being the
▇▇▇ ▇▇▇▇ Claim, Batty Claim and ▇▇▇▇ 1 Claim, calculated and payable in
accordance with the terms of this Agreement;
(b) 2% of the Net Smelter Returns from that part of the Property being two
mining claims owned by Halo and lying adjacent to the ▇▇▇ ▇▇▇▇ Claim
and known as Halo 6 (MB6189) and Halo 3 (MB6186), calculated and
payable in accordance with the terms of this Agreement (provided that
such 2% NSR Royalty on such claims shall terminate and be void in
respect of either of such claims in the event that such Royalty has
received in aggregate $1 million from the production of minerals from
each of such claims); and
(c) 1/2% of the Net Smelter Returns from that part of the Property being
the claims owned by Halo and located within the Sherridon Community
Boundary (as defined and set out on Schedule "I" attached hereto),
calculated and payable in accordance with the terms of this Agreement
(provided that such 1/2% NSR royalty shall terminate and be void in
respect of all such claims in the event that such royalty has received
in aggregate $2.5 million from the production of minerals from any one
or more of such claims).
The Owner has the right to buy back one third of the 3% NSR Royalty on
the ▇▇▇ ▇▇▇▇ Claim, Batty Claim and ▇▇▇▇ 1 Claim referred in 2 (a) above, so
that such Royalty is a 2 % NSR royalty on such claims, such buy back for a
purchase price of $500,000.00 per one half of one percent bought back.
3. TIME AND MANNER OF ROYALTY PAYMENTS
(a) All Royalty payments shall be made in cash to the Place of Delivery.
The Royalty shall be calculated and paid, and the Owner shall cause the
Royalty to be calculated and paid, to the Holder as follows:
(i) The Royalty shall be calculated for each three (3) month
period (a "Quarter") during the term of this Agreement, the
first quarter commencing on the date this Agreement becomes
- 4 -
effective. The Royalty payable for each Quarter shall be paid
to the Holder by the Owner by bank draft or wire transfer (in
the sole and absolute discretion of the Holder) in Canadian
dollars, on or before the last day of the calendar month
following the Quarter for which the Royalty is payable. To the
extent that the Owner is unable to calculate the Royalty with
certainty on the last day of such month, the Owner shall pay
the Royalty for the particular Quarter on the basis of the
Owner's best good faith estimate thereof, and a final
determination in respect of the Royalty payment with respect
to such Quarter shall be made by the Owner with all due
dispatch and, in any event, by the end of the next Quarter.
Any adjustment required by such final determination shall be
paid to the Holder within two (2) days of the date of such
final determination but in any event no later than the end of
the next Quarter following the Quarter for which the Royalty
is payable. All such Royalty payments shall be delivered to
the Holder at the Place of Delivery in such manner
contemplated by this Section 3(a) as specified in writing by
the Holder;
(ii) The Holder shall have no right to receive Royalty payments by
delivery of Minerals in kind;
(iii) At the time each Royalty payment is paid to the Holder, the
Owner shall prepare and deliver to the Holder a statement
setting out in reasonable detail the manner in which such
Royalty payment was calculated, including: (i) the quantities
of Minerals sold or otherwise disposed of by the Owner with
respect to such period or the amount of Minerals credited to
the account of the Owner, as the case may be; (ii) the
quantities of Minerals to which such Royalty payment is
applicable; (iii) the calculation of the applicable Net
Smelter Returns; (iv) the Spot Price for the applicable
Minerals, (v) the calculation of interest accrued on such
Royalty payment, if any and (vi) in the event of any
commingling as contemplated in Section 5, a summary of the
determination by the Owner of the quantity of Minerals subject
to the Royalty;
(iv) Notwithstanding the terms of any other provision in this
Agreement, the Owner shall not be obligated to make any
Royalty payment before the Owner has received or been credited
with payment for the sale or other disposition of such
Minerals.
(b) The Holder may object in writing to any statement, Royalty payment
amount and invoice within 2 months after receipt of the relevant
statement, payment or invoice. If any Royalty payment has not been
properly paid or credited in full as provided herein, the Holder may
give to the Owner notice in writing of such default and, unless the
Holder has received such payment within 15 business days after receipt
of such notice by the Owner, the Owner shall pay interest on any
payment determined to be delinquent at a rate of Prime plus 2% per
annum, commencing on the date on which such delinquent payment was
properly due and continuing until the Holder receives payment in full
of such delinquent payment and all accrued interest thereon; and for
the purposes of this subsection, Prime shall be determined as of the
date on which such delinquent payment was properly due.
- 5 -
(c) All Royalty payments, including interest and penalties, if any, will be
made subject to withholding or deduction in respect of the Royalty for,
or on account of, any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed or levied by or on
behalf of the Canadian Government, the Government of Manitoba or any
political subdivision thereof or any other governmental authority
(foreign or domestic), or department, authority or agency therein or
thereof having power and jurisdiction to tax and for which the
Processor or Owner is obligated in law to withhold or deduct and remit
to such taxing authority having such power and jurisdiction.
4. TERM
This Agreement shall continue in perpetuity unless terminated in
accordance with its terms. If any right, power or interest of either party under
this Agreement would violate the rule against perpetuities, then such right,
power or interest shall terminate at the expiration of 20 years after the death
of the last survivor of all the lineal descendants of Her Majesty, Queen
▇▇▇▇▇▇▇▇▇ ▇▇ of England, living on the date of this Agreement.
5. COMMINGLING
The Owner shall be entitled to commingle Minerals from the various
Properties and from any other properties during production, milling
(concentrating), refining, minting or further processing of Minerals produced
from the Properties.
6. HEDGING TRANSACTIONS
All profits and losses resulting from the Owner engaging in any
commodity futures trading, option trading, metals trading, gold loans or any
combination thereof, and any other hedging transactions (collectively "hedging
transactions") are specifically excluded from calculations of Royalty payments
pursuant to this agreement. All hedging transactions by the Owner shall be for
the Owner's sole account.
7. STOCKPILING
The Owner or operator shall be entitled to temporarily stockpile, store
or place ores or mined rock containing Minerals produced from the Property in
any locations owned by the Owner or the Processor on or off the Property site
provided the same are appropriately secured from theft or tampering.
8. BOOKS; RECORDS; INSPECTIONS
The Owner shall keep true and accurate books and records of all of its
operations and activities with respect to the Property, and the Minerals,
prepared on an accrual basis in accordance with Canadian generally accepted
accounting principles, consistently applied. The Holder shall be entitled to
perform audits or other examinations of the Owner's books and records relevant
to the calculation and payment of the Royalty pursuant to this Agreement once
per calendar year to confirm compliance with the terms of this Agreement,
including without limitation, calculations of Net Smelter Returns. In
particular, the Holder shall have the right to audit all invoices and other
records relating to the transportation of Minerals from the Property to the mill
- 6 -
at which ore and Minerals from the Property may be milled (concentrated) and
relating to the transportation of Minerals in the form of concentrates, dore,
slag or other waste products from the mill at which ore and Minerals from the
Property may be milled, to the Processor. The Holder shall promptly commence,
and diligently complete, any audit or other examination permitted hereunder. The
reasonable expenses of any audit or other examination permitted hereunder shall
be paid by the Holder, unless the results of such audit or other examination
permitted hereunder disclose a deficiency in respect of the Royalty payments
paid to the Holder hereunder in an amount greater than 5% of the amount of the
Royalty properly payable, in which event the costs of such audit or other
examination shall be paid by the Owner.
9. CONFIDENTIALITY
(a) Neither party shall, without the express written consent of the other
(which consent shall not be unreasonably withheld), disclose any
non-public information in respect of the terms of this Agreement or
otherwise received under or in conjunction with this Agreement and, in
the case of the Holder, concerning Minerals and operations on the
Property, other than to its employees, agents and consultants for
purposes related to the administration of this Agreement and no party
shall issue any press releases concerning the terms of this Agreement
or, in the case of the Holder, in respect of the operations of the
Owner, without the consent of the other party after such party having
first reviewed the terms of such press release. Each party agrees to
reveal such information only to its employees, agents and consultants
who need to know, who are informed of the confidential nature of the
information and who agree to be bound by the terms of this Section 9.
In addition neither party shall use any such information for its own
use or benefit except for the purpose of enforcing its rights under
this Agreement.
(b) The parties may disclose data or information obtained under or in
conjunction with this Agreement and otherwise prohibited by this
Section 9 after providing the other party with a copy of the proposed
disclosure and if the other party does not object, acting reasonably,
to such disclosure by notice in writing to such party within 48 hours
after receipt of such copy:
(i) to any third person to whom such party in good faith
anticipates selling or assigning its interest hereunder; or
(ii) to a prospective lender or other financier;
provided that in each case the other parties shall first have been
provided with a confidentiality agreement executed by such third party
purchaser or lender which agreement shall include the confidentiality
provisions of this section. Each party hereby agrees to indemnify and
save the other harmless from any damages resulting from any breach of
this Section 9 by such party, its employees, agents and consultants or
any claim made by third parties receiving information provided
hereunder.
(c) The parties may disclose data or information obtained under this
Agreement if required to do so for compliance with applicable laws,
rules, regulations or orders of a governmental agency or stock exchange
having jurisdiction over such parties, provided that such party shall
disclose only such data or information as, in the opinion of its
counsel, is required to be disclosed and provided further that where
- 7 -
possible (time permitting after reasonable efforts on the part of such
disclosing party) the other party shall be given the right to review
and object to the data or information to be disclosed prior to any
public release subject to any reasonable changes proposed by such other
parties.
10. CONDUCT OF OPERATIONS
(a) All decisions concerning methods, the extent, times, procedures and
techniques of any (i) exploration, development and mining related to
the Property, (ii) leaching, milling, processing, extraction treatment
and refining, if any, including, without limitation, the choice of
refiner and (iii) materials to be introduced on or to the Property or
produced therefrom and all decisions concerning the sale or other
disposition of ore and Minerals from the Property (including, without
limitation, decisions as to buyers, times of sale, whether to store or
stockpile ore and Minerals derived from the Property for a reasonable
length of time without selling, refining or otherwise processing the
same) shall be made by the Owner, in its sole discretion.
(b) The Owner shall not be responsible for nor obliged to make any Royalty
payments for Minerals or Mineral value lost in any mining or processing
of the Minerals conducted pursuant to good mining practices. The Owner
shall not be required to mine or to preserve or protect the Minerals
which under good mining industry practices cannot be mined or shipped
at a reasonable profit by the Owner at the time mined.
11. NO IMPLIED COVENANTS
The parties agree that there are no implied covenants or duties
relating to or affecting any of their respective rights or obligations
hereunder, and that the only covenants or duties which affect such rights and
obligations shall be those expressly set forth and provided for in this
Agreement.
12. NO RESTRICTIONS ON ASSIGNMENT
The Holder shall have the right, at any time and from time to time, to
assign, transfer, convey, mortgage, pledge or charge any portion or all of the
Royalty and its interest in and to this Royalty Agreement, in its sole
discretion, free from any restrictions from the Owner.
13. REGISTRATION
The Holder may or may cause, at its own expense, the due registration
of this Agreement or notice of this Agreement against the title to the Property.
The Owner shall co-operate with such registration and provide its written
consent or signature to any documents or things reasonably necessary to
accomplish such registration in order to ensure that any successor or assignee
or other acquiror of the Property, or any interest therein, shall have public
notice of the terms of this Agreement.
- 8 -
14. DISPUTE RESOLUTION
Any matter in this Agreement in dispute between the Parties which has
not been resolved by the Parties within fifteen (15) days of the delivery of
notice by either Party of such dispute may be referred by either Party to
binding arbitration. Such referral to binding arbitration shall be to a
qualified single arbitrator pursuant to the Arbitrations Act, 1991 (Ontario) and
its successor legislation, which act shall govern such arbitration proceeding in
accordance with its terms except to the extent modified by the rules for
arbitration set out in Schedule "II". The determination of such arbitrator shall
be final and binding upon the Parties hereto and the costs of such arbitration
shall be as determined by the arbitrator. The Parties covenant that they shall
conduct all aspects of such arbitration having regard at all times to expediting
the final resolution of such arbitration.
15. GENERAL PROVISIONS
(a) FURTHER ASSURANCES: Each party shall execute all such further
instruments and documents and do all such further actions as may be
necessary to effectuate the documents and transactions contemplated in
this Agreement, in each case at the cost and expense of the party
requesting such further instrument, document or action, unless
expressly indicated otherwise.
(b) BINDING EFFECT: All covenants, conditions, and terms of this Agreement
shall be binding upon and enure to the benefit of the parties hereto
and their respective successors and assigns. In the event that the
Owner sells, transfers, charges or assigns the Property or any part
thereof, the Owner shall be entitled to charge, novate or assign this
Agreement, as the case may be, to such purchaser, transferee, chargee
or assignee, provided that the Owner shall ensure that contemporaneous
with the consummation of any such sale, transfer, charge or assignment,
the Owner shall procure from the transferee or chargee pursuant to such
transaction, a written agreement with and in favour of the Holder, in
form and content satisfactory to the Holder acting reasonably, wherein
such transferee or chargee covenants and agrees to and in favour of the
Holder to be bound by the terms and conditions of this Agreement as if
it were an original signatory hereto (or in the case of a chargee, to
obtain such a written agreement from any transferee of such chargee)
and the Holder shall execute all such documentation as is required in
respect thereof and the Owner shall thereafter be released from all
obligations pursuant to the terms of this Agreement in respect of that
part of the Property so sold, transferred or assigned.
(c) RELATIONSHIP OF THE PARTIES: Nothing herein shall be construed to
create, expressly or by implication, a joint venture, mining
partnership, commercial partnership, or other partnership relationship
between the Owner and the Holder.
- 9 -
(d) GOVERNING LAW: This Agreement shall be governed by and construed under
the laws of the Province of Manitoba and the laws of Canada applicable
therein.
(e) TIME OF ESSENCE: Time is of the essence in this Agreement.
(f) SEVERABILITY: If any provision of this Agreement is wholly or partially
invalid, this Agreement shall be interpreted as if the invalid
provision had not been a part hereof so that the invalidity shall not
affect the validity of the remainder of the Agreement which shall be
construed as if the Agreement had been executed without the invalid
portion. It is hereby declared to be the intention of the parties that
this Agreement would have been executed without reference to any
portion which may, for any reason, hereafter be declared or held
invalid.
(g) ACCOUNTING PRINCIPLES: All calculations hereunder shall be made in
accordance with Canadian generally accepted accounting principles as
the same may be in effect from time to time.
(h) NOTICES: All notices, requests, demands or other communications which
by the terms hereof are permitted to be given by either Party to the
other shall be given in writing by personal delivery or by fax,
addressed to such other Party or delivered to such other Party as
follows:
(i) to Halo at:
▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
Attention: Marc Cernovitch
Fax No.: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Scotia Plaza, Suite 2100
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) to Dunlop at:
▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 10 -
or at such other addresses and to such other Person that may be given
by any of them to the others in writing from time to time on 10 days'
prior written notice and such notices, requests, demands or other
communications shall be deemed to have been received when delivered.
(i) SCHEDULES: The schedules which are attached to this Agreement are
incorporated into this Agreement by reference and are deemed to form
part hereof.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
HALO RESOURCES LTD.
Per
--------------------------------
W. ▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED NPL
Per
--------------------------------
SCHEDULE "I"
HALO CLAIMS WITHIN THE SHERRIDON COMMUNITY BOUNDARY
--------------------------------------------------------------------------------
Sub- Name Number Area Recorded Expires Map Holder
Project (ha) Ref. (*)
--------------------------------------------------------------------------------
Sherridon Halo 15 MB 6198 256 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 16 MB 6199 250 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 17 MB 6023 233 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 18 MB 6024 96 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 19 MB 6048 64 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 20 MB 6049 72 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 21 MB 6050 70 14-Oct-05 12-Dec-07 63N3 HALO
* Full name is Halo Resources Ltd.
SCHEDULE "II"
RULES OF ARBITRATION
The following rules and procedures shall apply with respect to any matter to be
arbitrated by the parties under the terms of the Agreement.
1. Initiation of Arbitration Proceedings
(a) If any party to this Agreement wishes to have any matter under
this Agreement arbitrated in accordance with the provisions of this Agreement,
it shall give notice to the other party hereto specifying particulars of the
matter or matters in dispute and proposing the name of the person it wishes to
be the single arbitrator. Within 5 days after receipt of such notice, the other
party to this Agreement shall give return notice to the first party advising
whether such party accepts the arbitrator proposed by the first party and if
such party does not accept the arbitrator proposed by the first party, proposing
the name of the person it wishes to be the single arbitrator. If such return
notice is not given by the other party within such 5 day period, it shall be
deemed to have accepted the arbitrator proposed by the first party. If such
return notice is given within such 5 day period and does not accept the proposed
arbitrator of the first party and proposes another person to be arbitrator, the
first party shall, within 5 days after receipt of such return notice, give
notice to the other party advising whether such first party accepts the
arbitrator proposed by the other party. If the parties do not agree upon a
single arbitrator within such second 5 day period, the single arbitrator shall
be chosen in accordance with the Arbitrations Act, 1991 (Ontario).
(b) The individual selected as Arbitrator shall be qualified by
education and experience to decide the matter in dispute. The Arbitrator shall
be at arm's length from both parties and shall not be a member of the audit or
legal firm or firms who advise either party, nor shall the Arbitrator be a
person who is otherwise regularly retained by either of the parties.
2. Submission of Written Statements
(a) Within 5 days of the appointment of the Arbitrator, the party
initiating the arbitration (the "Claimant") shall send the other party (the
"Respondent") a statement of claim setting out in sufficient detail the facts
and any contentions of law on which it relies, and the relief that it claims.
(b) Within 10 days of the receipt of the statement of claim, the
Respondent shall send the Claimant a statement of defence stating in sufficient
detail which of the facts and contentions of law in the statement of claim it
admits or denies, on what grounds, and on what other facts and contentions of
law he relies.
(c) Within 5 days of receipt of the statement of defence, the
Claimant may send the Respondent a statement of reply.
(d) All statements of claim, defence and reply shall be
accompanied by copies (or, if they are especially voluminous, lists) of all
- 2 -
essential documents on which the party concerned relies and which have not
previously been submitted by any party, and (where practicable) by any relevant
samples.
(e) After submission of all the statements, the Arbitrator will
give directions for the further conduct of the arbitration.
3. Meetings and Hearings
(a) The arbitration shall take place in the City of Winnipeg, or
in such other place as the Claimant and the Respondent shall agree upon in
writing. The arbitration shall be conducted in English. Subject to any
adjournments which the Arbitrator allows, the final hearing will be continued on
successive working days until it is concluded.
(b) All meetings and hearings will be in private unless the
parties otherwise agree.
(c) Any party may be represented at any meetings or hearings by
legal counsel.
(d) Each party may examine, cross-examine and re-examine all
witnesses at the arbitration.
4. The Decision
(a) The Arbitrator will make a decision in writing and, unless the
parties otherwise agree, will set out reasons for decision in the decision.
(b) The Arbitrator will send the decision to the parties as soon
as practicable after the conclusion of the final hearing, but in any event no
later than 10 days thereafter, unless that time period is extended for a fixed
period by the Arbitrator on written notice to each party because of illness or
other cause beyond the Arbitrator's control.
(c) The decision shall determine and award costs to the successful
party in the arbitration.
(d) The decision shall be final and binding on the parties and
shall not be subject to any appeal or review procedure provided that the
Arbitrator has followed the rules provided herein in good faith and has
proceeded in accordance with the principles of natural justice. In the event
either party initiates any court proceeding in respect of the decision of the
Arbitration or the matter arbitrated, such party shall, if unsuccessful in the
court proceeding, shall pay the other parties costs on a solicitor/client basis
plus all other reasonable expenses incurred by such other party from the date of
delivery of the notice commencing arbitration to the date of determination of
such court proceeding.
5. Jurisdiction and Powers of the Arbitrator
(a) By submitting to arbitration under these Rules, the parties
shall be taken to have conferred on the Arbitrator the following jurisdiction
and powers, to be exercised at the Arbitrator's discretion subject only to these
- 3 -
Rules and the relevant law with the object of ensuring the just, expeditious,
economical and final determination of the dispute referred to arbitration.
(b) Without limiting the jurisdiction of the Arbitrator at law,
the parties agree that the Arbitrator shall have jurisdiction to:
(i) determine any question of law arising in the
arbitration;
(ii) determine any question as to the Arbitrator's
jurisdiction;
(iii) determine any question of good faith, dishonesty or
fraud arising in the dispute;
(iv) order any party to furnish further details of that
party's case, in fact or in law;
(v) proceed in the arbitration notwithstanding the
failure or refusal of any party to comply with these
Rules or with the Arbitrator's orders or directions,
or to attend any meeting or hearing, but only after
giving that party written notice that the Arbitrator
intends to do so;
(vi) receive and take into account such written or oral
evidence tendered by the parties as the Arbitrator
determines is relevant, whether or not strictly
admissible in law;
(vii) make one or more interim awards;
(viii) hold meetings and hearings, and make a decision
(including a final decision) in Winnipeg, Manitoba or
elsewhere with the concurrence of the parties
thereto;
(ix) order the parties to produce to the Arbitrator, and
to each other for inspection, and to supply copies
of, any documents or other evidence or classes of
documents in their possession or power which the
Arbitrator determines to be relevant; and
(x) make interim orders to secure all or part of any
amount in dispute in the arbitration.
SCHEDULE "C"
RELEASE
TO: THE GOVERNMENT OF THE PROVINCE OF MANITOBA - INDUSTRY, ECONOMIC
DEVELOPMENT AND MINES, MINES BRANCH
RE: CURRENT AND FUTURE STAKED MINING CLAIMS IN THE SHERRIDON AREA OF THE
PROVINCE OF MANITOBA
For good and valuable consideration, the undersigned ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇, for and on behalf of themselves and with effect against and binding upon
their respective estates, executors, administrators, and heirs and all other
persons or legal entities associated with or under the control of ▇▇▇▇▇ ▇▇▇▇▇▇
or ▇▇▇▇▇ ▇▇▇▇▇▇ or in which ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ have a direct or
indirect interest (including, without limitation, any corporation, joint venture
or partnership) (collectively, the "Releasors") do hereby unconditionally and
irrevocably remise, release, disclaim and quit claim any and all claims, and all
rights to claim, any right, title or interest in and to any current or future
mining claim staked and recorded by Halo Resources Ltd., or in which Halo
Resources Ltd. acquires any direct or indirect right, title or interest, in and
around the Sherridon Area of the Province of Manitoba (including, without
limitation, those claims set out on Schedule D attached hereto) (all such
current or future mining claims collectively, the "Mining Claims") with the
intention that from and after this date the Releasors are and shall be estopped
from making any such claims as described herein).
This Release shall be governed by the laws of the Province of Manitoba.
DATED AT WINNIPEG, MANITOBA, THIS DAY OF , 2006
WITNESS:
)
)
)
--------------------------- ) --------------------------------
) ▇▇▇▇▇ ▇▇▇▇▇▇
)
)
--------------------------- ) --------------------------------
) ▇▇▇▇▇ ▇▇▇▇▇▇
)
SCHEDULE "C"
RELEASE
TO: HALO RESOURCES LTD.
RE: CURRENT AND FUTURE STAKED MINING CLAIMS IN THE SHERRIDON AREA OF THE
PROVINCE OF MANITOBA
In consideration of the execution and delivery of an Option Agreement between
▇▇▇▇▇ ▇▇▇▇▇▇ and Halo Resources Ltd. of even date herewith, each of the
undersigned ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, for and on behalf of themselves and
with effect against and binding upon their respective estates, executors,
administrators, and heirs and all other persons or legal entities associated
with or under the control of ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ or in which ▇▇▇▇▇
▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ have a direct or indirect interest (including, without
limitation, any corporation, joint venture or partnership) (collectively, the
"Releasors") do hereby unconditionally and irrevocably remise, release,
disclaim, and quit claim to and unto Halo Resources Ltd., any and all claims,
and all rights to claim, any right, title or interest in and to any current or
future mining claim staked and recorded by Halo Resources Ltd., or in which Halo
Resources Ltd. acquires any direct or indirect right, title or interest, in and
around the Sherridon Area of the Province of Manitoba (including, without
limitation, those claims set out on Schedule D attached hereto) (all such
current or future mining claims collectively, the "Mining Claims") with the
intention that from and after this date the Releasors are and shall be estopped
from making any such claims as described herein.
This Release shall be binding upon and may be enforced by the successors and
assigns, including the successors in title to any of the Mining Claims, of Halo
Resources Ltd.
This Release shall be governed by the laws of the Province of Manitoba.
DATED AT WINNIPEG, MANITOBA, THIS DAY OF , 2006
WITNESS: )
)
)
)
--------------------------- ) --------------------------------
) ▇▇▇▇▇ ▇▇▇▇▇▇
)
)
--------------------------- ) --------------------------------
) ▇▇▇▇▇ ▇▇▇▇▇▇
)
SCHEDULE "D"
ALL MINING CLAIMS IN THE SHERRIDON, MANITOBA AREA
IN WHICH HALO CURRENTLY HAS AN INTEREST
--------------------------------------------------------------------------------
Sub- Name Number Area Recorded Expires Map Holder
Project (ha) Ref. (*)
--------------------------------------------------------------------------------
Sherridon Halo 1 MB 6184 256 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 2 MB 6185 256 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 3 MB 6186 236 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 4 MB 6187 111 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 5 MB 6188 256 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 6 MB 6189 252 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 7 MB 6190 247 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 8 MB 6191 253 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 9 MB 6192 256 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 10 MB 6193 256 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 11 MB 6194 247 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 12 MB 6195 256 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 13 MB 6196 148 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 14 MB 6197 256 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 15 MB 6198 256 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 16 MB 6199 250 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 17 MB 6023 233 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 18 MB 6024 96 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 19 MB 6048 64 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 20 MB 6049 72 14-Oct-05 12-Dec-07 63N3 Halo
Sherridon Halo 21 MB 6050 70 14-Oct-05 ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 1 MB6251 ▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 2 MB6252 100 30-Nov-05 29-Jan-08 63N3 Halo
East East 3 MB6253 ▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 4 MB6254 ▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 5 MB6255 ▇▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 6 MB6256 ▇▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 7 MB6257 216 30-Nov-05 29-Jan-08 63N3 Halo
East East 8 MB6258 ▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 9 MB6259 ▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 10 MB6260 ▇▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 11 MB6261 ▇▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 12 MB6262 ▇▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 13 MB6263 ▇▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 14 MB6264 ▇▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 15 MB6265 ▇▇▇ ▇▇-▇▇▇-▇▇ ▇▇-▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ 16 MB6266 120 30-Nov-05 29-Jan-08 63N3 Halo
Meat Lake Meat 1 MB6200 256 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 2 MB6267 256 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 3 MB6268 256 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 4 MB6269 220 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 5 MB6270 253 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 6 MB6271 256 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 7 MB6272 256 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 8 MB6273 40 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 9 MB6274 218 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 10 MB6275 200 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 11 MB6308 184 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 12 MB6309 160 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 13 MB6310 100 30-Nov-05 29-Jan-08 63N2 Halo
Meat Lake Meat 14 MB6311 160 30-Nov-05 29-Jan-08 63N2 Halo
--------------------------------------------------------------------------------
* Full name is Halo Resources Ltd.
SCHEDULE "E"
HALO CLAIMS WITHIN THE SHERRIDON COMMUNITY BOUNDARY
--------------------------------------------------------------------------------
Sub- Name Number Area Recorded Expires Map Holder
Project (ha) Ref. (*)
--------------------------------------------------------------------------------
Sherridon Halo 15 MB 6198 256 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 16 MB 6199 250 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 17 MB 6023 233 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 18 MB 6024 96 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 19 MB 6048 64 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 20 MB 6049 72 14-Oct-05 12-Dec-07 63N3 HALO
Sherridon Halo 21 MB 6050 70 14-Oct-05 12-Dec-07 63N3 HALO
* Full name is Halo Resources Ltd.
SCHEDULE "F"
RULES OF ARBITRATION
The following rules and procedures shall apply with respect to any matter to be
arbitrated by the parties under the terms of the Agreement.
1. Initiation of Arbitration Proceedings
(a) If any party to this Agreement wishes to have any matter under
this Agreement arbitrated in accordance with the provisions of this Agreement,
it shall give notice to the other party hereto specifying particulars of the
matter or matters in dispute and proposing the name of the person it wishes to
be the single arbitrator. Within 5 days after receipt of such notice, the other
party to this Agreement shall give return notice to the first party advising
whether such party accepts the arbitrator proposed by the first party and if
such party does not accept the arbitrator proposed by the first party, proposing
the name of the person it wishes to be the single arbitrator. If such return
notice is not given by the other party within such 5 day period, it shall be
deemed to have accepted the arbitrator proposed by the first party. If such
return notice is given within such 5 day period and does not accept the proposed
arbitrator of the first party and proposes another person to be arbitrator, the
first party shall, within 5 days after receipt of such return notice, give
notice to the other party advising whether such first party accepts the
arbitrator proposed by the other party. If the parties do not agree upon a
single arbitrator within such second 5 day period, the single arbitrator shall
be chosen in accordance with the Arbitrations Act, 1991 (Ontario).
(b) The individual selected as Arbitrator shall be qualified by
education and experience to decide the matter in dispute. The Arbitrator shall
be at arm's length from both parties and shall not be a member of the audit or
legal firm or firms who advise either party, nor shall the Arbitrator be a
person who is otherwise regularly retained by either of the parties.
2. Submission of Written Statements
(a) Within 5 days of the appointment of the Arbitrator, the party
initiating the arbitration (the "Claimant") shall send the other party (the
"Respondent") a statement of claim setting out in sufficient detail the facts
and any contentions of law on which it relies, and the relief that it claims.
(b) Within 10 days of the receipt of the statement of claim, the
Respondent shall send the Claimant a statement of defence stating in sufficient
detail which of the facts and contentions of law in the statement of claim it
admits or denies, on what grounds, and on what other facts and contentions of
law he relies.
(c) Within 5 days of receipt of the statement of defence, the
Claimant may send the Respondent a statement of reply.
(d) All statements of claim, defence and reply shall be
accompanied by copies (or, if they are especially voluminous, lists) of all
essential documents on which the party concerned relies and which have not
- 2 -
previously been submitted by any party, and (where practicable) by any relevant
samples.
(e) After submission of all the statements, the Arbitrator will
give directions for the further conduct of the arbitration.
3. Meetings and Hearings
(a) The arbitration shall take place in the City of Winnipeg, or
in such other place as the Claimant and the Respondent shall agree upon in
writing. The arbitration shall be conducted in English. Subject to any
adjournments which the Arbitrator allows, the final hearing will be continued on
successive working days until it is concluded.
(b) All meetings and hearings will be in private unless the
parties otherwise agree.
(c) Any party may be represented at any meetings or hearings by
legal counsel.
(d) Each party may examine, cross-examine and re-examine all
witnesses at the arbitration.
4. The Decision
(a) The Arbitrator will make a decision in writing and, unless the
parties otherwise agree, will set out reasons for decision in the decision.
(b) The Arbitrator will send the decision to the parties as soon
as practicable after the conclusion of the final hearing, but in any event no
later than 10 days thereafter, unless that time period is extended for a fixed
period by the Arbitrator on written notice to each party because of illness or
other cause beyond the Arbitrator's control.
(c) The decision shall determine and award costs to the successful
party in the arbitration.
(d) The decision shall be final and binding on the parties and
shall not be subject to any appeal or review procedure provided that the
Arbitrator has followed the rules provided herein in good faith and has
proceeded in accordance with the principles of natural justice. In the event
either party initiates any court proceeding in respect of the decision of the
Arbitration or the matter arbitrated, such party shall, if unsuccessful in the
court proceeding, shall pay the other parties costs on a solicitor/client basis
plus all other reasonable expenses incurred by such other party from the date of
delivery of the notice commencing arbitration to the date of determination of
such court proceeding.
5. Jurisdiction and Powers of the Arbitrator
(a) By submitting to arbitration under these Rules, the parties
shall be taken to have conferred on the Arbitrator the following jurisdiction
and powers, to be exercised at the Arbitrator's discretion subject only to these
- 3 -
Rules and the relevant law with the object of ensuring the just, expeditious,
economical and final determination of the dispute referred to arbitration.
(b) Without limiting the jurisdiction of the Arbitrator at law,
the parties agree that the Arbitrator shall have jurisdiction to:
(i) determine any question of law arising in the
arbitration;
(ii) determine any question as to the Arbitrator's
jurisdiction;
(iii) determine any question of good faith, dishonesty or
fraud arising in the dispute;
(iv) order any party to furnish further details of that
party's case, in fact or in law;
(v) proceed in the arbitration notwithstanding the
failure or refusal of any party to comply with these
Rules or with the Arbitrator's orders or directions,
or to attend any meeting or hearing, but only after
giving that party written notice that the Arbitrator
intends to do so;
(vi) receive and take into account such written or oral
evidence tendered by the parties as the Arbitrator
determines is relevant, whether or not strictly
admissible in law;
(vii) make one or more interim awards;
(viii) hold meetings and hearings, and make a decision
(including a final decision) in Winnipeg, Manitoba or
elsewhere with the concurrence of the parties
thereto;
(ix) order the parties to produce to the Arbitrator, and
to each other for inspection, and to supply copies
of, any documents or other evidence or classes of
documents in their possession or power which the
Arbitrator determines to be relevant; and
(x) make interim orders to secure all or part of any
amount in dispute in the arbitration.
