EXHIBIT 4.12
PURCHASE AGREEMENT
BY AND BETWEEN
HALO RESOURCES LTD.
AND
ENDOWMENT LAKES (2002) LIMITED PARTNERSHIP
DATED
DECEMBER 3, 2006
FINAL
PURCHASE AGREEMENT
This Agreement is made as of December 3, 2006.
BETWEEN:
ENDOWMENT LAKES (2002) LIMITED PARTNERSHIP,
a limited partnership formed under the laws of the
province of Manitoba
(hereinafter referred to as the "VENDOR")
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HALO RESOURCES LTD.,
a corporation incorporated under the laws of the
province of British Columbia
(hereinafter referred to as the "PURCHASER")
WHEREAS the Vendor is the legal and beneficial owner of an
undivided 100% interest in and to the unpatented mining claims described in
Schedule "A" attached hereto (the "PROPERTIES");
AND WHEREAS the Parties entered into a letter of intent, dated
November 3, 2006 (the "LETTER OF INTENT"), whereby the Vendor agreed to sell to
the Purchaser and Purchaser has agreed to purchase from the Vendor, all of the
Vendor's right, title and interest in and to the Properties;
AND WHEREAS the Parties wish to formalize the terms of the
Letter of Intent by entering into this Agreement;
NOW THEREFORE IN CONSIDERATION of the premises and the mutual
covenants in this Agreement, and of other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by each Party), the
Parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement and the Schedules attached hereto, the
following terms shall have the following meanings:
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"AGREEMENT" means this purchase agreement and all attached
schedules, as supplemented, amended, restated or replaced from
time to time in accordance with the terms hereof;
"APPLICABLE LAW" means any federal, provincial or municipal
statute, law, ordinance, rule, regulation, restriction,
regulatory policy or guideline, by-law (zoning or otherwise)
or order that applies to the Parties or to the Properties and
includes the applicable by-laws or rules of any stock exchange
or securities commission having jurisdiction;
"APPROVALS" means any and all approvals, authorizations,
consents or other orders of any Government Authority or any
third party, including any stock exchange or securities
commission having jurisdiction;
"BUSINESS DAY" means any calendar day other than a Saturday or
Sunday or any day that is a statutory or civic holiday in
Manitoba;
"CASH CONSIDERATION" has the meaning ascribed to such term in
subsection 2.2(a)(i) hereof;
"CLOSING" means the completion of the sale, transfer,
assignment and/or conveyance to and the purchase by the
Purchaser of the Properties from the Vendor in accordance with
the terms of this Agreement;
"CLOSING DATE" means January 12, 2007 or such other date as
the Parties may mutually agree in writing;
"CLOSING DOCUMENT" means any document required to be delivered
at the Closing Time pursuant to this Agreement, which shall
include, without limitation, such officers' certificates and
instruments of conveyance as may be prescribed by this
Agreement or as are customary in transactions of the nature
contemplated herein, and such other documents as the Parties
may reasonably deem to be necessary or advisable;
"CLOSING TIME" means 2:00 p.m. on the Closing Date, or such
other time and date as the Parties agree in writing that the
Closing shall take place;
"ENCUMBRANCE" means any encumbrance, security interest,
mortgage, lien, hypothec, pledge, assignment, charge, or
right, title or interest affecting the Properties or the title
thereto;
"ENVIRONMENTAL LIABILITIES" means any and all actions,
demands, claims, debts, costs, liabilities, damages, duties,
obligations, penalties, fines and charges of any nature
imposed, issued, rendered or arising under or pursuant to
common law or any past, present or future statute, regulation,
by-law or other law, or any permit, licence, certificate,
approval, order, directive or other authorization of any
Governmental Authority in respect of or pertaining to the
impairment or contamination of the natural environment, the
undertaking of mineral resource exploration, development,
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extraction or processing operations and the decommissioning,
abandonment or closure of such operations or any matter
ancillary to all of the above including, without limitation,
the abatement, reclamation, rehabilitation, remediation and
restoration of mining properties and assets and the natural
environment;
"GOVERNMENTAL AUTHORITY" means any Canadian federal,
provincial or municipal government including any governmental
agency, department, ministry, authority, tribunal, commission
or official, stock exchange or securities commission having
jurisdiction;
"INCLUDING" means "INCLUDING WITHOUT LIMITATION" and shall not
be construed to limit any general statement which it follows
to the specific or similar items or matters immediately
following it;
"LETTER OF INTENT" has the meaning ascribed to such term in
the second recital of this Agreement;
"LOSS" in respect of any matter includes any and all costs,
expenses, penalties, fines, losses, damages, liabilities and
deficiencies (including, without limitation, all amounts paid
in settlement, all interest and penalties and all reasonable
legal and other professional fees and disbursements, including
those incurred in defending any claim) arising directly or
indirectly as a consequence of such matter;
"MINERALS" means all marketable metal bearing material in
whatever form or state that is mined, extracted, removed,
produced or otherwise recovered and sold from the Properties
after commencement of commercial production from the
Properties.
"PARTIES" means the parties to this agreement collectively,
and "PARTY" means either of them;
"PERSON" shall be broadly interpreted and includes an
individual, body corporate, partnership, unincorporated joint
venture, trust, association, unincorporated organization, any
Governmental Authority or any other entity recognized by law;
"PROPERTIES" has the meaning ascribed to such term in the
first recital of this Agreement;
"PURCHASE PRICE" means the consideration to be paid, granted
or given by the Purchaser to the Vendor for the Properties as
provided in section 2.2; and
"ROYALTY" has the meaning ascribed to such term in subsection
2.2(c) hereof.
"ROYALTY AGREEMENT" has the meaning ascribed to such term in
subsection 2.2(c) hereof;
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1.2 HEADINGS
The division of this Agreement into articles, sections,
subsections and schedules and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The article, section, subsection and schedule headings in this
Agreement are not intended to be full or precise descriptions of the text to
which they refer and are not to be considered part of this Agreement. All uses
of the words "hereto", "herein", "hereof", "hereby" and "hereunder" and similar
expressions refer to this Agreement and not to any particular section or portion
of it.
1.3 NUMBER AND GENDER
In this Agreement, words in the singular include the plural
and vice-versa and words in one gender include all genders.
1.4 ENTIRE AGREEMENT
This Agreement, together with the Closing Documents,
constitutes the entire agreement between the Parties pertaining to the subject
matter hereof and supersedes all prior agreements, negotiations, discussions and
understandings, written or oral, between the Parties, including the Letter of
Intent. Except as may be specifically set forth in this Agreement, there are no
representations, warranties, conditions, (including any representation, warranty
or condition of merchantability or fitness for a particular purpose), or other
agreements or acknowledgments, whether direct or collateral, express or implied,
that form part of or affect this Agreement, or which induced any Party to enter
into this Agreement or on which reliance is placed by any Party.
1.5 AMENDMENT
This Agreement may be amended, modified or supplemented only
by a written agreement signed by both Parties.
1.6 WAIVER OF RIGHTS
Any waiver of, or consent to depart from, the requirements of
any provision of this Agreement shall be effective only if it is in writing and
signed by the Party giving it, and only in the specific instance and for the
specific purpose for which it has been given. No failure on the part of any
Party to exercise, and no delay in exercising, any right under this Agreement
shall operate as a waiver of such right, except as shall be specified herein. No
single or partial exercise of any such right shall preclude any other or further
exercise of such right or the exercise of any other right.
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1.7 SCHEDULES
The following Schedules form part of this Agreement:
SCHEDULE DESCRIPTION OF SCHEDULE
A List of Properties
B Form of Royalty Agreement
1.8 APPLICABLE LAW
This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Province of Manitoba and the federal
laws of Canada applicable therein. Each Party irrevocably submits and attorns to
the jurisdiction of the courts of Manitoba with respect to any matter arising
hereunder or related hereto.
1.9 CURRENCY
All statements of or references to dollar amounts in this
Agreement are to lawful money of Canada.
1.10 PERFORMANCE ON HOLIDAYS
If any action is required to be taken pursuant to this
Agreement on or by a specified date that is not a Business Day, then such action
shall be valid if taken on or by the next succeeding Business Day.
ARTICLE 2
ASSET PURCHASE AND SALE
2.1 PURCHASE AND SALE
Subject to the terms and conditions hereof, the Vendor hereby
agrees to sell, transfer, assign and convey to the Purchaser, and the Purchaser
hereby agrees to purchase and acquire, all of the Vendor's right, title and
interest in and to the Properties.
2.2 PURCHASE PRICE
(a) The aggregate purchase price payable by the Purchaser to the
Vendor for the Properties shall consist of:
(i) the payment of $90,000 (the "CASH CONSIDERATION") in
accordance with Section 2.2(b) hereof;
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(ii) the issuance by the Purchaser to the Vendor of
160,000 common shares in the share capital of the
Purchaser. The issuance of such shares shall be at a
per share value equal to the fifteen day volume
weighted average price of the Purchaser's common
shares at the end of trading for the fifteen trading
days immediately prior to the date of such issuance;
and
(iii) the grant of the Royalty by the Purchaser to and in
favour of the Vendor.
(b) The Cash Consideration is payable by the Purchaser by bank
draft or wire transfer on the Closing Date as directed by the
Vendor in writing.
(c) At the Closing Time the Vendor and the Purchaser shall enter
into a net smelter returns royalty agreement (the "ROYALTY
AGREEMENT") in the form attached hereto as Schedule "B",
pursuant to which the Purchaser will issue and grant to the
Vendor a 1% net smelter returns royalty calculated and payable
in accordance with the Royalty Agreement (the "ROYALTY") on
the Purchaser's share of Net Smelter Returns (as defined in
the Royalty Agreement) derived from production from the
Properties following commencement of commercial production
from the Properties. All Royalty payments will be payable in
cash only. The Purchaser will be under no obligation
whatsoever to place the Properties into commercial production
and, if the Properties are placed into commercial production
by the Purchaser, the Purchaser will have the right at any
time to curtail, suspend or terminate such commercial
production as the Purchaser in its sole discretion deems
advisable. At the option of the Purchaser, which option may be
exercised at any time by the Purchaser by notice in writing to
the Vendor, the Purchaser may acquire the rights under the
Royalty Agreement to one half of the Royalty for a purchase
price of $500,000.00 so that the Royalty interest of the
Vendor thereafter shall be 0.5% of Net Smelter Returns.
2.3 TAXES
The Purchaser shall pay directly to or make the appropriate
filings with the appropriate taxing authorities in respect of any sales or
transfer taxes (including land transfer taxes), registration charges and
transfer fees and GST or other value added taxes applicable in respect of the
purchase and sale of the Properties under this Agreement.
2.4 AREA OF INFLUENCE
Any interest in and to a mining claim(s) staked or otherwise
acquired, or any right, title or interest acquired therein, by the Vendor or any
of its affiliates from and after the date of this Agreement that lies outside of
the perimeter boundaries of the Properties, or any part thereof, and wholly or
partly within the area (the "AREA OF INFLUENCE") comprised of those lands that
lie within one (1) kilometre of the perimeters/boundaries of the Properties, as
such perimeters exist as at the date hereof, shall be subject to this Agreement
and the Vendor shall sell or cause its affiliate to sell such right, title or
interest to the Purchaser. The Parties shall negotiate in good faith the value
of consideration for such mining claim(s) or interest therein. Each Party shall
be free to acquire properties outside the Area of Influence, in its own interest
and without any obligation or liability to the other Party.
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2.5 ISSUANCE OF THE SECURITIES
All shares issued or to be issued by the Purchaser to the
Vendor under and pursuant to this Agreement (the "HALO SECURITIES") shall be
subject to all applicable hold periods required by Applicable Laws and the TSX
Venture Exchange. The issuance of any Halo Securities shall be conditional upon
(i) the Purchaser obtaining all regulatory and third party consents or approvals
being required, including those of the TSX Venture Exchange and applicable
securities regulatory bodies; and (ii) the existence of an exemption from
prospectus and registration requirements under applicable securities laws for
the issuance of the Halo Securities to the Vendor. In the event that the
Purchaser has not received the required consents on or before the Closing Date
and as a result is unable to deliver the shares contemplated in Section 2.2 (a)
(ii) within six months of the date thereof, then the Purchaser shall have the
option to pay the value of such shares in cash based on the per share value
referenced in section 2.2 (a) (ii) for the fifteen day period immediately prior
to the date of such payment.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor, acknowledging that the Purchaser is entering into
this Agreement in reliance thereon, represents and warrants to the Purchaser as
follows:
(a) It is a limited partnership validly formed and existing under
the laws of the Province of Manitoba and is up to date in
respect of all filings required by law or by any Governmental
Authority;
(b) All requisite corporate and partnership acts and proceedings
have been done and taken by the Vendor, including obtaining
all requisite board of directors', shareholders' and limited
partners' approval with respect to entering into this
Agreement or completing the transactions contemplated herein;
(c) The Vendor has the requisite corporate and partnership power
and authority to enter into this Agreement and to perform its
respective obligations hereunder;
(d) This Agreement has been duly and validly executed and
delivered by the Vendor and constitutes a legal, valid and
binding obligation of the Vendor enforceable against it in
accordance with its terms;
(e) Except for the rights of the Purchaser pursuant to the Letter
of Intent and this Agreement, no Person has any agreement,
option, right of first refusal or right, title or interest or
right capable of becoming an agreement, option, right of first
refusal or right, title or interest, in or to the Properties;
(f) The Vendor has all necessary corporate and partnership power
to own the Properties and, to the best of the knowledge of the
Vendor, the Vendor is in compliance with all Applicable Laws
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and licences, registrations, permits, consents and
qualifications to which the Properties are subject;
(g) No Approvals are required of the Vendor in connection with the
execution and delivery or with the performance by it of this
Agreement or the Closing Documents or to effectively complete
the transactions contemplated by this Agreement;
(h) The Vendor has an undivided 100% legal and beneficial good,
valid, marketable and exclusive right, title and interest in
and to, and actual and exclusive possession of, the
Properties, free and clear of all Encumbrances;
(i) All taxes, local improvements, assessment rates, utilities and
any and all other payments to or assessments of any
Governmental Authority having jurisdiction in respect of the
Properties have been paid by the Purchaser in respect of the
Properties to and including the Closing Date;
(j) The sale of the Properties to the Purchaser and the completion
of the transactions contemplated in this Agreement do not
breach (i) the constating documents of the Vendor or any
directors, shareholders or partnership resolutions, (ii) any
agreements, documents, instruments, covenants or undertakings
to which the Vendor is a party or is bound or otherwise
affected, or (iii) any Applicable Law;
(m) There are no finder's fees, commissions or other payments
payable by the Vendor in relation to the transactions
contemplated herein;
(n) At the time the Vendor transfers all of its rights, title and
interests in and to the Properties to the Purchaser, such
rights, title and interests will be free and clear of all
Encumbrances;
(o) Subject to the Royalty contemplated in this Agreement, neither
the Properties nor any Minerals derived from the Properties
are subject to or bound by any royalty or royalty interest,
whether registered or unregistered, and the Vendor has not
granted any royalty interest in or affecting the Properties;
(p) There is no action, suit, order, work order, petition,
prosecution or other similar proceeding of which process
initiating the same has been served on the Vendor or
threatened against the Vendor and affecting any of the
Properties at law or in equity or before or by any
Governmental Authority;
(q) There are no Environmental Liabilities relating to the
Properties, nor, to the best of the knowledge of the Vendor,
any legal or administrative actions existing, pending or
threatened against the Vendor nor the Properties in respect of
any Environment Liabilities and to the best of the knowledge
of the Vendor, no contaminants, pollutants, wastes or toxic
substances (collectively "HAZARDOUS SUBSTANCES") have been
released, discharged, placed, escaped, leached or disposed of
on, into, under or through the Properties (including
watercourses, improvements thereon and contents thereof) or
nearby areas;
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(r) The Vendor has not received notice of any breach of any
Applicable Law in respect of its conduct on or under the
Properties which could have an adverse effect on the
Properties or the right, title and/or interest of the Vendor
therein and thereto and neither the Vendor nor, to the
Vendor's knowledge, any other Person, is subject to any
obligations or commitments for reclamation, closure or other
environmental corrective, clean-up or remediation action
directly or indirectly relating to the Properties;
(s) The sale, transfer, assignment and conveyance by the Vendor of
all of its right, title and interest in, and to the Properties
to the Purchaser in accordance with the terms of this
Agreement does not constitute a sale of all or substantially
all of the assets, property or undertaking of the Vendor;
(t) The Vendor is not and will not on the Closing Date be a
non-resident of Canada for the purposes of the INCOME TAX ACT
(Canada);
(u) The mining claims that comprise the Properties are in good
standing with respect to the performance of all obligations
(including, without limitation, payment of mining duties,
performance of minimum assessment work and filing of reports
with respect to minimum assessment work) applicable under all
laws of Canada and the Province of Manitoba (including,
without limitation, applicable mining and environmental laws
and regulations) and are, and at closing will be, owned by and
duly registered in the name of Endowment Lakes (2002) Ltd. as
general partner of the Vendor, free and clear of any
registered, or to the knowledge of the Vendor any unregistered
encumbrances, royalties or underlying rights or interests
whatsoever;
(v) Upon completion of the transactions contemplated herein, the
Purchaser shall acquire a 100% undivided legal and beneficial
interest in and to the Properties;
(w) The Vendor has not assigned, encumbered or covenanted to
assign or encumber any of the mining claims that comprise the
Properties or the rights which derive therefrom and the Vendor
has not acquired, with respect to third parties, any
obligation whatsoever that would prevent the Vendor from
entering into the Letter of Intent or this Agreement; and
(x) The Vendor has no information or knowledge pertaining to the
Properties or the lands comprising the Properties or
substances thereon, therein or therefrom not disclosed in
writing to the Purchaser which, if known to the Purchaser,
might reasonably be expected to deter the Purchaser from
completing the transactions contemplated hereby on the terms
and conditions contained herein.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser, acknowledging that the Vendor is entering into
this Agreement in reliance thereon, represents and warrants to the Vendor as
follows:
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(a) It is a corporation duly incorporated and validly existing
under the laws of British Columbia and is up to date in
respect of all filings required by law;
(b) All requisite corporate acts and proceedings have been done
and taken by the Purchaser with respect to entering into this
Agreement and completing the transactions contemplated herein;
(c) The Purchaser has the requisite corporate power and authority
to enter into this Agreement and to perform its obligations
hereunder;
(d) This Agreement has been duly and validly executed and
delivered by the Purchaser and constitutes a legal, valid and
binding obligation of the Purchaser enforceable against it in
accordance with the terms hereof;
(e) There are no finder's fees, commissions or other payments
payable by the Purchaser, in cash or shares or otherwise, in
relation to the transactions contemplated herein;
(f) The Purchaser has all necessary authority and capacity to
enter into the Agreement and all necessary acts, actions and
authorizations have been performed by the Purchaser in respect
thereof; and
(g) The Purchaser, or any affiliate the Purchaser proposes to use
to perform any operations contemplated by this Agreement, is
registered in the Province of Manitoba to carry on business,
has the capacity to own property in the Province of Manitoba
and has not received any notice from any Governmental
Authority advising it that it is not, authorized, permitted or
licensed to conduct business in Canada or the Province of
Manitoba or to perform such operations or obligations within
the jurisdiction of any Governmental Authority having
jurisdiction of the nature and scope of the obligations to be
performed by the Purchaser or any of its affiliates pursuant
to and in accordance with the terms of this Agreement.
3.3 QUALIFICATION OF REPRESENTATIONS AND WARRANTIES
Any representation or warranty made by a Party as to the
enforceability of this Agreement against such Party is subject to the following
qualifications:
(a) specific performance, injunction and other equitable remedies
are discretionary and, in particular, may not be available
where damages are considered an adequate remedy; and
(b) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other laws
generally affecting enforceability of creditors' rights.
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3.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The respective representations and warranties of the Vendor
and of the Purchaser contained in sections 3.1 and 3.2 shall survive the Closing
and will continue in full force and effect for a period of two (2) years after
the Closing.
ARTICLE 4
INDEMNITY
4.1 INDEMNIFICATION BY THE VENDOR
The Vendor hereby indemnifies and saves harmless the Purchaser
from any Loss suffered or incurred by the Purchaser arising from a claim against
the Purchaser arising from, related to or in any way connected with:
(a) any failure by the Vendor to sell, transfer, assign and convey
to the Purchaser all of the Vendor's rights, title and
interests in and to the Properties;
(b) any breach or non-performance of any representation, warranty,
covenant or agreement made or to be performed by the Vendor
under this Agreement; or
(c) any activities of or performed on behalf of the Vendor on or
under the surface of Properties up to and including the
Closing Date.
4.2 INDEMNIFICATION BY THE PURCHASER
The Purchaser hereby indemnifies and saves harmless the Vendor
from any Loss suffered or incurred by the Vendor arising from a claim against
the Vendor arising from, related to or in any way connected with any breach or
non-performance of any representation, warranty, covenant or agreement made or
to be performed by the Purchaser under this Agreement.
ARTICLE 5
CLOSING
5.1 CLOSING
The Closing will take place by escrow arrangements to be
agreed between the Vendor and the Purchaser and their respective legal counsel,
at 2:00 p.m. on the Closing Date or at such other time and date as the Parties
may agree in writing.
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5.2 CONDITIONS PRECEDENT IN FAVOUR OF THE PURCHASER
The obligation of the Purchaser to complete the transactions
contemplated in this Agreement shall be subject to the satisfaction of, or
compliance with, at or before the Closing Date, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Purchaser and may be waived by it in writing in whole or in
part):
(a) Each of the representations and warranties of the Vendor
contained in this Agreement shall be true, complete and
accurate as and when made and at and as of the Closing Time;
(b) The Vendor shall have performed and complied with all of the
covenants, terms and conditions in this Agreement to be
performed or complied with by it at or before Closing;
(c) The Purchaser shall have received at the Closing from the
Vendor the following Closing Documents, dated as of the
Closing Date, prepared and/or delivered at the expense of the
Vendor and in form and substance satisfactory to the Purchaser
including, without limitation:
(i) such instruments of sale, transfer, conveyance,
assignment or delivery, in registrable form or
otherwise, in respect of the Properties as the
Purchaser may reasonably require to assure the full
and effective sale, transfer, conveyance, assignment
or delivery of all of the Vendor's right, title and
interest in and to the Properties to the Purchaser;
(ii) an officer's certificate, dated as of the Closing
Date, in form and substance reasonably satisfactory
to the Purchaser, as to: (1) resolutions of the board
of directors of the Vendor authorizing the execution
and delivery of this Agreement and the Royalty
Agreement and the completion of the transactions
contemplated hereby, and (2) incumbency and
signatures of the officers of the Vendor executing
the Agreement and Closing Documents; and
(iii) such other documents, certificates and other
instruments as would be usual in respect of the
transactions contemplated herein or as the Purchaser
may reasonably require; and
(e) The Vendor shall have entered into the Royalty Agreement.
5.3 CONDITIONS PRECEDENT IN FAVOUR OF THE VENDOR
The obligations of the Vendor to complete the transactions
contemplated in this Agreement shall be subject to the satisfaction of, or
compliance with, at or before the Closing Date, each of the following conditions
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precedent (each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Vendor and may be waived by it in writing in whole or in part):
(a) Each of the representations and warranties of the Purchaser
contained in this Agreement shall be true, complete and
accurate as and when made and at and as of the Closing Time;
(b) The Purchaser shall have performed and complied with all of
the covenants, terms and conditions in this Agreement to be
performed or complied with by it at or before Closing;
(c) The Vendor shall have received at the Closing from the
Purchaser the following Closing Documents, dated as of the
Closing Date, prepared at the expense of the Purchaser and in
form and substance satisfactory to the Vendor including,
without limitation, an officer's certificate, dated as of the
Closing Date, in form and substance reasonably satisfactory to
the Vendor, as to incumbency and signatures of the officers of
the Purchaser executing this Agreement and the Closing
Documents; and
(d) The Purchaser shall have entered into the Royalty Agreement.
ARTICLE 6
GENERAL
6.1 EXPENSES
Subject as otherwise set out in this Agreement, each Party
shall pay all expenses it incurs in authorizing, preparing, executing and
performing this Agreement and the transactions contemplated hereunder, whether
or not the Closing occurs, including all fees and expenses of its legal counsel,
accountants or other representatives or consultants.
6.2 TIME
Time is of the essence of each provision of this Agreement.
6.3 NOTICES
Any notice or any communication required or permitted to be
given under this Agreement by either Party to the other Party, in any capacity
(hereinafter called a "NOTICE") shall be in writing and shall be deemed to have
been sufficiently given if sent by facsimile transmission or delivered to the
address of such other Party set forth as follows:
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(i) if to the Purchaser at: Halo Resources Ltd.
0000 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Attention: Marc Cernovitch, President
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
(ii) if to Vendor at:
Endowment Lakes (2002) Limited Partnership
c/o the General Partner
#0 -000 Xxxx Xxxxxx
Xxxx Xxxx, XX X0X 0X0
Attention: Xxxxxx Xxxxxxxx, President
Fax No.: 000-000-0000
Telephone No. 000-000-0000
or such substitute address or fax number as is specified by a Party by notice to
the other Party given in accordance with this section, and any such Notice shall
be deemed to have been received, if sent by facsimile transmission, on the first
Business Day after the date of facsimile transmission, and if delivered, upon
the day of delivery, or if such day is not a Business Day, then on the first
Business Day thereafter.
Each notice sent in accordance with this section 6.3 shall be
deemed to have been received:
(a) on the day it was delivered; or
(b) on the same day that it was sent by facsimile transmission, or
on the first Business Day thereafter if the day on which it
was sent by facsimile transmission was not a Business Day.
Any Party may change its address for notice by giving notice
to the other Party in accordance with this section 6.3.
6.4 ASSIGNMENT
Neither Party may assign any rights or benefits under this
Agreement, including the benefit of any representation or warranty, to any
Person without the prior written consent of the other Party. Each Party agrees
to perform its obligations under this Agreement itself, and not to arrange in
any way for any other Person to perform those obligations. No assignment of
benefits or arrangement for substituted performance by one Party shall be of any
effect against any other Party except to the extent that the other Party has
consented to it in writing.
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6.5 FURTHER ASSURANCES
Each Party shall do such acts and shall execute such further
documents, conveyances, deeds, assignments, transfers and other instruments, and
will cause the doing of such acts and will cause the execution of such further
documents as are within its power as any other Party may in writing at any time
and from time to time reasonably request be done and or executed, in order to
give full effect to the provisions of this Agreement and the Closing Documents.
6.6 CONFIDENTIALITY
(a) The terms of this Agreement, including the terms of the
proposed transactions contemplated hereunder and the fact that
the Parties are pursuing such transactions, are confidential
and except as expressly permitted by this Agreement neither
Party shall disclose any of such information to any Person or
entity without the prior written consent of the other.
(b) Each Party agrees to keep confidential any and all information
made available to it by the other Party or its representatives
or advisors in the course of the investigations and
negotiations related to the settlement of this Agreement and
agrees not to use, in relation to the Properties and the Area
of Influence, any such information except for or in respect of
the completion of the proposed transactions contemplated by
this Agreement, except to the extent that disclosure may be
required by or under any law or under the rules and
regulations of any Governmental Authority. The foregoing
restriction does not apply to any information (i) that is or
becomes generally available to the public, except through a
breach of this Agreement, (ii) that was known to a Party prior
to the receipt of such information from the other Party, (iii)
that is developed by a Party independently of information
received from the other Party, or (iv) that a Party obtained
from an independent third party who obtained such information
lawfully and was under no obligation of secrecy in respect of
such information. Notwithstanding the foregoing and for
greater certainty, no public announcement of the existence of
this Agreement or the transactions contemplated hereby shall
be made by either Party unless the timing and content thereof
have been agreed upon by both Parties, acting reasonably,
except as may, in the opinion of the announcing Party acting
reasonably, be required by Applicable Law.
6.7 LIABILITY OF LIMITED PARTNERS
The parties hereto acknowledge that the Vendor is a limited
partnership formed under the laws of Manitoba and that the covenants, agreements
and obligations of the Vendor hereunder shall not be personally binding upon,
nor shall resort be had to the personal property of any of, the limited partners
of the Vendor, nor their heirs, successors and assigns, and that resort shall
only be had to the property of the Vendor and the property of its general
partner, other than with respect to and to the extent of their investment and
interests in such limited partnership.
- 16 -
6.8 COUNTERPARTS
This Agreement may be executed in counterparts. Each executed
counterpart shall be deemed to be an original. Executed counterparts taken
together shall constitute one agreement.
6.9 FACSIMILE EXECUTION
An executed copy of this Agreement may be delivered by any
Party by facsimile. In such event, such Party shall forthwith deliver to the
other Party the original copy of this Agreement executed by such Party.
IN WITNESS WHEREOF the Parties hereto have duly executed this
Agreement as of the date first written above.
ENDOWMENT LAKES (2002) LIMITED
PARTNERSHIP, BY ITS GENERAL PARTNER,
ENDOWMENT LAKES (2002) LTD.
Per: /s/ XXXXXX XXXXXXXX
-----------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
Per:
-----------------------------------
Name:
Title:
HALO RESOURCES LTD.
Per: /s/ MARC CERNOVITCH
-----------------------------------
Name: Marc Cernovitch
Title: President
Per:
-----------------------------------
Name:
Title:
THIS IS SCHEDULE "A" TO THE PURCHASE AGREEMENT
DATED AS OF DECEMBER 3, 2006 BETWEEN
ENDOWMENT LAKES (2002) LIMITED PARTNERSHIP
AND HALO RESOURCES LTD.
-----------------------------------------------------------
LIST OF PROPERTIES
-----------------------------------------------------------
PROJECT CLAIM NAME CLAIM NUMBER
-----------------------------------------------------------
Eagle's Nest L. Elm 16 MB 3459
Meat Lake Elm 13 MB 3457
Meat Lake Elm 14 MB 0000
XX Xxxx Xxx 08 MB 3637
QM Lake Elm 09 MB 3638
QM Lake Elm 12 MB 3456
QM Lake Elm 10 MB 3639
QM Lake Elm 07 MB 3636
QM Lake Elm 24 MB 0000
XX Xxxx Xxx 25 MB 5145
FINAL
THIS IS SCHEDULE "B" TO THE PURCHASE AGREEMENT
DATED AS OF DECEMBER 3, 2006 BETWEEN
ENDOWMENT LAKES (2002) LIMITED PARTNERSHIP
AND HALO RESOURCES LTD.
FORM OF ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT MADE AS OF THIS 12TH DAY OF JANUARY, 0000,
X X X X X X X:
HALO RESOURCES LTD.,
a corporation incorporated under the laws of the
province of British Columbia
(the "Owner")
- and -
ENDOWMENT LAKES (2002) LIMITED PARTNERSHIP,
a limited partnership formed under the laws of the
province of Manitoba
(the "Holder")
WITNESSES THAT:
WHEREAS the Owner owns an undivided 100% interest in and to the
properties described on Schedule "A" attached hereto (the "Properties");
AND WHEREAS the Owner has agreed to grant to and in favour of the
Holder a 1 % net smelter return royalty in respect of any Minerals mined and
sold from the Properties;
AND WHEREAS all of the defined terms used in this Royalty Agreement
have the meaning ascribed thereto in Section 1 hereof unless otherwise defined
herein.
NOW THEREFORE in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto, the
parties agree as follows:
1. DEFINITIONS
(a) "AFFILIATE" shall have the meaning ascribed thereto in THE CORPORATIONS
ACT (Manitoba).
(b) "BUSINESS DAY" means any calendar day other than a Saturday or Sunday
or any statutory holiday or civic holiday in the Province of Manitoba.
- 2 -
(c) "ENCUMBRANCES" means any encumbrance as set out on Schedule "B";
(d) "FISCAL PERIOD" means each calendar year or other period of 12
consecutive months adopted by the Purchaser for tax purposes;
(e) "MINERALS" means all naturally occurring metallic minerals that are
mined, produced or otherwise recovered from the Properties after the
date of commencement of commercial production, whether in the form of
Ore, dore, concentrates or otherwise, including without limitation,
gold, silver and copper and other base metals and all beneficiated or
derivative products thereof.
(f) "NET SMELTER RETURNS" means the gross proceeds received by or payable
to the Owner of the Properties, from the sale or other disposition of
Minerals, less the following expenses, if actually incurred:
(i) direct sales, use, gross receipts and severance taxes and all
mining taxes, payable by the Owner of the Properties or other
operator of the Properties (and which taxes payable by such
operator are charged to the account of the Owner), that are
based directly upon, and actually assessed against, the value
or quantity of Minerals sold or otherwise disposed of from the
Properties; but excluding any and all taxes based upon the net
or gross income of the Owner of the Properties or other
operator of the Properties, the value of the Properties or the
privilege of doing business, and other taxes assessed on a
similar basis;
(ii) all transportation, marketing and sales and insurance costs
associated with transporting, smelting and/or refining and
selling any Minerals from the Properties and all charges and
costs charged by a Processor of the Minerals; but, if smelting
and/or refining are carried out in facilities owned or
controlled, in whole or in part, by the Owner, then the
charges and costs for such smelting or refining of such
Minerals shall be the lesser of: (A) the charges and costs the
Owner would have incurred if such smelting or refining 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 costs incurred by the
Owner with respect to such smelting and refining; and
(iii) charges, costs (including assaying and sampling costs) and all
penalties, if any, charged by any Processor of Minerals
produced from the Properties.
(g) "ORE" means all mineralized rock mined and/or milled from the
Properties or any part thereof;
(h) "PRIME" means at any particular time, the reference rate of interest,
expressed as a rate per annum, that the Canadian Imperial Bank of
- 3 -
Commerce 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 Canadian customers.
(i) "PROCESSOR" means collectively any smelter, refiner or other processor
of the Minerals, including the Owner.
(j) "PROPERTIES" means the properties described in Schedule "A" attached
hereto.
(k) "ROYALTY" means the net smelter royalty payments to the Holder
described in Section 2 of this Agreement.
2. GRANT OF ROYALTY
Subject to the terms of this Agreement and subject to the Encumbrances,
the Owner, for and in consideration of the sum of TEN DOLLARS ($10.00), the
receipt and sufficiency of which are hereby acknowledged by the Owner, hereby
grants, sells, conveys and covenants to pay to the Holder, with effect from the
date of this Agreement, a net smelter return royalty in respect of Minerals
mined and sold from the Properties at a rate equal to 1% of Net Smelter Returns.
3. TIME AND MANNER OF ROYALTY PAYMENTS
(a) The Royalty shall be calculated and paid to the Holder by the
Owner quarterly during the Fiscal Year within 45 Business Days of the end of
such fiscal quarter.
(b) All Royalty payments shall be payable in cash (or cash
equivalent) only and shall be delivered to the Holder at its principal place of
business or paid at such other place as the Holder may specify in writing.
(c) At the time each Royalty payment is paid by the Owner, the
Owner shall prepare and deliver to the Holder, or cause to be prepared and
delivered to the Holder, a detailed statement of the manner in which such
Royalty payment was calculated.
(d) The Holder may object in writing to any statement and payment
amount within two months after receipt of the relevant statement or payment. If
any Royalty payment is determined pursuant to the terms of this Agreement not to
have been paid in full as provided herein, the Owner shall pay interest on the
delinquent payment at a rate of Prime plus 1% per annum, commencing on the date
on which such delinquent payment was 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 due.
(e) All Royalty payments, including interest, 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 any governmental authority
having power and jurisdiction to tax and for which the Owner is obligated in law
to withhold or deduct and remit to such taxing authority having such power and
jurisdiction.
- 4 -
4. TERM
This Agreement shall continue for the term of the Properties (including
any related Crown mining lease or unpatented mining claims) and any renewals,
replacements and successions thereof, including any conversion of interest to
lease or fee simple and whether created privately or through governmental
action. If any right, power or interest of any 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 Xxxxxxxxx XX of England, living
on the date of this Agreement.
5. STOCKPILING
The Owner, and any operator of the Owner and any Processor shall be
entitled, in the sole discretion of the Owner, to stockpile, store or place
Minerals in locations on or off the Properties.
6. COMMINGLING
Before any Minerals are commingled with minerals from any other
properties, the Minerals shall be measured and sampled in accordance with sound
mining and metallurgical practices for moisture, metal, and other appropriate
content. Representative samples of the Minerals shall be retained by the Owner
and assays (including penalty substances) and other appropriate analyses of
these samples shall be made before commingling to determine metal, mineral and
other appropriate content and penalty substances of the Minerals. From this
information, the Owner shall determine the quantity of the Minerals subject to
the Royalty notwithstanding that the Minerals have been commingled with minerals
from other properties. Following the expiration of the period for objections
described above in Subsection 3(d) above, and absent timely objection, if any,
the Owner may dispose of the materials and data required to be produced pursuant
to this section.
7. HEDGING TRANSACTIONS
All profits and losses resulting from any owner of the Properties,
including the Owner, engaging in any commodity futures trading, option trading,
metals trading, gold loans or any combination thereof, and any other hedging
transactions are specifically excluded from calculations of Royalty payments
pursuant to this agreement.
8. BOOKS; RECORDS; INSPECTIONS
(a) The Owner shall keep true and accurate books and records of
all of its operations and activities with respect to the Properties and the
Minerals, in accordance with Canadian generally accepted accounting principles,
consistently applied. The Holder may, once per Fiscal Year, perform audits or
other examinations of the Owner's relevant books and records to confirm all
calculations of Royalty payments made by the Owner and compliance with the terms
of this Agreement. The Holder shall promptly commence, and diligently complete,
any audit or other examination permitted hereunder. The reasonable expenses of
- 5 -
any audit or other examination permitted hereunder shall be paid by the Holder,
unless the results of such audit or other examination permitted hereunder
discloses a deficiency in respect of the Royalty payments paid to the Holder
hereunder in an amount greater than $25,000, in which event the costs of such
audit or other examination shall be paid by the Owner.
(b) Within 120 days following the end of each Fiscal Year, the
Owner shall prepare and deliver to the Holder, or cause to be prepared and
delivered to the Holder, an annual report in respect of such Fiscal Year
summarizing (i) the quantities of Ore mined from the Properties, (ii) the
quantities of Ore milled, and (iii) calculations in respect of the Royalty.
9. CONFIDENTIALITY
(a) Subject to subsections 9(b) and 9(c), the Holder shall not,
without the express written consent of the Owner, disclose any non-public
information received under this Agreement relating to the Owner, the Properties
or any Minerals (the "Confidential Information"), or issue any press releases
relating to the Owner. In addition, the Holder shall not use any Confidential
Information for its own use or benefit except for the purpose of enforcing its
rights under this Agreement.
(b) The Holder may disclose Confidential Information to any third
party to whom the Holder, in good faith, anticipates selling or assigning its
interest hereunder, or to a prospective lender to whom the Holder may grant an
interest in Royalty payments as security for its obligations to such lender, in
each case only if the Owner has been provided with a confidentiality agreement
in its favour from such third party or lender that includes the confidentiality
provisions of subsection 9(a), and that has been executed by such third party or
lender, as the case may be.
(c) The Holder may disclose Confidential Information if such
disclosure is required for compliance with applicable laws, rules, regulations
or orders of any governmental agency or stock exchange having jurisdiction.
10. CONDUCT OF OPERATIONS
All decisions concerning the methods, the extent, times, procedures and
techniques of any exploration, development, mining, leaching, milling,
stockpiling, transporting, processing, extraction or treatment or sale or other
disposition, if any, of Ore or Minerals from the Properties, shall be made by
the Owner in its sole and absolute discretion. The Owner shall not be liable for
nor obliged to make any Royalty payments for Mineral values lost in any mining
or processing of the Minerals conducted pursuant to customary mining practice.
The Owner shall not be required to mine or to sell or otherwise dispose of or
preserve or protect any Minerals, which under customary mining practices cannot
be mined, milled, sold 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 the exploration, development or mining of, or the production of
- 6 -
Minerals from, the Properties and that the only covenants, duties, rights and
obligations of the parties shall be those expressly set forth and provided for
in this Agreement.
12. SALE OF PROPERTIES
The Owner shall be entitled to sell, transfer, mortgage or charge the
Properties or any part thereof without the prior written consent of the Holder
provided that any such transferee, mortgagee, chargee or secured party of the
Properties agrees in writing to assume and perform (upon enforcement of its
security only) and to cause any transferee therefrom to assume and perform, the
obligations of the Owner pursuant to the terms of this Agreement, in which event
the Owner shall be released from its obligations herein and therein in respect
of such part or parts so transferred and the Holder shall execute such release
in respect of the foregoing in such form as the Owner deems advisable.
13. THE OWNER'S RIGHT OF FIRST REFUSAL/BUYBACK
In consideration of the covenants and agreements of the parties herein
contained, the Holder hereby grants to and in favour of the Owner a right of
first refusal to acquire the Royalty. The Holder hereby agrees that any right of
the Holder to sell the Royalty and/or to assign this Agreement shall be limited
to a cash only purchase price and to such a sale or assignment of a 100%
interest only. In the event that the Holder receives an offer to purchase the
Royalty and/or to take an assignment of this Agreement from a bona fide
purchaser at arm's length to the Holder, which offer the Holder has accepted or
is willing to accept, the Holder shall give the Owner written notice thereof,
including the terms and conditions of such offer to purchase, and the Owner
shall have the right, within 30 days from the date of delivery to the Owner of
such notice, to exercise its right of first refusal in respect thereof and to
acquire the Royalty on the same terms and conditions as are set forth in the
offer to purchase. In addition to the foregoing right of first refusal, the
Owner shall be entitled at any time, commencing on the date of this Agreement,
to purchase 50% of the Royalty from the Holder and, if the Owner provides
written notice to the Holder to such effect, the Holder shall be obligated to
sell 50% of the Royalty to the Owner, for a purchase price of $500,000.00, such
that the Royalty interest of the Holder under this Agreement thereafter shall be
..5% of Net Smelter Returns.
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 shall be referred to binding arbitration.
Such referral to binding arbitration shall be to a qualified single arbitrator
pursuant to THE ARBITRATIONS ACT (Manitoba), which Act, including its
successors, shall govern such arbitration proceeding in accordance with its
terms except to the extent modified by the rules for arbitration set out in
Schedule "C". 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 minimizing the cost and
expediting the final resolution of such arbitration.
- 7 -
15. NOTICES
Any notice or any communication required or permitted to be given under
this Agreement by either party to the other party, in any capacity (hereinafter
called a "Notice") shall be in writing and shall be deemed to have been
sufficiently given if sent by facsimile transmission or delivered to the address
of such other party set forth as follows:
if to the Owner at:
Halo Resources Ltd.
0000 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Attention: Marc Cernovitch, President
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
if to the Holder at:
Endowment Lakes (2002) Limited Partnership
c/o the General Partner
#0 -000 Xxxx Xxxxxx
Xxxx Xxxx, XX X0X 0X0
Attention: Xxxxxx Xxxxxxxx, President
Fax No.: 000-000-0000
Telephone No. 000-000-0000
or such substitute address or fax number as is specified by a party by notice to
the other party given in accordance with this section, and any such Notice shall
be deemed to have been received, if sent by facsimile transmission, on the first
Business Day after the date of facsimile transmission, and if delivered, upon
the day of delivery, or if such day is not a Business Day, then on the first
Business Day thereafter.
Each notice sent in accordance with this section 15 shall be deemed to
have been received:
(c) on the day it was delivered; or
(d) on the same day that it was sent by facsimile transmission, or on the
first Business Day thereafter if the day on which it was sent by
facsimile transmission was not a Business Day.
Any party may change its address for notice by giving notice to the
other party in accordance with this section 15.
16. GENERAL PROVISIONS
(a) FURTHER ASSURANCES; SUBORDINATION OF INTEREST
Each party shall execute all such further instruments and documents and
do all such further actions as may be necessary to effectuate the 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. The Holder shall be entitled to register this Agreement or
notice of this Agreement against title to the Properties and covenants and
agrees to subordinate its interests pursuant to this Agreement to all mortgages,
charges and security interests in favour of any lender to the Owner provided
that such mortgagee, chargee or secured party agrees in writing with the Holder
to assume (upon enforcement of its security only), and to cause any purchaser
from such mortgagee, chargee or secured party to assume, the obligations of the
Owner, as the case may be, pursuant to the terms of this Agreement. In the event
of any enforcement by or purchase from such mortgagee, chargee or secured party,
the Owner, as the case may be, shall be released from its obligations herein
arising thereafter in respect of such part or parts of the Properties subject to
such enforcement by or purchase from such mortgagee, chargee or secured party
and the Holder shall execute such release in such form as the Owner deems
advisable.
(b) 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.
(c) TIME OF ESSENCE
Time is of the essence in this Agreement.
(d) 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.
(e) ACCOUNTING PRINCIPLES
All calculations hereunder shall be made in accordance with Canadian
generally accepted accounting principles.
- 8 -
(f) CURRENCY
All dollar amounts or references herein are in Canadian currency.
(g) LIABILITY OF LIMITED PARTNERS
The parties hereto acknowledge that the Holder is a limited partnership
formed under the laws of Manitoba and that the covenants, agreements and
obligations of the Holder hereunder shall not be personally binding upon, nor
shall resort be had to the personal property of any of, the limited partners of
the Holder, nor their heirs, successors and assigns, and that resort shall only
be had to the property of the Holder and the property of its general partner,
other than with respect to and to the extent of their investment and interests
in such limited partnership.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
HALO RESOURCES LTD.
Per:
--------------------------------------
Name:
Title:
Per:
--------------------------------------
Name:
Title:
ENDOWMENT LAKES (2002) LIMITED
PARTNERSHIP, BY ITS GENERAL PARTNER,
ENDOWMENT LAKES (2002) LTD.
Per:
--------------------------------------
Name:
Title:
Per:
--------------------------------------
Name:
Title:
THIS IS SCHEDULE "A" TO THE ROYALTY AGREEMENT
DATED AS OF JANUARY 12, 2007 BETWEEN
HALO RESOURCES LTD. AND
ENDOWMENT LAKES
---------------------------------------------------------
LIST OF PROPERTIES
---------------------------------------------------------
PROJECT CLAIM NAME CLAIM NUMBER
---------------------------------------------------------
Eagle's Nest L. Elm 16 MB 3459
Meat Lake Elm 13 MB 3457
Meat Lake Elm 14 MB 0000
XX Xxxx Xxx 08 MB 3637
QM Lake Elm 09 MB 3638
QM Lake Elm 12 MB 3456
QM Lake Elm 10 MB 3639
QM Lake Elm 07 MB 3636
QM Lake Elm 24 MB 5146
QM Lake Elm 25 MB 5145
THIS IS SCHEDULE "B" TO THE ROYALTY AGREEMENT
DATED AS OF JANUARY 12, 2007 BETWEEN
HALO RESOURCES LTD. AND
ENDOWMENT LAKES
ENCUMBRANCES
1. Liens for property taxes, assessments or governmental charges or levies
not at the time due and delinquent or the validity of which is being
contested at the time in good faith by the Owner.
2. Any undetermined or inchoate liens and charges incidental to
construction on the Properties or operations in respect of the
Properties which have not been filed against the Owner or which relate
to obligations not due or delinquent.
3. Any right reserved to or vested in any governmental or public authority
by any statute, regulation, lease, licence, franchise, grant or permit
in respect of the Properties including any statutory provision to
terminate any such lease, licence, franchise, grant or permit, or to
require annual or other periodic payments as a condition of the
continuance thereof.
4. Easements, rights of way, servitudes or other similar rights in lands
granted to or taken by other persons in respect of the Properties.
5. Rights, reservations, limitations, provisos and conditions in respect
of the Properties expressed in any original grant from the Crown or in
any applicable statute or regulation.
6. Subject to the terms of section 16 (a) of the Agreement, all charges,
mortgages, pledges, liens or security interests to and in favour of any
lender to the Owner.
7. Any Existing Royalties on the Properties
THIS IS SCHEDULE "C" TO THE ROYALTY AGREEMENT
DATED AS OF JANUARY 12, 2007 BETWEEN
HALO RESOURCES LTD. AND
ENDOWMENT LAKES
RULES FOR 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.
2. 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 10 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 10 day period, it shall be
deemed to have accepted the arbitrator proposed by the first party. If such
return notice is given within such 10 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 10 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 (Manitoba).
(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 10 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.
- 2 -
(c) Within 10 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
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 20 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.
- 3 -
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
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 Toronto, Ontario 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.
