EXHIBIT 4.5
Letter of Intent
by and between
Halo Resources Ltd.
and
Endowment Lakes (2002) Limited Partnership,
dated
February 9, 2005
[HALO RESOURCES LTD. LETTERHEAD]
AMENDMENT
February 9, 2006
Endowment Lakes (2002) Limited Partnership
c/o Endowment Lakes (2002) Ltd.
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Attention : Eckhart Buhlmann, President
Dear Eckhart:
RE: LETTER AGREEMENT DATED FEBRUARY 9, 2005 BETWEEN HALO RESOURCES LTD.
("HALO") AND ENDOWMENT LAKES (2002) LIMITED PARTNERSHIP ("EL")
CONCERNING THE ACQUISITION OF AN INTEREST BY HALO IN THE MINING
CONCESSIONS COMPRISING THE ▇▇▇▇▇ PROPERTY FROM EL (THE "LETTER
AGREEMENT")
Further to the Letter Agreement, we are writing to set out the agreed revisions
to such Letter Agreement.
This amending letter (the "AMENDING LETTER") constitutes an amendment and
supplement of, and not a replacement of, the Letter Agreement.
The Letter Agreement, as amended and supplemented hereby, remains in full force
and effect and the Letter Agreement and this Amending Letter shall be read
together and have effect so far as practicable as though all the provisions
thereof and hereof were contained in one instrument.
The Letter Agreement is hereby amended as follows:
1. The words "on or before the first anniversary of the date of this
Agreement" in Subsection 1(c)(ii) of the Letter Agreement are hereby
deleted and replaced with the words "on or before March 9, 2006".
2. The words "on the first anniversary of the date of this Agreement" in
Subsection 1(c)(iii) of the Letter Agreement are hereby deleted and
replaced with the words "on or before March 9, 2006".
3. Capitalized terms used in this Amending Letter and not defined herein
shall have the meaning ascribed thereto in the Letter Agreement.
4. This Amending Letter may be executed in two or more counterparts, all
of which taken together shall constitute one instrument. Delivery of
this Amending Letter may be made by facsimile transmission.
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5. This Amending Letter shall be governed by and construed in accordance
with the laws of the Province of Ontario and the laws of Canada
applicable therein.
6. If the foregoing terms are acceptable to you, please sign and return a
copy of this Amending Letter to us at the address indicated above on
or prior to the close of business (Vancouver time) on February 9,
2006, after which this Amending Letter shall cease to have effect.
Yours very truly,
HALO RESOURCES LTD.
Per:
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Name:
Title:
I have the authority to bind the company.
Confirmed, agreed to and accepted this ______ day of February, 2006.
ENDOWMENT LAKES (2002) LIMITED PARTNERSHIP
BY ITS GENERAL PARTNER, ENDOWMENT LAKES (2002) LTD.
Per:
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Name:
Title:
I have the authority to bind the company.
[LETTERHEAD OF HALO RESOURCES LTD.]
February 9, 2005
Endowment Lakes (2002) Limited Partnership
c/o Endowment Lakes (2002) Ltd.
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Attention : ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Dear Sirs:
RE: ACQUISITION OF AN INTEREST BY HALO RESOURCES LTD. ("HALO") IN THE MINING
CONCESSIONS COMPRISING THE ▇▇▇▇▇ PROPERTY FROM ENDOWMENT LAKES (2002)
LIMITED PARTNERSHIP ("EL")
This letter agreement sets forth the principal terms and conditions upon which
Halo Resources Ltd. or, at its election, a wholly-owned subsidiary of Halo, will
acquire an option to earn up to an eighty percent (80%) interest in certain
exploration and exploitation mining concessions owned by EL, located in
Manitoba, and more particularly described in Schedule A attached to this letter
agreement and shown on the map attached as Schedule B to this letter agreement
(the "Property").
1. OPTION AGREEMENT
(a) The parties shall negotiate in good faith, enter into and deliver to each
other an option agreement (the "Option Agreement") as soon as possible
following the execution of this letter agreement, which agreement shall
reflect the provisions regarding the First Option and the Second Option
(both as hereinafter defined) and such other terms as are usual and
customary for agreements of this nature.
(b) EL hereby grants to Halo the sole and exclusive right and option to earn
an undivided fifty-one percent (51%) beneficial interest in the Property
(the "First Option") on or before the date which is two years from the
date of this Agreement (the "First Option Period").
(c) In order to maintain the First Option in good standing, Halo shall incur
and fund expenditures on the Property in the aggregate amount of $500,000
(the "Work Costs") and pay certain fees and issue certain shares,
collectively (the "Payments") on or before the date which is two years
from the date of this Agreement as follows:
(i) contemporaneous with the signing of this Agreement, Halo shall pay
to EL the sum of $40,000 and subject to section 7, shall cause to be
issued to Endowment Lakes (2002) Ltd. (the "General Partner") as
General Partner in trust for EL 50,000 common shares in the capital
of Halo;
(ii) on or before the first anniversary of the date of this Agreement
Halo shall incur and fund expenditures on the Property of at least
$250,000;
(iii) on the first anniversary of the date of this Agreement, Halo shall
pay to EL the sum of $40,000 and, subject to section 7 issue to the
General Partner in trust for EL 50,000 common shares in the capital
of Halo; and
(iv) during the period from the date of the first anniversary of the date
of this Agreement until the date of the Second Anniversary of the
date of this Agreement, Halo shall incur and fund expenditures on
the Property of at least $250,000.
provided, however, that if Halo incurs and funds the Work Costs and makes
the payments and issues the shares in full prior to and in advance of the
time frame provided herein, then it will be deemed to have exercised the
First Option at the time that both the Work Costs are incurred and funded
and the payments are paid in full and it will not be required to incur and
fund any further expenditures or pay any further amounts or issue any
further shares in accordance with the terms of this section 1(c).
(d) EL hereby grants to Halo the sole and exclusive right and option to earn
an additional undivided twenty-nine percent (29%) beneficial interest in
the Property (the "Second Option" and collectively with the First Option,
the "Options" and each individually an "Option"), on or before the date
which is two years from the date upon which the First Option is exercised.
The period commencing on the date the First Option is exercised and ending
on the second anniversary of such date is hereinafter referred to as the
"Second Option Period". The Second Option shall vest upon the exercise of
the First Option by Halo and the delivery by Halo to EL of a notice in
writing electing to earn the Second Option, which notice must be delivered
to EL not more than 45 days following the date upon which the First Option
is exercised.
(e) In order to maintain the Second Option in good standing, Halo shall incur
and fund expenditures on the Property in the aggregate amount of
$1,500,000 (the "Second Work Costs") and pay certain fees and issue
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certain shares (the "Second Payments") on or before the date which is two
years from the date of the exercise of the First Option as follows:
(i) on or before the first anniversary of the exercise of the First
Option, Halo shall pay to EL the sum of $40,000 and, subject to
section 7, issue to the General Partner in trust for EL 50,000
common shares in the capital of Halo; and
(ii) during the Second Option Period incur and fund expenditures on the
Property of at least $1,500,000, provided, however, that if Halo
incurs and funds the Second Work Costs and the Second Payments in
full prior to and in advance of the time frame provided herein, then
it will be deemed to have exercised the Second Option at the time
that both the Second Work Costs and the Second Payments are paid in
full and it will not be required to incur and fund any further
expenditures or pay any further amounts or issue any further shares
in accordance with the terms of this Section 1(e).
(f) The Work Costs shall be as defined in Schedule C to this letter agreement.
For greater certainty, Halo may, at any time during the First Option
Period or the Second Option Period, terminate this letter agreement or the
Option on thirty (30) days' prior written notice to EL without any
obligation to incur Work Costs or pay any further fees or issue any
further shares.
(g) In order to provide for (i) the manner in which the development,
exploration and operation of the Property shall be conducted (including
without limitation, the appointment of Halo or its affiliate as manager to
conduct development and mining activities on the Property and to propose
work programs); (ii) the respective rights and obligations of the parties
arising out of or in connection with the of the Property; (iii) the
management fees that Halo shall be entitled to charge; and (iv) the manner
in which the rights in the Property may be transferred, immediately upon
the earlier of (A) the exercise of the Second Option by Halo; and (B) the
expiry of the Second Option, EL and Halo shall enter into a joint venture
agreement. The form of joint venture agreement between EL and Halo (the
"Joint Venture Agreement") shall be attached as a schedule to and form
part of the Option Agreement.
(h) The Work Costs are not committed and may be made in Halo's sole
discretion. If the annual Work Costs to be incurred on or before the dates
provided in section 1(c)(i)-(iv) or (1)(e)(i) - (ii) above are less than
the minimum annual requirement, then Halo may pay the deficiency to or to
the direction of EL in cash within sixty (60) days after the expiry of the
respective annual period in order to maintain the First Option or Second
Option, as applicable. If the aggregate Work Costs incurred on or before
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the second anniversary of the date of the Option Agreement are less than
$500,000, or if the Second Work Costs incurred on or before second
anniversary of the exercise of the First Option are less than $1,500,000,
Halo may pay the deficiency to or to the direction of EL in cash within
sixty (60) days after the applicable date in order to exercise the First
Option or Second Option, as applicable. Any and all expenditures made
under section 1(c) above, or any payments made pursuant to this section
1(h) are not reimbursable if Halo does not exercise the First Option. If
Halo does not incur and fund the Work Costs in accordance with the
schedule provided in section 1(c) hereof, or if it does not make the
payments to EL in lieu of the annual Work Costs as provided herein, other
than in circumstances of a force majeure event, the First Option shall
terminate and any expenditures previously incurred or funded, or any
payments previously made to EL, shall be forfeited. If Halo does not incur
and fund the Second Work Costs in accordance with the schedule provided in
Section 1(e) hereof or if it doesn't make the payments to El in lieu of
the Second Work Costs as provided herein, other than in circumstances of a
force majeure event, the Second Option will terminate and any expenditures
previously incurred or funded, or any payments previously made to EL,
shall be forfeited.
(i) Halo or an affiliate shall have the exclusive right to manage and operate
all work programs carried out on the Property for so long as the Options
remain outstanding, including the right to prospect, explore, conduct
drilling, environmental tests, metallurgical tests, geochemistry and
geophysics tests and to conduct any other exploration, development testing
or determining of feasibility and test mining that it deems desirable, and
all work programs shall be in the sole discretion of Halo or an affiliate
permitted to exercise such rights. Thereafter, work programs shall be
carried out by Halo in accordance with the terms of the Joint Venture
Agreement.
(j) Notwithstanding any other provision in this letter agreement, Halo shall
not conduct any drilling or perform any underground developments on the
Property unless and until the parties have executed and delivered to each
other the Option Agreement in accordance with Section 1(a) hereof.
(k) EL shall indemnify and hold Halo and its directors, officers, employees
and consultants harmless from and against any losses, liabilities,
damages, injuries, costs or expenses (including legal costs) incurred by
such persons arising out of, resulting from or in any way connected with
the operations conducted on the Property by EL or its affiliates prior to
the date of this letter agreement or reclaiming any of the concessions
that comprise the Property in respect of any work performed by EL or its
affiliates on such concessions prior to the date of this letter agreement.
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Such indemnity shall survive the termination of the First Option Period or
the failure of Halo to exercise the First or Second Option.
(l) The Option Agreement shall contain the terms and provisions set out in
this letter agreement and such other representations, warranties,
covenants, conditions and indemnities that are usual and customary to a
mining transaction of this nature or are otherwise necessary or
appropriate to implement the terms of this letter agreement and as are
mutually acceptable and agreed upon by the parties, including, without
limitation, those representations and warranties contained in section 8
hereof.
(m) Upon the exercise of each of the First and Second Options, as applicable,
the appropriate registrations shall be made to reflect each party's
ownership interest, on title to the Property.
2. CONTRIBUTION TO COSTS
(a) During the Option Periods, Halo shall be responsible for the conduct and
cost of all minimum assessment work and exploration programs conducted on
the Property and, from and after the date of this letter agreement, Halo
shall maintain the Property in good standing with all appropriate
authorities and under the laws of Canada and the provincial authorities,
including, without limitation, the payment of any mining duties, property
taxes, instruction fees, service fees or stamp duties, the filing of
reports with respect to minimum assessment work, and the performance of
any and all obligations required by the terms and conditions of the mining
concessions that comprise the Property (the "Maintenance Costs"), and Halo
shall fund and pay such Maintenance Costs, until the earlier of:
(i) the expiry or termination of the First Option;
(ii) the date upon which Halo has exercised the Second Option; or
(ii) the Second Option expires or is terminated without having been
exercised by Halo,
If the First Option expires or is terminated without having been exercised
by Halo, EL shall be responsible for, pay and fund all Maintenance Costs
from and after the date of such expiration or termination. Where Halo has
exercised the First Option, and the Second Option expires or is terminated
without having been exercised by Halo, EL and Halo in accordance with
their proportional interests shall be responsible for, pay and fund all
Maintenance Costs and all other costs in respect of the Property from and
after the date of such expiration or termination of the Second Option and
shall be responsible for all liabilities incurred in accordance with their
proportionate interests. For greater certainty, Halo's obligation to pay
Maintenance Costs applies only to Maintenance Costs the liability for
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which did not arise prior to the date of this letter agreement.
Maintenance Costs shall form part of the Work Costs for the purposes of
the First Option and Second Option. If either EL or Halo fails to
contribute to the expenditures related to the Property, following the
termination or expiry of the Second Option, whichever is earlier, in
accordance with their respective proportionate interests, and pursuant to
this section 2(a), and the other of EL or Halo (the "contributing party")
contributes not less than the full amount of the contributing party's
required funding pursuant to this Section 2(a), then the non-contributing
party's percentage holdings in the Property shall be recalculated in
accordance with the following formula:
Property shareholding of party = (A X 100)
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B
Where:
A = actual contributions of party to expenditures related to the
Property and required by the Joint Venture Agreement
(excluding Work Costs incurred by Halo pursuant to the
Options);
B = total contributions of both parties to the expenditures
related to the Property and required in the Joint Venture
Agreement.
For greater certainty, a non-contributing party's percentage holdings in
the Property shall not be recalculated in accordance with the formula
contained herein if the contributing party does not contribute the full
amount of the contributing party's required funding pursuant to this
section 2(a).
(b) Any recalculation of percentage holdings in the Property shall be
implemented by the transfer of interest to the other party. If a party's
percentage interest is diluted to less than ten percent (10%), then such
other party's interest is automatically converted to a one percent (1%)
net smelter royalty upon substantially the same terms and conditions
contained in the Royalty Agreement. In such event the joint venture shall
immediately be terminated provided that all terms set out therein which
are stated to survive termination shall remain in full force and effect
and any liabilities which have been incurred or accrued shall remain in
effect.
(c) A non-contributing party's percentage holdings in the Property shall be
deemed to be recalculated immediately after the time for making a
contribution has lapsed and the other party has made the contributing
party's contribution in full. The parties shall execute and deliver all
necessary instruments and documents and take such actions required to
effect such transfer of interest.
(d) Following the exercise of the Second Option, Halo shall be responsible for
all costs necessary to advance the Property to production and EL shall not
be required to expend monies in relation to the Property provided however,
that each of EL and Halo shall be liable for any liabilities of the
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Project in proportion to their joint venture interests and provided that
Halo shall be entitled to recover all costs incurred in respect of the
Property, including without limitation all capital expenditures, prior to
any payment of profit to Halo or EL on the basis of their proportionate
joint venture interests.
3. NET SMELTER RETURNS ROYALTY
On the date that the Second Option is exercised, EL and Halo will enter into a
net smelter returns royalty agreement (the "Royalty Agreement") on terms
mutually satisfactory to both parties, pursuant to which Halo will issue and
grant to EL a 1% net smelter returns royalty calculated and payable in
accordance with Schedule D attached (the "NSR") on Halo's share of any gold and
silver production from the Property following commencement of commercial
production, with the price of gold being determined on the basis of the monthly
average price of gold, calculated by dividing the sum of all London Bullion
Market Association P.M. Gold Fix prices reported for the calendar month in
question by the number of days for which such prices were quoted, and for silver
on the basis of the monthly average price of silver, calculated by dividing the
sum of all London Bullion Market Association prices for silver reported for the
calendar month in question by the number of days for which such prices were
quoted. All royalty payments will be paid in cash only. Notwithstanding this
Section 3, if Halo is the operator or manager or the Property, Halo will be
under no obligation whatsoever to place the Property into commercial production,
and if the Property is placed into commercial production by Halo, Halo will have
the right at any time to curtail, suspend or terminate such commercial
production as Halo in its sole discretion deems advisable. At the option of
Halo, which may be exercised at any time by notice in writing to EL, Halo may
acquire the rights under the Royalty Agreement for a purchase price of
$1,000,000.
4. AREA OF INFLUENCE
Any mining concession located or otherwise acquired by or on behalf of Halo or
EL or any of their affiliates from and after the date of this letter agreement
that lies wholly or partly within a five (5) kilometre radius of the perimeter
of the Property, as such perimeter exists as at the date hereof (the "Area of
Influence"), or any right, title or interest therein, shall be subject to this
letter agreement. Each party shall be free to acquire properties outside the
Area of Influence, in its own interest and without any obligation or liability
to any other party.
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5. ACCESS TO INFORMATION
(a) Subject to the terms and conditions hereof, EL shall have, at all
reasonable times from and after the date of this letter agreement, timely
access to the Property and to all data, studies, maps, drill core and all
other information generated by Halo in respect of or derived from the
Property. Halo shall, from the date of this letter agreement until
exercising the earlier of (i) the expiry or termination of the Second
Option; and (ii) the exercise of the Second Option, provide EL, all
information generated from exploration and development on the Property on
a timely basis, which information shall be treated as confidential in
accordance with the provisions hereof. EL acknowledges that nothing in
this letter agreement will obligate Halo: (i) to prepare, or to assist in
the preparation of, any technical report or reports relating to the
Property which EL might be required to prepare and file with any Canadian
regulatory authority at any time pursuant to National Instrument 43-101
"Standards of Disclosure for Mineral Projects", or any similar regulatory
policy; or (ii) to provide the services of, or to assist EL in procuring
the services of, a "qualified person" (as that term is defined in the
National Instrument) to produce, or to oversee the production of, any such
technical report or reports.
(b) Within thirty (30) days of the date of this letter agreement, EL shall
disclose or make available to Halo copies of all information and data
within its control or possession concerning the Property, including,
without limitation, all historical documentation with respect to title,
all geological, geophysical and assay results, maps, environmental
studies, tests and assessments and notifications from regulatory
authorities and prior exploration, development, reclamation and
remediation work carried out thereon and within its knowledge.
6. REPRESENTATIONS AND WARRANTIES
(a) EL represents and warrants to Halo that:
(i) the concessions that comprise the Property 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 owned by and
duly registered in the name of EL free and clear of any
encumbrances, royalties or underlying interests whatsoever;
(ii) to the knowledge of EL after due inquiry, nothing in the mining laws
of Canada and the Province of Manitoba prohibits EL from granting to
Halo the right to hold exploration rights in respect of the Property
in order to carry out prospecting, exploration, pre-development and
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feasibility activities on the Property as to gold and minerals for
as long as the concessions that comprise the Property are in force;
(iii) upon exercise of the First Option by Halo, EL shall have the legal
right and authority to transfer an undivided fifty-one percent (51%)
beneficial interest in the Property to Halo and to register such
interest on the legal title to the Property;
(iv) to the knowledge of EL, there are no actions, suits, investigations
or proceedings before any court, arbitrator, administrative agency
or other tribunal or governmental authority, whether current,
pending or threatened, which directly or indirectly relate to or
affect the Property;
(v) to the knowledge of EL, 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 Property (including watercourses, improvements
thereon and contents thereof) or nearby areas;
(vi) neither EL nor, to EL'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 Property;
(vii) the activities on and the use of the Property by EL have been in
compliance with all laws of Canada and the Province of Manitoba and
EL has not received any notice of any breach or violation of such
laws;
(viii) as at the date of this letter agreement, no adverse claims or
challenges have been made to EL's interest in or to the Property;
(ix) EL has not assigned, encumbered or covenanted to assign or encumber
any of the concessions that comprise the Property or the rights
which derive therefrom and EL has not acquired, with respect to
third parties, any obligation whatsoever that would prevent EL from
entering into this letter agreement; and
(x) EL has no any information or knowledge pertaining to the Property or
the lands comprising the Property or substances thereon, therein or
therefrom not disclosed in writing to Halo which, if known to Halo,
might reasonably be expected to deter Halo from completing the
transactions contemplated hereby on the terms and conditions
contained herein.
(b) Halo represents and warrants to EL that Halo, or any affiliate Halo
proposes to use to perform any operations contemplated by this letter
agreement, is, 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 and the Province of Manitoba and to perform
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such operations or obligations within the jurisdiction of any governmental
authority having jurisdiction of the nature and scope of the operations
and obligations to be performed by Halo or any of its affiliates pursuant
to and in accordance with the terms of this letter agreement.
(c) Halo, on the one hand, and EL on the other hand, represent and warrant to
each other that:
(i) Halo 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;
(ii) EL is a limited partnership duly registered under the laws of
Manitoba, and it is duly organized and validly subsisting under such
laws;
(iii) each party has full corporate power and authority to carry on its
business and to enter into this letter agreement and to carry on and
perform all of its obligations and duties hereunder;
(iv) each party has duly obtained all corporate and regulatory
authorizations for the execution, delivery and performance of this
letter agreement and, except as expressly set out in this letter
agreement, and 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 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;
(v) this letter agreement has been duly executed and delivered by each
party and is valid, binding and enforceable against each party in
accordance with its terms.
7. ISSUANCE OF THE SECURITIES
All shares, warrants, units and other securities issued or to be issued by Halo
to EL under and pursuant to this letter of intent on under the Option Agreement
(the "Halo Securities") shall be subject to all applicable hold periods required
by applicable securities laws and the TSX Venture Exchange. The issuance of any
Halo Securities shall be conditional upon (i) Halo obtaining all regulatory and
third party consents or approvals being received, 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 EL. In the
event that Halo has not received the required consents on the date this letter
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agreement is signed and fails to deliver the shares contemplated in Section
1(c)(i) within six months of the date hereof, this letter agreement shall be
null and void, save for the provisions of Section 8.
8. CONFIDENTIALITY
(a) The terms of this letter 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 letter 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 contemplated hereunder
and agrees not to use, in relation to the Property and the Area of
Influence, any such information except for or in respect of the completion
of the proposed transactions contemplated by this letter agreement, except
to the extent that disclosure may be required by or under any law or under
the rules and regulations of any securities commission or stock exchange.
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
letter 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 letter 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 otherwise be required by applicable law, rule or
regulation.
9. BINDING PROVISIONS
(a) This letter agreement shall be binding upon the parties and contains the
entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understanding, duties or obligations between
the parties respecting the subject matter hereof.
(b) In addition to any other remedies Halo or EL may have: (i) Halo may,
subject to a force majeure event, terminate this letter agreement if EL
fails to perform or breaches any of its material obligations under this
letter agreement, and such party fails to cure any such non-performance or
breach within sixty (60) days after receipt of written notice thereof from
Halo; and (ii) EL may, subject to a force majeure event, terminate this
letter agreement if Halo fails to perform or breaches any of its material
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obligations under this letter agreement, and such party fails to cure any
such non-performance or breach within sixty (60) days after receipt of
written notice thereof from EL.
(c) This letter agreement shall remain binding on the parties if the Option
Agreement is not executed and delivered for any reason whatsoever other
than Halo terminating this letter agreement in accordance with the terms
hereof.
(d) The parties hereto acknowledge that EL is a limited partnership formed
under the laws of Manitoba. The parties hereto acknowledge that the
obligations of EL shall not be personally binding upon, nor shall resort
be had to, the property of any of the Limited Partners, their heirs,
successors and assigns, and that resort shall only be had to the property
of EL and the property of the General Partner.
10. FORCE MAJEURE
Neither Halo or EL shall be liable to the other, and neither Halo or EL shall be
deemed in default hereunder, for any failure to perform or delay in performing
any of its covenants and agreements or in incurring Work Costs caused by or
arising out of any event (a "force majeure event") beyond the reasonable control
of such party, excluding lack of funds, but including, without limitation, lack
of rights from or permission by indigenous peoples' groups to enter upon the
Property to conduct exploration, development and mining operations thereon, war
in Canada, earthquake, fire, storm, flood, explosion, strike, labour trouble,
accident, riot, act of restraint of any lawful authority, act of God, protest or
demonstrations by environmental lobbyists or indigenous peoples' groups, delays
in transportation, breakdown of machinery, inability to obtain necessary
materials in the open market, unavailability of equipment or delays by any
governmental authority or agency in providing any permission, licence or permit
required to perform any such covenant or agreement (so long as such delays are
not themselves the result of delays by the party seeking to rely upon this
clause). No right of Halo or EL shall be affected for failure or delay to
perform any of its covenants and agreements or to incur Work Costs, if the
failure or delay is caused by one of the events referred to above. All times
provided for in this letter agreement shall be extended for the period
commensurate with the period of delay and, so far as possible, the party
affected shall take all reasonable steps to remedy the cause of the delay
attributable to the events referred to above; provided, however, that nothing
contained in this section shall require Halo or EL to settle any labour dispute,
protest or demonstration, or to question or test the validity of any
governmental order, regulation, or law or claim of right by indigenous peoples'
groups.
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11. MISCELLANEOUS
(a) Any notice or any communication required or permitted to be given under
this letter agreement by any party to the other parties, in any capacity
(hereinafter called a "Notice") shall be in writing and shall be deemed to
have been sufficiently given if telefaxed or delivered to the address of
such other parties set forth as follows:
(i) if to Halo at:
1305 - ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: Marc Cernovitch, President & CEO
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to EL at:
c/o the General Partner
#▇ -▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No. ▇▇▇-▇▇▇-▇▇▇▇
or such substitute address or fax number as is specified by a party by
notice to the other parties given in accordance with this section, and any
such Notice shall be deemed to have been received, if telefaxed, on the
first business day after the date of 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.
(b) None of the provisions of this letter agreement shall be amended or
modified, and no waivers, consents or approval in respect hereof shall be
effective unless made in writing and signed by the parties.
(c) No party shall sell, transfer, assign or convey this letter agreement, or
any of its rights, benefits, privileges or obligations thereunder, without
the prior written consent of the other parties, provided that EL or Halo
may sell, transfer, assign or convey this letter agreement (or, in the
case of EL, the Property) and its rights, benefits and privileges
thereunder, to an affiliate of such party, provided that:
(i) such party delivers to the other party notice of such assignment;
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(ii) such affiliate agrees in writing with the non-assigning party to be
bound by the terms of this letter agreement;
(iii) before such affiliate ceases to be an affiliate of such party, the
interest assigned must be assigned back to such party; and
(iv) notwithstanding such assignment and shall continue to be bound by
the terms of this Letter agreement.
The Option Agreement and Joint Venture Agreement shall contain right of
first refusal provisions binding on the parties with respect to their
respective interests in the Option Agreement, the Joint Venture Agreement
and the Property.
(d) Nothing in this letter agreement shall be deemed to constitute any party
the partner, agent or legal representative of the other parties for any
purpose whatsoever.
(e) The letter agreement enures to and is binding upon the successors and
assigns of the parties.
(f) This letter agreement and its application and interpretation will be
governed by and interpreted in accordance with the laws of Province of
Manitoba with respect to any property situated in the Province of Manitoba
or any obligations to be performed in Province of Manitoba pursuant to
documents or other writings prepared under or subject to the laws of the
Province of Manitoba, or the performance of which is sought before the
courts of the Province of Manitoba, and, as to all other matters, this
letter agreement shall be construed in accordance with the laws of Ontario
and the applicable federal laws of Canada.
(g) The letter agreement may be signed in counterpart by original or faxed
copy, each of which will be deemed to be an original and all of which
together shall constitute one and the same instrument.
(h) For purposes of this letter agreement, the Option Agreement, the Joint
Venture Agreement and the Royalty Agreement, the term "affiliate" shall
mean, as to any party, any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is
controlled by or is under common control with that party, and for the
purposes of this definition "control" means possession, directly or
indirectly, of the power to direct or cause the direction of management
and policies through ownership of voting securities, contract, voting
trust or otherwise.
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If the terms of this letter agreement are acceptable to you, please sign and
return the enclosed copy of this letter agreement to us at the address indicated
above on or before 5:00 PM, Vancouver time, on February 9, 2005.
Yours truly,
HALO RESOURCES LTD.
Per: _________________________
I have the authority to bind the company
ENDOWMENT LAKES (2002) LIMITED PARTNERSHIP
BY ITS GENERAL PARTNER, ENDOWMENT LAKES (2002) LTD.
Per: _________________________
I have the authority to bind the company
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LIST OF SCHEDULES [Not Attached]
Schedule A List Of Properties
Schedule B MAP - Quarter Moon Lake Property
Schedule C Description of Work Costs
Schedule D Description of Net Smelter Returns Royalty
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