EXHIBIT 4.10
HEADS OF AGREEMENT BY AND AMONG
HILTON PETROLEUM LTD. AND
LOGISTIC RESOURCES LTD.,
DELTA RICH RESOURCES LTD.,
EQUITY WORLD RESOURCES,
WING HONG NG, XXXXX XXXX
AND XXXXXXX X.X. XXXX
DATED JUNE 24, 2002.
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HILTON
Petroleum Ltd.
Xxxxx 0000
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Phone: (000) 000-0000
Fax: (000) 000-0000
June 24, 2002
Logistic Resources Ltd. ("Logistic")
Delta Rich Resources Ltd.
Equity World Resources
(collectively the "Targets")
and to
The Shareholders of the Targets, namely:
Mr. Wing Hong Ng
Mr. Xxxxx Xxxx; and
Xx. Xxxxxxx X.X. Xxxx
(collectively the "Shareholders")
Dear Sirs:
RE: HEADS OF AGREEMENT
This letter confirms our agreement to complete transactions whereby
Hilton Petroleum Ltd. ("Purchaser") will acquire all of the outstanding shares
("Target Shares") of each of the Targets from the Shareholders. The terms for
this transaction are as follows:
1. Representations and Warranties of Purchaser
Purchaser represents and warrants to Targets and the Shareholders that:
(a) It has been duly continued under the laws of the Yukon
Territory and is in good standing in respect of the filing of
annual returns under such laws;
(b) It is a reporting issuer in British Columbia and its common
shares are listed for trading on the TSX Venture Exchange
("Exchange");
(c) Its authorized capital consists of an unlimited number of
common shares without par value of which 41,923,439 shares are
currently issued and outstanding;
(d) Its filings, as required with the British Columbia Securities
Commission and the Exchange are up to date and disclose all
material facts relating to the Company and its affairs; and
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(e) It is not party to any action, suit, claim or proceeding nor
is there any outstanding order, writ, injunction or judgement
issued against it.
2. Representations and Warranties of Targets and Shareholders
Each of Targets and Shareholders represent and warrant to Purchaser
that:
(a) Each of Targets has been duly incorporated under the laws of
the British Virgin Islands and is in good standing in respect
of the filing of annual returns under such laws;
(b) Each of Targets is a corporation duly organized, validly
existing and in good standing in the jurisdiction of its
incorporation;
(c) The execution and delivery of this Agreement has been duly and
validly authorized by all necessary actions on the part of
each of the Targets enforceable against each of the Targets in
accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other similar laws
of general applicability related to or affecting creditors'
rights and to the availability of equitable remedies;
(d) Except as otherwise provided in this agreement, no
authorization, approval, order, licence, permit, consent,
certificate or registration of any governmental authority,
court, or arbitrator, and no registration, declaration or
filing by any of the Targets with any governmental authority,
court or arbitrator, is required in order for the Targets to
complete the transactions contemplated hereby;
(e) None of the Targets is a party to any action, suit, claim or
proceeding and there is no outstanding order, writ, injunction
or judgement issued against it; and
(f) Targets are the registered and beneficial owners of the
property rights described in Schedule "A" hereto (the
"Properties") and all such rights are in good standing and
free and clear of all liens, charges and encumbrances.
3. Representations and Warranties of Shareholders
Each of the Shareholders separately represents and warrants to
Purchaser that:
(a) Shareholders are the beneficial owners of all the Target
Shares and have or will at the time of Closing have good and
sufficient right and authority to sell the Target Shares and
to transfer legal and beneficial title and ownership of the
Target Shares to Purchaser;
(b) At the time of Closing, his Target Shares will be free and
clear of all liens, charges and encumbrances; and
(c) There are no agreements, options, rights or privileges being
or capable of becoming an agreement for the purchase of his
respective Target Shares, except for a pre-existing right
which exists for the sale of the shares of equity. Within the
next ten days this pre-existing right will be exercised and if
not exercised the shares of equity will be sold to Xxxxxxxxx.
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0. Xxxxxxxx and Sale
Based upon the foregoing representations and warranties and subject to
the terms herein, Purchaser agrees to purchase the Target Shares from the
Shareholders and the Shareholders agree to sell the Target Shares to Purchaser
in consideration of:
(a) For the Shares of Logistic and Delta:
(i) Cdn.$1,542,500 payable as follows: on signing this
Agreement Cdn. $62,000; upon receipt of acceptable
title opinions on the properties Cdn. $93,000; on
Closing Cdn. $1,077,500; and the balance of Cdn.
$310,000 payable on completion by Purchaser of a
financing raising in excess of US $1.2 million;
(ii) 4,000,000 common shares in the capital of Purchaser
payable at closing;
(iii) a 7.5% net profits interest in any profits generated
from the Properties by the subsidiary of the
Purchaser to be formed for the purposes of acquiring
and holding the Properties, payable when such profits
are earned; and
(iv) if the Properties are determined to contain reserves
of greater than 5 million ounces of gold or gold
equivalent as determined by an independent
engineering report showing an internal rate of return
from the properties of greater than 30%, 500,000
common shares for each 500,000 ounces over 5 million
ounces (pro rated for fractions of 500,000 ounces),
such shares to be payable upon establishment of such
reserves.
(b) For the Shares of Equity:
(i) Cdn.$1,542,500 payable as follows: upon receipt by
Purchaser of written confirmation with respect to
expiration of pre-existing purchase rights Cdn.
$62,000; upon receipt by Purchaser of acceptable
title opinions on the properties Cdn. $93,000; on
Closing Cdn. $1,077,500; and the balance of Cdn.
$310,000 payable on completion by Purchaser of a
financing raising in excess of US $1.2 million;
(ii) 4,000,000 common shares in the capital of Purchaser
payable at closing;
(iii) a 7.5% net profits interest in any profits generated
from the Properties by the subsidiary of the
Purchaser to be formed for the purposes of acquiring
and holding the Properties, payable when such profits
are earned; and
(iv) if the Properties are determined to contain reserves
of greater than 5 million ounces of gold or gold
equivalent as determined by an independent
engineering report showing an internal rate of return
from the properties of greater than 30%, 500,000
common shares for each 500,000 ounces over 5 million
ounces (pro rated for fractions of 500,000 ounces),
such shares to be payable upon establishment of such
reserves.
Shareholders agree that, for twelve months from Closing, where feasible
any additional opportunities to acquire resource properties (mining and oil and
gas) in Asia which are presented to them or made available to them, shall be
presented to the Purchaser. The Purchaser can then determine to pursue the
acquisition or pass, in which case the Shareholders will be free to pursue the
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opportunity. Purchaser mayfarm-out all or any portion of the Properties to other
companies and where feasible, Purchaser will offer the Shareholders the right to
participate in the such other companies, as equal partners with the Purchaser.
5. Closing
The closing of the transactions contemplated hereby (the "Closing")
will take place at 10 a.m. (Vancouver time) on the 2nd business day following
receipt of all required regulatory approvals at the offices of Purchaser, or at
such other time and place as the parties hereto may agree.
6. Covenants of Purchaser
Between now and Closing, Purchaser will:
(a) Provide full access during normal business hours to its books
and records to the Shareholders for the purposes of conducting
due diligence;
(b) Maintain any information acquired from Target or the
Shareholders and this agreement and the transactions to which
it relates as confidential and not disclose the details of
such transactions to any third party except as required by law
or to obtain all necessary approvals;
(c) Forthwith apply for all approvals required to complete the
transactions contemplated hereby, including Exchange approval;
and
(d) Do everything else reasonably required to give effect to this
agreement.
After Closing Purchaser will:
(e) Use reasonable commercial efforts to develop the Properties
through its own exploration efforts or through farming out;
and
(f) Within 60 days of Closing provide or arrange for funding of US
$400,000 to Targets for work and other costs.
7. Covenants of Shareholders and Targets
Between now and Closing, Shareholders and Targets will:
(a) Provide full access during normal business hours to the books
and records of Targets to Purchaser for the purposes of
conducting due diligence;
(b) Maintain any information acquired from Purchaser and this
agreement and the transactions to which it relates as
confidential and not disclose the details of such transactions
to any third party except as required by law or to obtain all
necessary approvals;
(c) Not enter into any new transactions whatsoever including,
without limitation, any new financings or new commitments or
make any expenditures outside of its ordinary day to day
ongoing business, without the prior approval of Purchaser;
(d) Provide all necessary capital to Targets to maintain
operations; and
(e) Do everything else reasonably required to give effect to this
agreement.
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8. Conditions for the Benefit of Purchaser
The obligation of Purchaser to complete the transactions contemplated
hereby is subject to the following conditions which are for the exclusive
benefit of Purchaser and may be waived by Purchaser at any time:
(a) Approval by the Exchange to the transactions contemplated
hereby;
(b) Completion of a diligence review of the business and affairs
of Targets with results satisfactory to Purchaser, such review
to be completed not later than June 30, 2002;
(c) The representations and warranties of Targets and the
Shareholders in sections 2 and 3 being true as at the Closing;
(d) Completion of a financing to raise net proceeds of at least
Cdn.$2 million will be done in conjunction with the Closing of
this acquisition; and
(e) Target and the Shareholders not being in default of any
material term of this agreement as at the Closing.
9. Conditions of Benefit of Targets and Shareholders
The obligations of Targets and Shareholders to complete the
transactions contemplated hereby are subject to the following conditions which
are for the exclusive benefit of Targets and the Shareholders and may be waived
by Targets and Shareholders at any time:
(a) Completion of a due diligence review of the business and
affairs of Purchaser with results satisfactory to Targets and
Shareholders, such review to be completed not later than June
30, 2002;
(b) The representations and warranties of Purchaser in section 1
being true as at the Closing; and
(c) Purchaser not being in default of any material terms of this
agreement as at the Closing Date.
10. Closing Deliveries
At Closing:
(a) Purchaser will deliver to Targets or the Shareholders, as
applicable:
(i) Evidence of all necessary approvals to this agreement
and the transactions contemplated hereby;
(ii) Cheque for Cdn.$2 million payable to the Shareholders
or as directed by them;
(iii) Certificates representing 5 million common shares of
the Purchaser issued to the Shareholders in the
proper denominations;
(iv) Evidence of the royalty interest referred to in
paragraph 4(c); and
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(v) Such other documents as may be reasonably requested
by Targets and the Shareholders; and
(b) Targets or the Shareholders will deliver to Purchaser:
(i) Certificates representing the Target Shares duly
endorsed for transfer or accompanied by instruments
of transfer;
(ii) Certified copies of resolutions of the directors of
each of the Targets approving the transfer of the
Target Shares to Purchaser and issuing a new share
certificate in the name of Purchaser;
(iii) New share certificates registered in the name of
Purchaser representing all of the outstanding Target
Shares; and
(iv) Such other documents as may be reasonably requested
by the Purchaser.
At Closing, Shareholders will also be entitled to appoint two nominees
to Purchaser's board of directors.
11. Purchaser, Shareholders and Targets will each pay their own costs in
respect of the transactions contemplated hereby.
12. Targets and the Shareholders may give Purchaser notice in writing under
this letter of intent by telecopying such notice addressed to Purchaser as
follows:
Hilton Petroleum Ltd.
Attention: Xx. Xxxx XxXxxx
Facsimile No. 000 000-0000
Purchaser may give Targets or the Shareholders notice in writing under
this letter of intent by telecopying such notice addressed to Targets and
Shareholders as follows:
Mr. Wing Hong Ng Facsimile No. 852 2521 8998
Mr. Xxxxx Xxxx Facsimile No. 000 000 0000
Xx. Xxxxxxx X.X. Xxxx Facsimile No. 000 000 0000
13. Any notice delivered in accordance with section 12 or 13 will be deemed
to have been given and received on the day it was telecopied. Any party may at
any time give to the other notice in writing of any change of address of the
party giving such notice and from and after the giving of such notice the
address therein specified will be deemed to be the address of such party for the
purpose of giving notice hereunder.
14. Each party will at any time and from time to time, upon the reasonable
request of the other party, execute and deliver such further documents and do
such further acts and things as the other party may reasonably request in order
to evidence, carry out and give full effect to the terms, conditions, interest
and meaning of this agreement.
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15. Purchaser intends to form a wholly owned subsidiary to acquire and hold
the Target Shares and Targets and Shareholders hereby consent to Purchaser doing
so.
Please confirm your agreement to the above terms by signing below
whereupon this will become a legal and binding agreement. Forthwith after
execution of this agreement, the parties will use their best efforts to complete
a formal agreement incorporating the terms of this agreement and such other
provisions as are customary in a transaction of this nature, as soon as possible
after execution of this agreement.
Yours truly,
HILTON PETROLEUM LTD.
Per: "Xxxx XxXxxx"
--------------------
Authorized Signatory
ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN.
TARGETS SHAREHOLDERS
LOGISTIC RESOURCES LTD. SIGNED SEALED AND DELIVERED BY:
Per: /s/ Xxxxxxx Xxxx /s/ Wing Hong Ng
--------------------- --------------------------------
Authorized Signatory
DELTA RICH RESOURCES LTD. SIGNED SEALED AND DELIVERED BY:
Per: /s/ Xxxxxxx Xxxx /s/ Xxxxxxx X.X. Xxxx
--------------------- --------------------------------
Authorized Signatory
SIGNED SEALED AND DELIVERED BY:
EQUITY WORLD RESOURCES /s/ Xxxxx Xxxx
--------------------------------
Per: /s/ Xxxxxxx Xxxx
---------------------
Authorized Signatory
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SCHEDULE "A"
DESCRIPTION OF PROPERTIES
LOGISTIC RESOURCES LTD.
Inner Mongolian Properties
Co-ordinates 107(degree)40' 00" 107(degree)47' 00"
42(degree)08' 00" 42(degree)12' 00"
107(degree)19' 00" 107(degree)27' 00"
42(degree)20' 00" 42(degree)24' 45"
DELTA RICH RESOURCES LTD.
Mongolian Properties
Co-ordinates 97(degree)00' 00" 44(degree)46' 00" 96(degree)00' 00" 44(degree)48' 50"
97(degree)15' 00" 44(degree)46' 00" 96(degree)05' 55" 44(degree)48' 50"
97(degree)15' 00" 44(degree)40' 00" 96(degree)05' 55" 44(degree)47' 10"
97(degree)00' 00" 44(degree)40' 00" 96(degree)08' 10" 44(degree)47' 10"
96(degree)30' 00" 44(degree)44' 00" 96(degree)08' 10" 44(degree)47' 50"
97(degree)00' 00" 44(degree)44' 00" 96(degree)08' 10" 44(degree)48' 50"
97(degree)00' 00" 44(degree)40' 00" 96(degree)12' 30" 44(degree)48' 50"
97(degree)30' 00" 44(degree)40' 00" 96(degree)12' 30" 44(degree)46' 50"
96(degree)13' 40" 44(degree)46' 40"
96(degree)13' 40" 44(degree)42' 00"
96(degree)00' 00" 44(degree)42' 00"
EQUITY WORLD RESOURCES
Mongolian Properties
Co-ordinates 107(degree)20' 00" 42(degree)50' 00" 105(degree)45' 00" 48(degree)26' 40"
105(degree)00' 00" 42(degree)00' 00" 106(degree)09' 50" 48(degree)40' 20"
108(degree)00' 00" 42(degree)00' 00" 106(degree)29' 09" 48(degree)34' 28"
104(degree)18' 20" 42(degree)04' 00" 105(degree)55' 09" 48(degree)34' 28"
104(degree)28' 22" 42(degree)07' 10"
105(degree)55' 40" 42(degree)42' 00"
105(degree)55' 40" 42(degree)35' 08"
105(degree)45' 00" 42(degree)47' 00"
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