LETTER OF INTENT
Exhibit
4.4
THIS
LETTER OF INTENT hereinafter referred to as the "LOI", is entered into; dated and
made effective this 20th day of
May, 2008,
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BETWEEN:
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GUILDHALL
MINERALS LTD., a British Columbia corporation having an office at 320 -
0000 Xxxxxxxx Xxxxxx in the City of Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X
0X0
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("Guildhall")
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AND:
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FIRST
WEST PETROLEUM INC, an Alberta corporation having an address at Suite 1000
— 000 0xx
Xxxxxx, Xxxxxxx, Xxxxxxx X0X
0X0
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("First
West")
WHEREAS
First West is the beneficial owner of 100% right, title and interest in the
assets described in Schedule "A" (Land) and Schedule "C" (Equipment) attached
hereto (the "Assets")
AND
WHEREAS Guildhall intends to make to the shareholders of First West (the "First
West Shareholders") an offer (the "Offer"), by way of bid circular or other
document in conformity with Multilateral Instrument 62-104 and applicable
securities laws, rules and regulations,
to purchase all of the issued and outstanding shares of First West (the "First
West Shares") in exchange for the payment to the First West Shareholders, pro
rata each according to his or her interest, of the consideration described in
sections 2 and 3 hereof.
AND
WHEREAS the parties hereto wish to enter into this non-binding Letter
of Intent to record their understanding of the process and concurrent
transactions which will be associated with the offer by Guildhall to acquire the
First West Shares, including First West's understanding of the financial support
it will receive from Guildhall concurrently with Guildhall's purchase of the
First West Shares,
NOW,
THEREFORE, in consideration of $10.00 and other good and valuable consideration,
the parties agree as follows:
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1.
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The
parties hereto agree that they will act together towards ensuring that
Guildhall is able to, on or before the date thirty (30) days from the date
hereof, make an offer (the "Offer") to the First West Shareholders,
containing substantially the same terms and provisions as this LOI, to
purchase the First West Shares.
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2.
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The
Offer shall provide that the closing (the "Closing") of the acquisition of
the First West Shares by Guildhall will be conditional
upon:
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(a)
Guildhall agreeing to loan on Closing or immediately thereafter to First West
Cdn$5,000,000 (the "Subsidiary Loan") for First West to carry on its business of
managing the Assets, which Subsidiary. Loan
will be funded upon closing of the Financing contemplated in section
2(h);
(b)
Guildhall loaning to First West, within ten (10) days of the date of this L0I,
$250,000 which loan will be forgiven if the Closing does not occur;
(c) First
West securing, within thirty (30) days of the date of this LOI, an additional
$250,000 in loan financing in addition to that in section 2(b);
(d) the
assumption and payment, by Guildhall concurrently with Closing or immediately
thereafter, of the debts of First West which debts will not materially exceed
$5,750,000 including any fund loaned to First West by Guildhall. The payments of
debts, including the debts of First West to Sabre Energy Ltd. in the amount of
approximately $2,229,170.86, will be funded by the closing of the Financing
contemplated in section 2(h). The parties acknowledge that there may be some
debts, in particular small trade payable debts, which it is not feasible to
assign and further acknowledge that not all creditors may agree to the
assignment of the debts from First West to Guildhall or consent to the
assignment. All FWP debts are outlined in Schedule "B".
(e)
Guildhall agreeing to pay First West's costs, including legal costs, of
negotiating and carrying out the transactions contemplated in this
LOI;
Exhibit
4.4
(f) Guildhall
having secured shareholder approval, and having completed, a share split on a
1.5 new shares for LO old shares basis prior to the Closing and the issuance of
the Guildhall Shares contemplated in section 3 below;
(g) Guildhall
having secured TSX Exchange approval of its listing on the TSX or, in the
alternative, secured TSX-Venture Exchange approval of its relisting on the
TSX-Venture Exchange and any required concurrent NEX approval;
(h) Guildhall
having entered into subscription agreements providing fur a minimum of
$30,000,000 in equity financing (the "Financing") and having received TSX
Exchange or TSX-Venture Exchange for the Financing.
(i) Guildhall
concurrently with Closing appointing to its board of directors two persons
designated by First West; and
(j) Guildhall
shall offer to issue, to the holders of 3, 65,897 First West share purchase
warrants, 3,894,053 warrants to purchase Guildhall shares (the "Guildhall
Warrants"). The Guildhall Warrants will have the following terms, comparable to
the terms of the First West share purchase warrants: 1,192,866 Guildhall
Warrants shall be exercisable until Sept. 19, 2008 at $1.35 per share; 651,187
Guildhall Warrants will be exercisable until Sept. 19, 2008 at $0.85 per share
and 2,050,000 Guildhall Warrants will be exercisable until the date which is two
(2) years from the Closing at an exercise price of $0.75 per share.
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3
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As
consideration for the purchase of the First West Shares, Guildhall shall
issue to the First West Shareholders a total of 24,500,000 shares of
common stock of Guildhall (the "Guildhall Shares") for the First West
Shares issued and outstanding as of Closing. The Guildhall Shares will
represent the purchase price (the "Purchase Price") for the First West
Shares. There are 19,837,034 First West Shares issued and outstanding. In
addition to the 24,500,000 Guildhall Shares to be issued to the First West
Shareholders, Guildhall shall issue to a finder (Bayside Consultants a
total of 1,500,0110 common shares (the "Finders Shares") as a finder's fee
in connection with this transaction, If the TSX or the ISX-V requires that
the number of Finders Shares be reduced, then the 24,500,000 Guildhall
Shares will be increased by a corresponding
number.
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4.
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If
necessary to comply with applicable company law or securities law, rules
and regulations, First West will call a meeting of its shareholders to
approve the transactions contemplated in the Offer and to secure any other
necessary shareholder approval of the
Offer.
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5.
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If
necessary to comply with applicable securities laws, rules and
regulations, Guildhall shall distribute to the First West Shareholders a
takeover bid circular prepared in accordance with MI 62-104 or other
disclosure document drafted by the corporate counsel for Guildhall with
First West's review and consent to the
document.
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6.
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The
acquisition of the First West shares will be conditional upon Guildhall
agreeing to provide to First West a loan (the "Loan Funds") of $100,000,
payable within thirty (30) days of the date hereof. If the Closing of the
acquisition of the First West Shares does not close, the Loan Funds will
not be repayable for a period of six (6)
months.
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7.
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The
Offer will provide that the Closing will be conditional upon the
following:
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(a)
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The
First West Shareholders and First West shall operate the business of First
West only in the ordinary course and will not sell, distribute, license or
encumber any of the Assets;
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(b)
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the
receipt of any certificates, legal, tax or other opinions and/or documents
related to the Assets, including a legal opinion of local Albertan counsel
that the transfer contemplated by the Offer of the First West Shares is
binding under applicable Alberta laws, as Guildhall may reasonably
request;
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(c)
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the
receipt of all consents, approvals, authorizations and orders required of
or for the completion of any document required
hereunder;
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(d)
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satisfactory
completion of due diligence, to be conducted by Guildhall's counsel and
such other or additional firm, geological consultant or agent as Guildhall
chooses to use, at the absolute and sole discretion of Guildhall,
concerning the business, affairs, financial affairs and assets of First
West, the First West Shareholders and the legal status of the
Assets;
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(e)
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with
respect to the Assets, the existence of no outstanding mergers,
acquisitions, financial commitments, obligations, liabilities, etc. other
than those contemplated in this transaction or incurred in the ordinary
course of business;
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(f)
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with
respect to the First 'West Shares, the existence of no outstanding
agreements or understandings providing fir the transfer, assignment, sale
or encumbrance of any of the First West Shares. other than as contemplated
by any First West Shareholder's acceptance of the Offer;
and
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(g)
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regulatory
acceptance of the Offer that Guildhall must
secure.
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Exhibit
4.4
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8.
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Guildhall
will, in the Offer or otherwise, represent and warrant to the First West
Shareholders or to First West
that:
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(a)
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it
is validly incorporated and is in good standing with all applicable
regulatory agencies;
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(b)
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there
are no legal actions against Guildhall or its directors or officers and
the company knows of no intended legal actions against the company and is
not engaged
in any legal actions against other
parties;
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(c)
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other
than as have been or will be publicly disclosed, there are no outstanding
mergers, acquisitions, financial commitments, obligations, liabilities,
etc. other than those contemplated in this transaction and in the Offer
concerning Guildhall; and
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(d)
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there
are no legal actions against the company or directors, officers and/or
shareholders of the company nor does Guildhall. know of any intended legal
actions against it or any of its directors and Guildhall is riot engaged
in any legal actions against other parties, and is current in all filings
with tax and regulatory
authorities.
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9. First
West will, concurrently with closing of the Offer, represent and warn Guildhall
that:
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(a)
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First
West is in good standing with all regulatory
agencies;
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(b)
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there
are no legal actions against the Assets or against First West or directors
of First West nor does First West know of any intended legal actions,
including government actions for environmental or royalty / tax
liabilities, against it or any of its directors or against First West and
First West is not engaged in any legal actions against other parties, and
First West is current in all filings with tax and regulatory
authorities;
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(c)
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its
business and financial condition remain materially unchanged from any due
diligence or financial statement documentation provided to Guildhall prior
to Closing;
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(d)
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subject
to the Royalty, First West owns a 100% beneficial right, title and
interest in and to the Assets, subject to any liens, charges,
securitizations, filings or debts disclosed in the schedule or financial
statements of First West provided to Guildhall prior to
Closing;
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(e)
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there
have been no other issuances of shares of its capital stock, or
instruments exercisable for, convertible into or otherwise entitling the
holder to acquire shares of its capital stock, other than in connection
with the Closing or financing of the transactions to be contemplated in
the Offer;
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(f)
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First
West and its Assets are the subject of no outstanding mergers,
acquisitions, financial commitments, obligations, liabilities, etc, other
than those contemplated in the
Offer.
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10. The
Offer shall provide that each and every obligation of Guildhall to be performed
thereunder shall be subject to the satisfaction prior thereto of the following
conditions:
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a)
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the
representations and warranties made by First \Vest in this LOI shall be
substantially accurate in all material respects on arid as of Closing with
the same effect as though such representations and warranties had been
made or given on and as of
Closing;
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b)
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The
First West Shareholders shall have performed and complied with all
obligations and covenants required by the Offer to be performed or
complied with by them prior to or at
Closing;
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c)
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Guildhall
shall have been furnished that information on the business and affairs of
First West which it deems, in its sole and absolute discretion, to be
necessary for it to meet its regulatory obligations, if
any;
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d)
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as
of Closing there shall not have occurred any material adverse change to
First West or the Assets, financially or otherwise, which materially
impairs the ability of Guildhall to conduct the business of First West and
of the Assets;
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e)
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the
completion, by First West, of any financial statements required to be
filed, on a consolidated basis with Guildhall's financial statements,
following the Closing; and
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f)
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the
opinion of counsel to Guildhall that the Closing will not result in
Guildhall breaching any applicable securities law, rules and
regulations.
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11. The
Offer shall provide that each and every obligation of the First West
Shareholders and First West to be performed on Closing shall be subject to the
satisfaction prior thereto of the following conditions:
Exhibit
4.4
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(a)
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the
representations and warranties made by Guildhall in this Trill and the
Offer shall be substantially accurate in all material respects on and as
of Closing withthe same effect as though such representations
and warranties had been made or given on and as of
Closing;
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(b)
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Guildhall
shall have performed and complied with all obligations and covenants
required by the Offer to be performed or complied with by it prior to or
at Closing; and
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(c)
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as
of Closing there shall not have occurred any material adverse change to
Guildhall, financially or otherwise, which materially impairs the ability
to conduct its business.
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12.
Neither Guildhall on the one hand, and First West on the other, will make any
disclosure or public announcements of the proposed transactions, the Offer or
the terms thereof without the prior knowledge of the other. Because of the
number of First West Shareholders, Guildhall may disclose or make public
announcements of the proposed transactions, the Offer or the terms thereof
without first notifying the First West Shareholders.
13. Each
party agrees and acknowledges that such party and its directors, officers,
employees, agents and representatives will and may disclose business information
and information about the proposed transaction in the course of securing
financings for Guildhall and that both parties and their representatives may be
required to disclose that information under applicable regulatory or legal
requirement, if any.
14. The
parties hereto agree that neither will solicit any third party for the
licensing, lease, transfer, assignment, encumbrance or sale of any or all their
respective interests in the Assets or the First West Shares, or solicit
opportunities for either party to enter into any discussions with any third
party for the licensing, lease, transfer, assignment, encumbrance or sale of any
or all of the Assets or the First West Shares, for the term of the Offer. This
section shall not be read to prohibit the parties from conducting such
discussions which are in the ordinary course of business but is intended to be
read as protecting each of the parties from the other entering into negotiations
which would conflict with the transactions contemplated by the
Offer,
15. This
LOI shall be construed in accordance with, and governed by, the laws of the
Province of British Columbia, and each party separately and unconditionally
subjects to the jurisdiction of any court of competent authority in the Province
of British Columbia, and the rules and regulations thereof.
16. This
LOI sets forth the entire understanding of the parties with respect to the
subject matter hereof. The LOI may be modified at anytime by agreement of the
parties hereto.
17. The
parties shall, on or before Closing, prepare, execute and file any and all
documents (including, if necessary, a directors circular of First West)
necessary to comply with all applicable provincial securities laws, rules and
regulations in any jurisdiction that are required to do so,
18. If
any term or provision hereof shall be held illegal or invalid, this LOI shall be
construed and enforced as if such illegal or invalid term or provision had not
been continued herein,
19. Unless
otherwise indicated, all references to currency in this LOI are references to
the lawful currency of Canada,
20. The
obligations of Guildhall hereunder are expressly conditional upon TSXVenture
Exchange, NEX or TSX approval of this Letter of Intent and the acquisition Of
the First West Shares by way of the Offer.
DATED
EFFECTIVE THIS 20TH DAY OF MAY, 2008
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FIRST
WEST PETROLEUM INC.
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GUILDHALL
MINING
LIMITED
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Exhibit
4.4
