UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the quarterly period ended: December 31, 2007 . | ||
[ ] | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the transition period from_______ to _______ . | ||
Commission file number: 000-52417 |
DYNAMIC GOLD CORP. |
(Exact name of small business issuer as specified in its charter) |
NEVADA | Applied For |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) |
506 675 West Hastings Street, Vancouver, British Columbia V6B 1N2 Canada |
(Address of principal executive offices) |
(604) 488-0860 |
(Issuers telephone number) |
None |
(Former name, former address and former fiscal year, if changed since last report) |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 9,515,000 Shares of $0.001 par value Common Stock outstanding as of February 13, 2008 .
Transitional Small Business Disclosure Format Yes [ ] No [X]
TABLE OF CONTENTS
PART 1 FINANCIAL INFORMATION
2
FORWARD-LOOKING STATEMENTS
This Form 10-QSB includes "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
All statements other than historical facts included in this Form, including without limitation, statements under "Plan of Operation", regarding our financial position, business strategy, and plans and objectives of management for the future operations, are forward-looking statements.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, market conditions, competition and the ability to successfully complete financing.
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
As used herein, the terms Company, our,, we, and us refer to Dynamic Gold Corp., a Nevada corporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited financial statements included in the Form 10-QSB reflect all adjustment (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the period presented. The results of operation for the periods presented are not necessarily indicative of the results to be expected for the full year.
3
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
4
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Consolidated Balance Sheets |
(Expressed in U.S. Dollars) |
(Unaudited) |
As at 31 | As at 30 | |||||
December | June 2007 | |||||
2007 | (Audited) | |||||
$ | $ | |||||
Assets | ||||||
Current | ||||||
Cash and cash equivalents | 17,923 | 6,653 | ||||
Liabilities | ||||||
Current | ||||||
Accounts payable and accrued liabilities (Note 5) | 21,223 | 22,129 | ||||
Due to related party (Note 6) | 49,932 | 30,732 | ||||
71,155 | 52,861 | |||||
Shareholders deficiency | ||||||
Capital stock (Note 7) | ||||||
Authorized | ||||||
75,000,000 shares, $0.001 par value | ||||||
Issued and outstanding | ||||||
31 December 2007 9,515,000 common shares | ||||||
30 June 2007 9,515,000 common shares | 9,515 | 9,515 | ||||
Additional paid-in capital | 68,385 | 36,585 | ||||
Deficit, accumulated during the exploration stage | (131,132 | ) | (92,308 | ) | ||
(53,232 | ) | (46,208 | ) | |||
17,923 | 6,653 |
Nature and Continuance of Operations (Note 1)
On behalf of the Board:
/ s / Tim Coupland | Director | / s / Ann-Marie Cederholm | Director |
The accompanying notes are an integral part of these financial statements.
5
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Consolidated Statements of Operations and Deficit |
(Expressed in U.S. Dollars) |
(Unaudited) |
For the period | |||||||||||||||
from the date | |||||||||||||||
of inception on | For the three | For the three | For the six | For the six | |||||||||||
21 January | month | month | month | month | |||||||||||
2004 to | period ended | period ended | period ended | period ended | |||||||||||
31 December | 31 December | 31 December | 31 December | 31 December | |||||||||||
2007 | 2007 | 2006 | 2007 | 2006 | |||||||||||
$ | $ | $ | $ | $ | |||||||||||
Expenses | |||||||||||||||
Mineral property costs (Note 4) | 10,607 | - | - | - | - | ||||||||||
Advertising and promotion | 668 | - | - | - | - | ||||||||||
Bank charges and interest | 730 | 42 | 42 | 99 | 101 | ||||||||||
Filing and financing fees | 7,847 | 485 | 654 | 1,229 | 654 | ||||||||||
Legal and accounting | 63,306 | 1,680 | 4,357 | 5,543 | 6,357 | ||||||||||
Management fees | |||||||||||||||
(Notes 8 and 10) | 42,000 | 15,000 | - | 30,000 | - | ||||||||||
Office and miscellaneous | 574 | - | - | 153 | - | ||||||||||
Rent (Notes 8 and 10) | 5,400 | 900 | - | 1,800 | - | ||||||||||
Net loss for the period | (131,132 | ) | (18,107 | ) | (5,053 | ) | (38,824 | ) | (7,112 | ) | |||||
Deficit, accumulated | |||||||||||||||
during the exploration | |||||||||||||||
stage, beginning of period | - | (113,025 | ) | (60,522 | ) | (92,308 | ) | (58,463 | ) | ||||||
Deficit, accumulated | |||||||||||||||
during the exploration | |||||||||||||||
stage, end of period | (131,132 | ) | (131,132 | ) | (65,575 | ) | (131,132 | ) | (65,575 | ) | |||||
Basic and diluted loss per | |||||||||||||||
common share | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.01 | ) | |||||||
Weighted average number | |||||||||||||||
of common shares | |||||||||||||||
outstanding | 9,515,000 | 9,515,000 | 9,515,000 | 9,515,000 |
The accompanying notes are an integral part of these financial statements.
6
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Consolidated Statements of Cash Flows |
(Expressed in U.S. Dollars) |
(Unaudited) |
For the period | |||||||||||||||
from the date | |||||||||||||||
of inception on | For the three | For the three | For the six | For the six | |||||||||||
21 January | month | month | month | month | |||||||||||
2004 to | period ended | period ended | period ended | period ended | |||||||||||
31 December | 31 December | 31 December | 31 December | 31 December | |||||||||||
2007 | 2007 | 2006 | 2007 | 2006 | |||||||||||
$ | $ | $ | $ | $ | |||||||||||
Cash flows from operating activities | |||||||||||||||
Net loss for the period | (131,132 | ) | (18,107 | ) | (5,053 | ) | (38,824 | ) | (7,112 | ) | |||||
Adjustments to reconcile loss to net | |||||||||||||||
cash used by operating activities | |||||||||||||||
Contributions to capital by related | |||||||||||||||
party expenses (Notes 8 and 10) | 47,400 | 15,900 | - | 31,800 | - | ||||||||||
Changes in operating assets and | |||||||||||||||
liabilities | |||||||||||||||
Increase (decrease) in accounts | |||||||||||||||
payable and accrued liabilities | 21,223 | (2,828 | ) | (2,619 | ) | (906 | ) | (619 | ) | ||||||
Increase in loan payable | 49,932 | 19,200 | 10,000 | 19,200 | 10,000 | ||||||||||
(12,577 | ) | 14,165 | 2,328 | 11,270 | 2,269 | ||||||||||
Cash flows from financing activity | |||||||||||||||
Issuance of common shares for cash | 30,500 | - | - | - | - | ||||||||||
Increase in cash and cash equivalents | 17,923 | 14,165 | 2,328 | 11,270 | 2,269 | ||||||||||
Cash and cash equivalents, | |||||||||||||||
beginning of period | - | 3,758 | 2,131 | 6,653 | 2,190 | ||||||||||
Cash and cash equivalents, end of | |||||||||||||||
period | 17,923 | 17,923 | 4,459 | 17,923 | 4,459 |
Supplemental Disclosures with Respect to Cash Flows (Note 10)
The accompanying notes are an integral part of these financial statements.
7
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Consolidated Statements of Changes in Shareholders Deficiency |
(Expressed in U.S. Dollars) |
(Unaudited) |
Deficit | |||||||||||||||
accumulated | |||||||||||||||
Number of | Additional | during the | Total | ||||||||||||
shares | Share | paid-in | exploration | shareholders | |||||||||||
issued | capital | capital | stage | deficiency | |||||||||||
Balance at 21 January 2004 | |||||||||||||||
(inception) | |||||||||||||||
Common shares issued for cash | |||||||||||||||
($0.001 per share) | 7,500,000 | 7,500 | - | - | 7,500 | ||||||||||
Common shares issued for cash | |||||||||||||||
($0.01 per share) | 2,000,000 | 2,000 | 18,000 | - | 20,000 | ||||||||||
Common shares issued for cash | |||||||||||||||
($0.20 per share) | 15,000 | 15 | 2,985 | - | 3,000 | ||||||||||
Net loss for the year | - | - | - | (10,267 | ) | (10,267 | ) | ||||||||
Balance at 30 June 2004 | 9,515,000 | 9,515 | 20,985 | (10,267 | ) | 20,233 | |||||||||
Net loss for the year | - | - | - | (26,040 | ) | (26,040 | ) | ||||||||
Balance at 30 June 2005 | 9,515,000 | 9,515 | 20,985 | (36,307 | ) | (5,807 | ) | ||||||||
Net loss for the year | - | - | - | (22,156 | ) | (22,156 | ) | ||||||||
Balance at 30 June 2006 | 9,515,000 | 9,515 | 20,985 | (58,463 | ) | (27,963 | ) | ||||||||
Contributions to capital by related | |||||||||||||||
party expenses | - | - | 15,600 | - | 15,600 | ||||||||||
Net loss for the year | - | - | - | (33,845 | ) | (33,845 | ) | ||||||||
Balance at 30 June 2007 | 9,515,000 | 9,515 | 36,585 | (92,308 | ) | (46,208 | ) | ||||||||
Contributions to capital by related | |||||||||||||||
party expenses (Notes 8 and 10) | - | - | 31,800 | - | 31,800 | ||||||||||
Net loss for the period | - | - | - | (38,824 | ) | (38,824 | ) | ||||||||
Balance at 31 December 2007 | 9,515,000 | 9,515 | 68,385 | (131,132 | ) | (53,232 | ) |
The accompanying notes are an integral part of these financial statements.
8
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
1. | Nature and Continuance of Operations |
Dynamic Gold Corp. (the Company) was incorporated under the laws of the State of Nevada on 21 January 2004 and is in the exploration stage.
The Company is in the business of acquiring and exploring mineral properties. The recoverability of the amounts expended by the Company on acquiring and exploring mineral properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to complete the acquisition and/or development of the properties and upon future profitable production.
The Companys financial statements as at 31 December 2007 and for the six month period then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has a loss of $38,824 for the six month period ended 31 December 2007 (31 December 2006 - $7,112, cumulative - $131,132) and has a working capital deficit of $53,232 at 31 December 2007 (30 June 2007 - $46,208).
Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Companys capital resources should be adequate to continue operating and maintaining its business strategy during fiscal 2008. However, if the Company is unable to raise additional capital in the near future, due to the Companys liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favourable terms and/or pursue other remedial measures. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
At 31 December 2007, the Company had suffered losses from exploration activities to date. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. Accordingly, the Company must rely on its president to perform essential functions without compensation until a business operation can be commenced. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
2. | Change in Accounting Policy |
Effective 30 June 2007, the Company adopted, on a retroactive basis, the provisions of Financial Accounting Standards Board (FASB) EITF 04-2 Whether Mineral Rights are Tangible or Intangible Assets . EITF 04-2 establishes mineral rights as tangible assets, whereby the aggregate carrying amount of such mineral rights should be reported as a separate component of property, plant, and equipment. The retroactive impacts of adopting EITF 04-2 had no impact on net loss or earnings per share for the periods ended 31 December 2007 and 2006 and 30 June 2007 (Notes 3 and 4).
9
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
3. | Significant Accounting Policies |
The following is a summary of significant accounting policies used in the preparation of these financial statements.
Basis of presentation
These financial statements have peen prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the six month period ended 31 December 2007 are not necessarily indicative of the results that may be expected for the year ended 30 June 2008. For further information, refer to the audited financial statements of the Company for the year ended 30 June 2007.
Principles of consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Dynamic Gravel Holdings Ltd. (Dynamic Gravel), a company incorporated in the province of Alberta on 21 November 2007. All significant inter-company balances and transactions have been eliminated upon consolidation.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
Mineral property costs
The Company is primarily engaged in the acquisition, exploration and development of mineral properties.
Mineral property acquisition costs are initially capitalized as tangible assets when purchased. At the end of each fiscal quarter end, the Company assesses the carrying costs for impairment. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserve.
Mineral property exploration costs are expensed as incurred.
10
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.
As of the date of these financial statements, the Company has not established any proven or probable reserves on its mineral properties and incurred only acquisition and exploration costs (Note 4).
Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Companys title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.
Impairment of long-lived assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate.
Environmental expenditures
The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Companys policy is to meet or, if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.
Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.
Foreign currency translation
The Companys functional and reporting currency is in U.S. dollars. The financial statements of the Company are translated to U.S. dollars in accordance with SFAS No. 52, Foreign Currency Translation . Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
11
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.
Concentration of credit risk
The Companys financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and related party payables. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Companys management also routinely assesses the financial strength and credit worthiness of any parties to which it extends funds and as such, it believes that any associated credit risk exposures are limited.
Risks and uncertainties
The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.
Financial instruments
The Companys financial instruments consist of cash, prepaid expenses, accounts payable and accrued liabilities and loan payable. The carrying value of the financial instruments is approximate fair value due to their short term to maturity. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risk arising from these financial instruments.
Income taxes
Deferred income taxes are reported for timing difference between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with SFAS No. 109, Accounting for Income Taxes , which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.
12
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
Basic and diluted loss per share
The Company computes net loss per share in accordance with SFAS No. 128, Earnings per Share . SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.
Comprehensive loss
SFAS No. 130, Reporting Comprehensive Income , establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at 31 December 2007, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
Comparative figures
Certain comparative figures have been adjusted to conform to the current years presentation.
Recent accounting pronouncements
In December 2007, the Financial Accounting Standards Board (the FASB) issued SFAS No. 141(R), Business Combinations . The objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, this Statement establishes principles and requirements for how the acquirer (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
This Statement applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses (the acquiree), including those sometimes referred to as "true mergers" or "mergers of equals" and combinations achieved without the transfer of consideration, for example, by contract alone or through the lapse of minority veto rights. This Statement applies to all business entities, including mutual entities that previously used the pooling-of-interests method of accounting for some business combinations. It does not apply to (a) the formation of a joint venture, (b) the acquisition of an asset or a group of assets that does not constitute a business, (c) a combination between entities or businesses under common control, (d) a combination between not-for-profit organizations or the acquisition of a for-profit business by a not-for-profit organization.
13
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
This Statement replaces SFAS No. 141, Business Combinations . This Statement retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS No. 141 did not define the acquiree, although it included guidance on identifying the acquiree, as does this Statement. This Statement's scope is broader than that of SFAS No. 141, which applied only to business combinations in which control was obtained by transferring consideration. By applying the same method of accounting - the acquisition method - to all transactions and other events in which one entity obtains control over one or more other businesses, this Statement improves the comparability of the information about business combinations provided in financial reports.
This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 15 December 2008. An entity may not apply it before that date. The Company is currently evaluating SFAS No. 141(R), and has not yet determined its potential impact on its future results of operations or financial position.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements - an Amendment of ARB No. 51 . A noncontrolling interest, sometimes called a minority interest, is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require (a) the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent's equity, (b) the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, (c) changes in a parent's ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently. A parent's ownership interest in a subsidiary changes if the parent purchases additional ownership interests in its subsidiary or if the parent sells some of its ownership interests in its subsidiary. It also changes if the subsidiary reacquires some of its ownership interests or the subsidiary issues additional ownership interests. All of those transactions are economically similar, and this Statement requires that they be accounted for similarly, as equity transactions, (d) when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any noncontrolling equity investment rather than the carrying amount of that retained investment, (e) entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners.
14
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
This Statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. Not-for-profit organizations should continue to apply the guidance in Accounting Research Bulletin No. 51, Consolidated Financial Statements, before the amendments made by this Statement, and any other applicable standards, until the Board issues interpretative guidance.
This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this Statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This Statement improves comparability by eliminating that diversity.
This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after 15 December 2008. Earlier adoption is prohibited. The effective date of this Statement is the same as that of the related Statement 141(R). This Statement shall be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. The Company is currently evaluating SFAS No. 160, and has not yet determined its potential impact on its future results of operations or financial position.
4. | Mineral Property |
During the year ended 30 June 2004, the Company acquired a 100% undivided right, title and interest in and to the 24 claim units located in the Red Lake Mining District in the province of Ontario, Canada (the Sobeski Lake Gold Property) for $3,500 cash. These claims expired and were restaked during the year ended 30 June 2006 at a cost of $5,732. As a result, the Sobeski Lake Gold Property comprises three mineral claims consisting of 17 claim units.
During the six month period ended 31 December 2007, the Company elected to abandon the Sobeski Lake Gold Property as it did not intend to do any further work on that property (Note 11).
5. | Accounts Payable and Accrued Liabilities |
Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.
15
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
6. | Due to Related Party |
The balances due to related party is non-interest bearing, unsecured and have settlement dates within one year.
As at 31 December 2007, the amount due to related party consisted of $49,932 (30 June 2007 - $30,732) and consisted of cash advances from an officer who is also a director and shareholder of the Company.
7. | Capital Stock |
Authorized
The total authorized capital is 75,000,000 common shares with a par value of $0.001.
Issued and outstanding
The total issued and outstanding capital stock is 9,515,000 common shares with a par value of $0.001 per common share.
8. | Related Party Transactions |
During the six month period ended 31 December 2007, an officer and director of the Company made contributions to capital for management fees in the amount of $30,000 (31 December 2006 - $Nil, cumulative - $42,000) and for rent in the amount of $1,800 (31 December 2006 - $Nil, cumulative - $5,400) (Note 10).
9. | Income Taxes |
The Company has losses carried forward for income tax purposes to 31 December 2007. There are no current or deferred tax expenses for the period ended 31 December 2007 due to the Companys loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Companys ability to generate taxable income within the net operating loss carry-forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
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Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
The provision for refundable federal income tax consists of the following:
For the six | For the six | ||||||
month period | month period | ||||||
ended 31 | ended 31 | ||||||
December 2007 | December 2006 | ||||||
$ | $ | ||||||
Refundable federal tax asset attributable to: | |||||||
Current operations | 13,200 | 2,418 | |||||
Contributions to capital by related parties | (10,812 | ) | - | ||||
Less: Change in valuation allowance | (2,388 | ) | (2,418 | ) | |||
Net refundable amount | - | - |
The composition of the Companys deferred tax assets as at 31 December 2007 and 30 June 2007 are as follows:
As at 31 | As at 30 | ||||||
December | June 2007 | ||||||
2007 | (Audited) | ||||||
$ | $ | ||||||
Net operating loss carry-forward | 131,132 | 92,308 | |||||
Statutory federal income tax rate | 34% | 34% | |||||
Contributed rent and services | -8.81% | -5.75% | |||||
Effective income tax rate | 0% | 0% | |||||
Deferred tax asset | 28,469 | 26,081 | |||||
Less: Valuation allowance | (28,469 | ) | (26,081 | ) | |||
Net deferred tax asset | - | - |
The potential income tax benefit of these losses has been offset by a full valuation allowance.
As at 31 December 2007, the Company has an unused net operating loss carry-forward balance of approximately $83,732 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires in 2026.
17
Dynamic Gold Corp. |
(An Exploration Stage Company) |
Notes to the Consolidated Financial Statements |
(Expressed in U.S. Dollars) |
(Unaudited) |
31 December 2007 |
10. | Supplemental Disclosures with Respect to Cash Flows |
For the period | ||||||||||
from the date | For the six | For the six | ||||||||
of inception on | month | month | ||||||||
21 | period | period | ||||||||
January 2004 to | ended 31 | ended 30 | ||||||||
31 December | December | December | ||||||||
2007 | 2007 | 2006 | ||||||||
$ | $ | $ | ||||||||
Cash paid during the period for interest | - | - | - | |||||||
Cash paid during the period for income | ||||||||||
taxes | - | - | - |
During the six month period ended 31 December 2007, an officer and director of the Company made contributions to capital for management fees in the amount of $30,000 (31 December 2006 - $Nil, cumulative - $42,000) and for rent in the amount of $1,800 (31 December 2006 - $Nil, cumulative - $5,400) (Note8).
11. | Subsequent events |
The following events occurred subsequent to 31 December 2007:
i. | In January 2008, the Company acquired, for a cost o $25,000, a 100% interest in two gravel claims called the Northern Gravel Claims and Super Mammoth Gravel Claims (the Super Mammonth) located at Lloyd Point in the east arm of Toba Inlet situated 50 kilometers east of Campbell River, British Columbia and 28 kilometers north of Powel River on the British Columbia mainland. | |
ii. | On 8 January 2008, the Company borrowed $75,000 from an officer, director and shareholder of the Company. This promissory note payable bears interest at 10% per annum, is secured by a general agreement over all of the assets of the Company and is due on demand. | |
iii. | On 20 January 2008, the Company allowed the Sobeski Lake Gold Property claims to expire (Note 4). |
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ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
During the six month period ended December 31, 2007 we elected to abandon the Sobeski Lake Gold property as it did not intend to do any further work on the property. On January 20, 2008, the Company allowed the Sobeski Lake Gold Property claims to expire.
On January 8, 2008, we acquired, through our wholly owned subsidiary, a 100% interest in two gravel claims called the Northern Gravel Claims and Super Mammoth Gravel Claims (the Super Mammoth Gravel Project) situated on tidewater for $25,000. The Super Mammoth Gravel Project consist of two mineral claim tenures that are approximately 124.1 each hectares (ha) in size (total 248.2 ha). A detailed report used in obtaining aggregate samples has been filed and accepted by the British Columbias Gold commissioners office in September 2007. The claims are currently in good standing until their respective anniversary dates which include November 6, 2014 (Northern Gravel Claim) and January 19, 2015 (Super Mammoth Claim).
The Super Mammoth Gravel Project is located at Lloyd Point on the east arm of Toba Inlet situated 50 kilometers east of Campbell River, British Columbia, Canada and 28 kilometers north of Powell River on the British Columbia mainland. The existence of the Super Mammoth gravel deposit has been identified by Lands and Water British Columbia Inc. and has been the subject of numerous preliminary investigations over the years, with the potential to host a year round future sand and gravel aggregate operation with tidewater access that could supply growing demand for a range of raw materials to both British Columbia, Washington State, California and other United States and Pacific Rim coastal construction markets. The Super Mammoth Gravel Project is situated between sea level to about 300 meters in elevation that comprises a sorted accumulation of sand and gravel.
Plan of Operations
Our plan of operations for the twelve months following the date of this report is to finalize a National Instruments 43-101 report on the Super Mammoth Gravel Project which will outline the first phase of work. This phase will include geological data review and prospecting and will take approximately two months to complete. This exploration will be completed by a two-person crew, including a qualified geologist. We anticipate that the program will cost approximately $35,000. To date, we have not commenced exploration on the Super Mammoth Gravel Project.
In the next 12 months, we also anticipate spending an additional $80,000 on administrative fees, including professional fees payable in connection with the filing of this registration statement and complying with reporting obligations. Total expenditures over the next 12 months are therefore expected to be approximately $115,000.
Our cash reserves are not sufficient to meet our obligations for the next twelve-month period. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding. However, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. As well, our management is prepared to provide us with short-term loans, although no such arrangement has been made.
We cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing.
If we do not secure additional funding for exploration expenditures, we may consider seeking an arrangement with a joint venture partner that would provide the required funding in exchange for receiving a part interest in the Super Mammoth Gravel Project. We have not undertaken any efforts to locate a joint venture partner. There is no guarantee that we will be able to locate a joint venture partner who will assist us in funding exploration expenditures upon acceptable terms.
If we are unable to arrange additional financing or find a joint venture partner for the Super Mammoth Gravel Project, our business plan will fail and operations will cease.
19
Results of Operations for Period Ending December 31, 2007
We have not earned any revenues from our incorporation on January 21, 2004 to December 31, 2007. We have not commenced the exploration stage of our business and can provide no assurance that we will discover economic mineralization on the property.
The Companys net loss for the three month period ended December 31, 2007 was $(18,107) compared to a net loss of $(5,053) for the three month period ended December 31, 2006. The Companys net loss for the six month period ended December 31, 2007 was $(38,824) compared to a net loss of $(7,112) for the six month period ended December 31, 2006. The increase in net loss for the six month period ended December 31, 2007 is mainly attributed to legal and accounting fees, management fees and rent.
Legal and accounting fees decreased to $1,680 for the three month period ended December 31, 2007 from $4,357 for the three month period ended December 31, 2006. For the six month period ended December 31, 2007, legal and accounting fees decreased to $5,543 from $6,357 for the same period in 2006. The decrease in legal and accounting fees period over period is due mainly to professional fees incurred to prepare and file our regulatory quarterly and annual filings with the United States Securities and Exchange Commission.
During the three month period ended December 31, 2007, an officer and director of the Company made contributions to capital for management fees in the amount of $15,000 and for rent in the amount of $900 as compared to $Nil for the three month period ended December 31, 2006. For the six month period ended December 31, 2007, an officer and director of the Company made contributions to capital for management fees in the amount of $30,000 and for rent in the amount of $1,800 as compared to $Nil for same period in the prior year.
We have not attained profitable operations and are dependent upon obtaining financing to pursue exploration activities. For these reasons our auditors believe that there is substantial doubt that we will be able to continue as a going concern.
Liquidity and Capital Resources
At December 31, 2007, we had cash on hand of $17,923 and liabilities of $71,155 consisting of accounts payable and accrued liabilities of $21,223 and cash advances from our president, Tim Coupland, for $49,932.
Our cash reserves are not sufficient to meet our obligations for the next twelve-month period. We will require additional funding in order to cover all anticipated administration costs and to proceed with and finalizing a National Instruments 43-101 report on the Super Mammoth Gravel Project, estimated to cost a minimum of $115,000 over the next twelve months. We do not have any arrangements in place for any future equity financing and there is no guarantee we will be able to obtain the funding necessary to continue as a going concern.
Capital Expenditures
The Company expended no amounts on capital expenditures for the period from inception to December 31, 2008. At present there are no transactions being contemplated by management or the board that would affect the financial condition, results of operations and cash flows of any asset of the Company.
Employees
At present, we have no employees, other than our current officers and directors, who devote their time as required to our business operations.
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Research and Development Expenditures
We have incurred a total of $1,000 in connection with a geological report concerning the Sobeski Lake Gold property. We have not incurred any other research and development expenditures since our incorporation.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements that would require disclosure.
Subsequent Events
The following events occurred subsequent to December 31, 2007:
Critical Accounting Policies
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the recognition of revenues and expenses for the reporting periods. These estimates and assumptions are affected by management's application of accounting policies.
Mineral property costs
The Company is primarily engaged in the acquisition, exploration and development of mineral properties.
Mineral property acquisition costs are initially capitalized as tangible assets when purchased. At the end of each fiscal quarter end, the Company assesses the carrying costs for impairment. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserve.
Mineral property exploration costs are expensed as incurred.
Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.
As of the date of these financial statements, the Company has not established any proven or probable reserves on its mineral properties and incurred only acquisition and exploration costs.
21
Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Companys title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.
Impairment of long-lived assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate.
ITEM 3 CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Based on the managements evaluation (with the participation our President and Chief Financial Officer), our President and Chief Financial Officer have concluded that as of December 31, 2007, the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange of 1934 (the "Exchange Act") are effective to provide reasonable assurance that the information required to be disclosed in this quarterly report on Form 10-QSB is recorded, processed, summarized and reported within the time period specified in Securities and Exchange Commission rules and forms. and that such information is accumulated and communicated to the Companys management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
(b) Internal control over financial reporting
Management's annual report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting should include those policies and procedures that:
Under the supervision and with the participation of our management, including Tim Coupland, our President and Chief Executive Officer, and Ann-Marie Cederholm, our Chief Financial Officer, we have evaluated the effectiveness of our internal control over financial reporting and preparation of our quarterly financial statements as of December 31, 2007 and believe they are effective.
Based upon their evaluation of our controls, Tim Coupland, our President and Chief Executive Officer, and Ann-Marie Cederholm, our Chief Financial Officer, has concluded that, there were no significant changes in our internal control over financial reporting or in other factors during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
22
Attestation report of the registered public accounting firm
This quarterly report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.
Changes in internal control over financial reporting
There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.
Changes in Internal Controls
Based on the evaluation as of December 31, 2007, Tim Coupland, our President and Chief Executive Officer, and Ann-Marie Cederholm, our Chief Financial Officer have concluded that there were no significant changes in our internal controls over financial reporting or in any other areas that could significantly affect our internal controls subsequent to the date of his most recent evaluation, including corrective actions with regard to significant deficiencies and material weaknesses.
ITEM 3A(T) CONTROLS AND PROCEDURES
See Item 8A Controls and Procedures above.
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding. Management is not aware of any threatened litigation, claims or assessments.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITES AND USE OF PROCEEDS
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
None
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ITEM 6 EXHIBITS
The following exhibits are furnished as required by Item 601 of Regulation S-B.
* | Included in our original SB-2 Registration Statement filed on December 9, 2004. | |
** | Included in our SB-2 Amended Registration Statement filed on October 19, 2005. |
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DYNAMIC GOLD CORP. | |||
BY:
/ s / Tim
Coupland
Tim Coupland, President and Chief Executive Officer BY: / s / Ann-Marie Cederholm Ann-Marie Cederholm, Chief Financial Officer |
|||
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Exhibit 10.2
LOAN AGREEMENT
THIS LOAN AGREEMENT
dated effective as of the 8th day of
January,
2008.
BETWEEN:
WHEREAS :
1. | The Lender has agreed to lend to the Borrower and the Borrower has agreed to borrow from the Lender, the principal amount of U.S. $75,000 on the terms and subject to the conditions contained herein. |
2. | As continuing security for the repayment of the Indebtedness, the Borrower has agreed to execute and deliver a general security agreement to the Lender for the full Indebtedness due under the Loan. |
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements herein contained and for other good and valuable consideration (the receipt and adequacy whereof is hereby acknowledged) the parties hereto agree as follows:
Definitions
For the purposes of this Agreement, unless there is something in the subject matter or context inconsistent therewith:
(a) | " Administrative Body " means any domestic or foreign, national, federal, provincial, state, municipal or other local government or regulatory body and any division, agency, ministry, commission, board or authority or any quasi-governmental or private body exercising any statutory, regulatory, expropriation or taxing authority under the authority of any of the foregoing, and any domestic, foreign or international judicial, quasi-judicial, arbitration or administrative court, tribunal, commission, board or panel acting under the authority of any of the foregoing; |
(b) | " Agreement ", "this Agreement", "hereto", "herein", "hereof', "hereby", "hereunder" and similar expressions refer to this Loan Agreement and not to any particular section or other portion hereof, and the expressions "article" or "section" followed by a number mean and refer to the specified article or section of this Loan Agreement; |
(c) | " Business Day " means a day other than Saturday, Sunday or a statutory holiday, or any other day upon which the Lender is not open for the transaction of business throughout normal business hours, at its principal office, in the City of Vancouver; |
(d) | " Business Hours " means those hours on a Business Day during which the Lender or the Borrower, as the case requires, is normally open to the public for the conduct of its business; |
25
(e) | " Control " and " Controlled " shall have the same meaning as defined in the Business Corporations Act, (Alberta), and "controlling" shall have a comparable meaning; | |
(f) | " Corporate Distribution " means: | |
(i) | the declaration by the Borrower of any dividend or other distribution based on issued shares of the Borrower; | |
(ii) | the purchase, redemption or retirement, by the Borrower, of any issued shares of the |
Borrower;
(iii) | the payment by the Borrower of any management, consulting fee, or bonus to shareholders or persons related to shareholders, other than normal remuneration payable to employees, directors, officers or consultants of the Borrower or reimbursement of Project expenses incurred by such Persons; and | |
(iv) | any payment by the Borrower on account of any principal or interest on any loans or advances owing at any time by the Borrower to any of its Controlled companies or to its shareholders, directors or officers; |
(g) | " Default " or " Event of Default " means any of the events specified in section 5.1 hereof, provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act; |
(h) | " Guarantee " means a guarantee of the Material Subsidiaries to be issued by each of the Material Subsidiaries in favour of the Lender with respect to the Borrower's obligations to the Lendor; |
(i) | " Indebtedness " includes all principal, Interest, interest on unpaid interest and costs and expenses payable pursuant to the provisions of this Agreement and the Security, from time to time outstanding; |
(j) | " Interest " shall have the meaning ascribed thereto in Section 2.2 hereof; |
(k) | " Law " means all constitutions, treaties, laws, statutes, codes, ordinances, orders, decrees, rules, regulations and municipal by-laws, whether domestic, foreign or international, any judgments, orders, writs, injunctions, decisions, rulings, decrees and awards of any Administrative Body, and any policies voluntary restraints, practices or guidelines of any Administrative Body, and including any principles of common law and equity; |
(l) | " Lien " means any mortgage, lien, pledge, charge (whether fixed or floating), security interest, title retention agreement (other than operating leases in respect of tangible personal property which are not in the nature of financing transactions) or other encumbrance of any kind, contingent or absolute but excludes any contractual right of set-off created in the ordinary course of business and any writ of execution, or other similar instrument, arising from a judgment relating to the non- payment of Indebtedness; |
(m) | " Loan " means a loan from the Lender to the Borrower in the aggregate principal amount of U.S.. $75,000, of which $10,000 was advanced by the Lender to the Borrower on December 8, 2006, $10,800 was advanced by the Lender to the Borrower on March 31,2007, $10,000 was advanced by the Lender to the borrower on April 3, 2007, $19,200 was advanced by the Lender to the borrower on December 21, 2007 and $25,000 was advanced by the Lender to the Borrower on January 8, 2008. The principal amount outstanding under the Loan from time to time shall be evidenced by the Promissory Note; |
26
(n) | " Material Subsidiaries " means Dynamic Grovel Holdings Ltd. and any other Subsidiary of the Borrower who from time to time owns Mortgaged Property and "Material Subsidiary" means anyone of them; | |
(o) | " Maturity Date " means January 8, 2009; | |
(p) | " Mortgaged Property " means and includes all the undertaking, property, intellectual property and otherwise whatsoever, and wheresoever situate, and assets of the Borrower and Material Subsidiaries expressed herein or in the Security Agreement, or by any instrument supplemental hereto or thereto, to be mortgaged, hypothecated, pledged, charged, ceded and/or transferred, or in which a security interest is granted, or intended so to be, in favour of the Lender; | |
(q) | " Permitted Encumbrances " means anyone or more of the following: | |
(i) | those mortgages and other charges set out in Schedule "A" or specifically approved from time to time by the Lender in writing, and, if requested by the Lender, postponed to the charges described in the Security pursuant to an agreement acceptable to the Lender; | |
(ii) | security given in the ordinary course of business to a public utility or any municipality or governmental or other public authority when required by such utility or municipality or governmental or other authority in connection with the operations of the Borrower and Material Subsidiaries; | |
(iii) | Liens for taxes, assessments and governmental charges which are not due or the validity of which is being diligently contested in good faith by the Borrower or the Material Subsidiaries; and | |
(iv) | mechanics', builders' materialmen' s and like Liens in respect of services rendered or goods supplied for which payment is not at the time more than sixty (60) days past due or is being diligently contested in good faith by the Borrower and the Material Subsidiaries; | |
(r) | " Person " includes an individual, a partnership, a joint venture, a trust, an unincorporated organization or any other association, a corporation and a government or any department or agency thereof; | |
(s) | " Promissory Note " means a promissory note or promissory notes issued by the Borrower evidencing the principal amount outstanding under the Loan; | |
(t) | " Security " means the Security Agreement and any other instrument or agreement from time to time that purports to secure the Indebtedness; | |
(u) | " Security Agreement " means a general security agreements of the Borrower and Material Subsidiaries to be issued by the Borrower in favour of the Lender as collateral security for the payment of the Indebtedness; | |
(v) | " Subsidiary " means any Person of which more than 50% of the outstanding Voting Securities are owned, directly or indirectly by or for the Borrower, provided that the ownership of such securities confers the right to elect at least a majority of the board of directors of such Person, or a majority of Persons serving similar roles and includes any legal entity in like relationship to a Subsidiary; and | |
(w) | " Voting Securities " means securities of capital stock of any class of any corporation, partnership units in the case of a partnership, trust units in the case of a trust or other evidence of ownership |
27
serving similar purposes, carrying voting rights under all circumstances, provided that, for the purposes of this definition, shares which only carry the right to vote conditionally on the happening of an event will not be considered Voting Securities, whether or not such event will have occurred, nor will any securities be deemed to cease to be Voting Securities solely by reason of a right to vote accruing to securities of another class or classes by reason of the happening of such event.
1.1 | Representations and Warranties |
The Borrower represents and warrants to the Lender, on the date hereof and acknowledges that the Lender is relying on such representations and warranties in entering into this Agreement and in making the Loan, as follows:
(a) | Status |
The Borrower has been duly incorporated and organized and is a valid and subsisting corporation under the laws of its jurisdiction of incorporation, and has full capacity and power to carry on its business and to own and lease property; the Borrower has the power and is duly authorized to borrow the monies herein contemplated, and to enter into, execute, deliver and perform this Agreement and the Security Agreement, and holds all necessary licences, permits and consents to carry on such business in all jurisdictions in which it does so;
(b) | Non-Violation of Other Instruments and Authorization | ||
(i) | The borrowing of money by the Borrower, the entering into and performance of this Agreement and the Security Agreement does not conflict, and will not result with the passage of time or otherwise, in a breach or violation of, or constitute a default under, its articles of incorporation or its by-laws, or any of the covenants or the provisions contained in any agreement to which it is a party, or by which it or its assets are, or may be, bound, or to which it or its assets are, or may be, subject, and does not require the consent or approval of any person; and | ||
(ii) | All necessary steps and proceedings have been taken by the Borrower, and all consents have been obtained to authorize the entering into, delivery and performance of this Agreement and the Promissory Note and to create and authorize the issuance, delivery and performance of the Security Agreement; | ||
(c) | Valid Security |
This Agreement, the Promissory Note and the Security Agreement constitute valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms subject to the usual bankruptcy, insolvency and equitable principles;
(d) | Title to Assets and Property |
Subject only to the Permitted Encumbrances, the Borrower has good and marketable title to the Mortgaged Property owned by it free and clear of any encumbrances or security interests whatsoever, and no person has any agreement or right to acquire any of such properties out of the ordinary course of business;
28
(e) | No Default |
The Borrower is not in default in the performance or observance of any of the material obligations, covenants or conditions contained in any material contract, agreement or other instrument to which it is a party or by which it is bound;
(f) | Compliance with Laws |
To the best knowledge and belief of the Borrower, the Borrower is not in breach of any by-law, law, statute, regulation, rule or order of any governmental authority relating in any way to the Mortgaged Property, or the operation of its business, or both;
(g) | Judgments and Executions |
There are no judgments or executions filed or pending against the Borrower;
(h) | Insolvency Proceedings |
The Borrower has not made any assignment for the benefit of creditors, nor has any receiving order been made against it under the provisions of the Bankruptcy and Insolvency Act (Canada), nor has any petition for such an order been served upon it, nor are there any proceedings in effect or threatened under the provisions of the Winding-Up and Restructuring Act (Canada) or the Companies' Creditors Arrangement Act (Canada), nor has any receiver, receiver and manager, monitor, custodian or official with similar powers been appointed by court order or privately respecting the Borrower, or any of its assets or property;
(i) | Leases |
The Borrower is in good standing under all leases to which it is a party, and no right currently exists in any lessor or lessee thereunder to terminate any such lease, and each such lease is valid and binding;
(j) | Taxation Procedures |
The Borrower has duly and timely filed all tax returns required to be filed by it, and has paid all taxes which are due and payable, and has paid all assessments and reassessments, and all other taxes, governmental charges, governmental royalties, penalties, interest and fines claimed against it on or before the date hereof. Adequate provision and installment payments have been made for taxes and governmental royalties payable for the current period for which returns are not yet required to be filed. There are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any tax return, or payment of any taxes, governmental charge, governmental royalties or deficiency against the Borrower;
(k) | Employee Payments |
The Borrower has withheld from each payment to any of its officers, directors and employees the amount of all taxes, including but not limited to, income tax and other deductions required to be withheld therefrom, and has paid the same to the proper tax or other receiving authorities within the time required under any applicable tax legislation;
29
(l) | Material Liabilities |
As of the date hereof, there are no material liabilities of the Borrower of any kind whatsoever, absolute or contingent, in respect of which the Borrower is, or may become, liable or obligated to pay on or after the date of this Agreement which are not fully and properly reflected in the financial information of the Borrower previously delivered to the Lender;
(m) | Ownership or Licence |
The Borrower owns or licenses, free of adverse claim, all licences, patents, trademarks, copyright, industrial designs, know how, trade secrets and other industrial and intellectual property used in connection with its business, and all such licences are in good standing and registered as applicable; and
(n) | Litigation |
As of the date of execution of this Agreement, there are no litigation, arbitration or administrative proceedings outstanding and, to the Borrower's knowledge after having made reasonable inquiry, there are no such proceedings pending or threatened, against the Borrower.
1.2 | Survival of Representations, Warranties and Covenants |
The covenants, agreements, representations and warranties set forth in this Agreement, and in any certificate or other document delivered hereunder, shall continue in full force and effect until repayment in full of all of the Indebtedness.
ARTICLE 2 - REPAYMENT, INTEREST AND CONVERSION
2.1 | Principal Amount |
The Lender agrees to lend to the Borrower and the Borrower agrees to borrow from the Lender a Loan in the principal amount of up to U.S. $75,000, which Loan shall be repayable in accordance with the terms of this Agreement. The outstanding principal amount due and payable from the Borrower to the Lender pursuant to the Loan from time to time shall be evidenced by a Promissory Note or Promissory Notes delivered by the Borrower to the Lender at the time of any advance or advanced from the Lender to the Borrower. The Borrower hereby acknowledges receipt on: (i) December 8, 2006 of the principal amount of $10,000; (ii) March 31, 2007 of the principal amount of $10,800; (iii) April 3, 2007 of the principal amount of $10,000; (iv) December 21, 2007 of the principal amount of $19,200; and (v) January 8, 2008 of the principal amount of $25,000; advanced by the Lender and forming part of the Loan.
2.2 | Interest |
Interest shall accrue and be payable on the outstanding amount of the Loan at a rate per annum equal at all times to ten (l0%) percent. Interest shall be payable, before and after demand, default and judgment, at the same rate until paid in full. In the event the foregoing rate of interest on all overdue payments under this Agreement is not recoverable under applicable law, the applicable rate of interest shall be reduced to the highest rate permitted under applicable law. Interest shall accrue for the exact number of days such Indebtedness is outstanding and shall be calculated on the basis of a three hundred and sixty-five day year. Accrued and unpaid interest on the Loan shall be paid in full by the Borrower on the Maturity Date.
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2.3 | Repayment |
Notwithstanding anything else contained herein or in the Security Agreement, the Indebtedness shall be due and payable in full by the Borrower to the Lender on the earlier of
(a) | the Maturity Date; or | |
(b) | any demand for payment as a result of an Event of Default pursuant to Section 5.1. |
2.4 | Place and Manner of Payment |
All sums to be paid the Lender pursuant to the terms of this Agreement, whether for principal, interest or otherwise, shall be paid to the Lender at its offices as designated pursuant to Article 7 hereof.
2.5 | No Set-Off |
The obligations of the Borrower to make all payments of amounts due with respect to the Loan shall be absolute and unconditional, and shall not be affected by any circumstance, including without limitation, any set-off, compensation, counter-claim, recoupment, defence or other right which the Borrower may have against the Lender or anyone else for any reason whatsoever.
2.6 | Use of Proceeds |
Proceeds from the Loan granted hereunder shall be used solely for the purpose of satisfying and paying costs and expenses of the Borrower associated with:
(a) | the acquisition of the Northern Gravel and Super Mammoth 5 gravel claims by the Borrower, through its wholly owned subsidiary; and | |
(b) | accounts payable and general working capital. |
2.7 | General Provisions |
(a) | All interest, fees and other amounts payable by a party hereunder shall accrue daily, be computed as described herein, and be payable both before and after maturity, default and judgment. | |
(b) | To the maximum extent permitted by law, the covenant of a party to pay interest at the rates provided herein shall not merge in any judgment relating to any obligation of such party . | |
(c) | In no event shall any interest, fees or other amounts payable hereunder exceed the maximum rate permitted by law. In the event and for so long as any such interest or fee exceeds such maximum rate, such interest or fee shall be reduced to the maximum rate recoverable under law. | |
(d) | The records and entries kept and made by the Lender shall constitute prima facie evidence of the matters recorded therein and the existence and amounts of the obligations of the parties hereunder, provided, however, that the failure of the Lender to record or to correctly record any such amount or date shall not affect the obligation of a party to pay amounts actually due hereunder in accordance with this Agreement. |
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(e) | All principal, interest, fees and other amounts payable hereunder shall be paid by a party in United States Dollars on the day such amount is due by cheque or time of deposit to the account of the party entitled thereto or transfer thereof to the account of such party in Vancouver, British Columbia. |
2.8 | General Indemnity of the Borrower |
To the extent not otherwise provided for herein, the Borrower shall indemnify, defend and hold harmless the Lender from and against any and all losses, costs, expenses, damages, claims or liabilities incurred by the Lender with respect to any Loan to the Borrower hereunder whether before, during or after any period that such Loan are outstanding including, without limitation, any loss of profits, commissions or fees anticipated hereunder, and any expense or cost incurred in the liquidation and re-deployment of any funds acquired by the Lenders to fund or maintain any portion of such Loans hereunder in all cases as a result of the failure of the Borrower to borrow or make repayments on the dates required hereunder.
ARTICLE 3 - SECURITY
3.1 | General Security Agreement |
To secure the due and punctual payment of the Indebtedness due and outstanding from the Borrower or any Material Subsidiaries to the Lender under this Agreement and the Promissory Note from time to time, and to secure the due and punctual performance of the Borrower's other obligations and covenants hereunder, the Borrower and the Material Subsidiaries shall execute and deliver the Security Agreement to the Lender, each of the Material Subsidiaries shall execute and deliver the Guarantee in favour of the Lender with respect to the Borrower's obligations to the Lender, and such other security requested by the Lender, acting reasonably.
3.2 | Additional Security - Other Jurisdictions |
In the event that any of the Security granted by the Borrower or any Material Subsidiaries to the Lender specified or contemplated above cannot be registered or perfected in any jurisdiction in the form in which such Security was taken, the Borrower or any Material Subsidiaries agree to execute and deliver to the Lender or cause to be executed and delivered to the Lender, on the request of the Lender, such form of security agreements or security documentation as may be reasonably necessary in order to comply with or meet the requirements of laws or procedures of any jurisdiction in which the Borrower or any Material Subsidiaries carries on business or has property or assets or customers, in order to insure that the Lender has valid and enforceable Security which can be properly registered and perfected in all such jurisdictions covering all of the Mortgaged Property of the Borrower or any Material Subsidiaries. Such Security agreements or such Security documentation shall be in a form satisfactory to the Lender and its solicitors, acting reasonably, and on terms consistent with the provisions of this Agreement.
3.3 | Discharge |
Upon the repayment in full of the Indebtedness and the payment of accrued interest on the Loan to the Lender, the Lender shall, discharge all charges and liens under the Security and execute and deliver to the Borrower, such deeds or other instruments as shall be requisite to discharge the charges and liens thereof.
3.4 | Repayment of Promissory Note and Conflict |
The Parties agree that payment of the principal amount outstanding on the Loan on the terms and conditions provided for herein constitutes repayment of the Promissory Note and the indebtedness evidenced thereby and the Lender shall not be entitled to demand repayment of the Promissory Note except in accordance with the terms and conditions of this Agreement. The Promissory Note shall be
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cancelled and returned to the Borrower upon payment and satisfaction in full of all Indebtedness. To the extent of any conflict, inconsistency or discrepancy between the provisions of the Promissory Note and the provisions of this Agreement, the provisions of this Agreement shall prevail.
3.5 | Sale of Assets |
In the event of a sale of property, assets, or undertaking of the Borrower in respect of which the Lender's consent has been obtained under this Agreement, the Borrower shall cause the net proceeds of sale to be paid into a cash collateral account forming part of the Security to be applied, at the option of the Borrower: a) as all or a portion of a prepayment pursuant to Section 2.4 at any time that such a prepayment may be made; or b) as repayment of the Indebtedness at maturity. Such proceeds in either case shall be applied firstly to interest, and thereafter to principal to the extent of the funds received, unless otherwise agreed by the Lender at its sole option.
ARTICLE 4 - COVENANTS
4.1 | Positive Covenants |
The Borrower hereby covenants and agrees with the Lender that so long as any of the Indebtedness remains unpaid:
(a) | To Pay Indebtedness |
The Borrower will, duly and punctually payor cause to be paid to the Lender, the Indebtedness at the dates, time and places, and in the manner provided for herein;
(b) | Notice of Removal of Assets From Jurisdiction |
If at any time or from time to time, the Borrower desires to remove assets which comprise part or all of the Mortgaged Property from a jurisdiction in which the Security Agreement is validly registered to any jurisdiction other than a jurisdiction in which the Security Agreement is validly registered, the Borrower will, prior to removing such assets from a jurisdiction in which it is registered to a jurisdiction in which it would not be registered, give the Lender ten (10) days' notice thereof, accompanied by a full description of such assets and the proposed location thereof, and shall deliver, prior to the removal of such assets, such documents and instruments filed or registered pursuant to applicable law, if required, as may be necessary to preserve and perfect the Lender's security interest therein in such other jurisdiction in form and content satisfactory to the Lender and its counsel, and shall pay all legal and registration costs in connection therewith;
(c) | Notice of Litigation and Defence of Title |
The Borrower will give the Lender prompt written notice of any action, suit, litigation or other proceeding which is commenced or threatened against the Borrower and which involves either a claim or potential claim which is not or would not be fully covered by insurance and which is in excess of Ten Thousand Dollars ($10,000). The Borrower shall defend the Mortgaged Property against all persons claiming the Mortgaged Property or an interest therein;
(d) | Notice of Material Change |
The Borrower will give the Lender prompt written notice of any material change in the business or condition of the Borrower, financial or otherwise, or of any material loss, destruction or damage of or to any properties or assets of the Borrower, including notice of any demand upon,
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or change in the terms and conditions governing, the operating or similar line of credit of the Borrower with its bank;
(e) | Notice of Change of Name |
The Borrower will give the Lender thirty (30) days prior written notice of any intended change of the name of the Borrower;
(f) | Other Information |
The Borrower will promptly furnish the Lender with such other information respecting the Borrower, its properties, assets, anticipated contracts, acquisitions, investments and other matters and information relating to the Borrower and its business, as the Lender may from time to time reasonably request;
(g) | To Maintain Existence |
The Borrower will at all times maintain its corporate existence and ensure that the performance of this Agreement will not conflict with its constating documents or any agreement to which it is a party;
(h) | To Carryon Business and Abide by Government Regulations |
The Borrower will carry on its business in a proper and efficient manner, and will keep or cause to be kept proper books of account, and make or cause to be made therein true and faithful entries of all material dealings and transactions in relation to its business, and will at all times abide by all federal and provincial laws, municipal by-laws and all government regulations pertaining to the operation of the business of the Borrower;
(i) | To Pay Taxes |
The Borrower will payor cause to be paid all taxes, rates, government fees and dues levied, assessed or imposed upon it and upon its property or any part thereof, as and when the same become due and payable, save and except when, and so long as, the validity of any such taxes, rates, fees, dues, levies, assessments or imposts is in good faith, by proper legal proceedings, being contested by it, provided such proceedings effectively postpone enforcement of any lien arising from non-payment;
(j) | To Insure | ||
(i) | The Borrower will insure the Mortgaged Property with such carriers and in such amounts, and against such risks and with such loss payable clause as shall be reasonably satisfactory to the Lender. All policies of insurance shall provide for ten (l0) days written notice of cancellation to the Lender, and the Lender shall have full power to collect any and all insurance upon the Mortgaged Property, and then to apply the same at its option and subject to (iii) below, to repayment of the Indebtedness, or to the restoration or repair of the Mortgaged Property; | ||
(ii) | Renewal Receipt - No later than thirty (30) days prior to the expiry of any insurance policy required hereby, the Borrower shall deliver to the Lender a renewal receipt, binder or new policy replacing such expiring insurance policy, or otherwise satisfY the Lender that such insurance has been renewed; and |
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(iii) | Application of Proceeds - The Borrower shall cause the insurance money under all policies required hereunder to be made payable to the Lender (as its interest may appear) or shall otherwise deal with such policies in such manner as to enable any insurance money payable thereunder, in respect of any claim in excess of Ten Thousand Dollars ($10,000), to be collected by the Lender (as its interest may appear) which may elect to have such insurance money applied to replace or repair the relevant assets, or towards prepayment of the monies advanced hereunder whether then due or not. The Borrower shall from time to time, do, sign, execute or endorse all transfers, assignments, cheques, loss claims, receipts, writings and things necessary or desirable for the purposes aforesaid and for such purposes the Borrower hereby irrevocably appoints the Lender its attorney to do, sign, execute and endorse such transfers, assignments, cheques, loss claims, receipts, writings and things in the name of the Borrower and on its behalf as the Lender may deem necessary or advisable; |
(k) | Further Assurances |
At any and all times the Borrower will do, execute, acknowledge, deliver, file and register, or will cause to be done, executed, acknowledged, delivered, filed and registered all and every such further acts, deeds, conveyances, mortgages, transfers and assurances as the Lender shall reasonably require for the purpose of giving effect to this Agreement;
(1) | Payment of Costs and Expenses |
Each of the Borrower and the Lender will pay its own costs in connection with the completion of the Loan provided for in this Agreement, and the Security taken in pursuance hereof, and the preparation and registration of any further security or agreements required as further assurances or as a consequence of amendment or renewal. The Borrower will payor reimburse the Lender and its agents for all reasonable costs, charges and expenses (including legal fees and disbursements) on a lawyer and his own client basis in connection with the enforcement or realization of any such Security, and any amount not so paid shall bear interest at the rate of interest as set forth in Section 2.2 hereof, and shall be payable out of any funds coming into the possession of the Lender in priority to the Indebtedness;
(m) | To Repair |
The Borrower will at all times repair and keep in repair and good order and condition, or cause to be so repaired and kept in good order and condition, the Mortgaged Property;
(n) | Change of Address |
The Borrower shall notify the Lender of any change of address of any office or other business location of the Borrower existing as at the date of execution herein, and of the location of any new business premises where the Borrower undertakes its business at any time, subsequent to the date of execution herein;
(o) | Notice of Default |
The Borrower shall give prompt written notice to the Lender of any Default hereunder;
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(p) | Compliance |
The Borrower shall perform, observe and comply at all times with the covenants, terms, conditions, stipulations and provisos of this Agreement, the Security Agreement and any agreements and instruments delivered in connection with this Agreement to the extent that it is party to any of the foregoing;
(q) | Access to Premises |
The Borrower shall permit the Lender, its servants and agents, to enter into at all reasonable times and upon reasonable notice any business premise owned or occupied by the Borrower to inspect the business operations of the Borrower and all assets and properties of the Borrower including those in which the Lender has security; and
(r) | Acquisition of Gravel Claims |
The Borrower will use its reasonable commercial efforts to execute, deliver and complete or will cause to be executed, delivered and completed an agreement or agreements of the Borrower to acquire the North Gravel and Super Mammoth 5 gravel claims.
4.2 | Negative Covenants |
The Borrower hereby covenants and agrees with the Lender that so long as any of the Indebtedness remains outstanding, without the prior written consent of the Lender, the Borrower will not:
(a) | Not to Sell Assets or Enter Into Amalgamations and Mergers | ||
(i) | sell or otherwise dispose of any of its property, assets or undertaking including the Mortgaged Property in any manner whatsoever, except in the ordinary course of business, or | ||
(ii) | amalgamate or merge or enter into any statutory arrangement with any other corporation or entity; | ||
(b) | Attached Fixtures and Accessions |
other than accessions to the Borrower's leased motor vehicles (all of which may be removed by the Borrower without damage to the vehicles) permit any personal property forming a part of the Mortgaged Property to become an accession or a fixture, excluding such property that becomes an accession or fixture to property also forming part of the Mortgaged Property, unless the Borrower shall have:
(i) | provided fifteen (15) days prior written notice to the Lender, and | |
(ii) | obtained and delivered to the Lender such acknowledgments and consents from the owner of the other property as may be necessary to preserve the security interest of the Lender; |
(c) | As to Encumbrances |
do any act to further or in any way encumber the Mortgaged Property, or create or permit to exist any mortgage, hypothec, charge, pledge, lien or encumbrance, or other security interest, whether by fixed or floating charge, upon its undertaking, property or assets, or any part or parts thereof,
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which ranks or purports to rank prior to or equal to the Security Agreement, except the Security Agreement and Permitted Encumbrances;
(d) | Not to Commit Waste |
except as permitted elsewhere herein, remove or destroy any of its buildings, machinery or any structure whatsoever comprising the Mortgaged Property or the plant, machinery or fixtures attached or appertaining thereto, or otherwise forming part of the Mortgaged Property;
(e) | Restriction on Corporate Distribution |
become liable in respect of, or pay, any Corporate Distribution;
(f) | Restriction on Sale and Leasebacks |
sell, assign or dispose of any property in any transaction or series of transactions which will conclude with a reacquisition by the Borrower of the same or similar property:
(i) | subject to any encumbrance to which such property was not theretofore subject; |
or
(ii) | pursuant to a conditional sale agreement or other title retention agreement, including a financing transaction or capital lease arrangement; |
(g) | Capital Expenditures |
make any capital expenditures, including financing or capital leases or similar financial arrangements, in excess of Twenty Five Thousand Dollars ($25,000) in the aggregate in any fiscal year, unless included in a capital budget of the Borrower previously approved in writing by the Lender for such fiscal year;
(h) | Not to Pay Related Parties |
use the proceeds of the loan to make payments to any "associates" or "affiliates" of the Borrower as such terms are defined by the Business Corporations Act (Alberta);
(i) | Not to Assign Shares |
permit, approve or consent to the assignment, sale or transfer of any of the shares in the share capital of the Borrower, directly or indirectly; and/or
(j) | Restrict Use of Proceeds |
use the proceeds of the Loan for any purposes other than as set forth in Section 2.7 of this Agreement.
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ARTICLE 5 - DEFAULT AND ENFORCEMENT
5.1 | Events of Default |
Each and every one of the following shall be a Default under this Agreement:
(a) | if the Borrower makes default in payment of the Indebtedness as and when the same becomes due under any provision hereof, and the default is not cured within ten (10) days thereof; | |
(b) | if the Borrower shall neglect to carry out or observe any covenant or condition (other than those relating to the payment of any Indebtedness) contained in this Agreement, or the Security Agreement, provided the Borrower shall have ten (10) days after receipt of notice from the Lender to make good such default before the Borrower shall be in Default hereunder, or provided that such default cannot be cured within such ten (10) day period and the Borrower so advises the Lender prior to the termination of such ten (10) day period and provided further that such default is capable of being cured and the Lender in its sole discretion is satisfied that the Borrower is diligently proceeding to cure such default, the Borrower shall have an additional ten (10) days to make good such default before the Borrower shall be in Default hereunder; | |
(c) | if the Borrower ceases, or threatens to cease, carrying on its business or if a petition shall be filed, an order shall be made or a resolution be passed for the winding-up or liquidation of the Borrower; | |
(d) | if the Borrower shall become insolvent, or shall make a bulk sale of its assets, a general assignment for the benefit of its creditors, a proposal under the Bankruptcy and Insolvency Act, or if a bankruptcy petition shall be filed or presented with respect to the Borrower and such is not removed or discharged prior to the time when any party thereunder shall have the right to realize against the Mortgaged Property, or if a custodian, sequestrator, receiver, receiver and manager, or any other officer with similar powers shall be appointed of its properties, or any part thereof which is, in the opinion of the Lender, acting reasonably, a substantial part thereof; | |
(e) | if any proceedings respecting the Borrower are commenced under the Companies' Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act (Canada), or any legislation or other provision of law providing for similar effect; | |
(f) | if an encumbrancer takes possession of the Mortgaged Property or any other property of the Borrower or any part thereof which is, in the opinion of the Lender, acting reasonably, a substantial part thereof, or if a distress or execution or any similar process be levied or enforced against the same and such remains unsatisfied for such period as would permit such property or such part thereof to be sold or seized thereunder; | |
(g) | if default occurs under any agreement containing an obligation of the Borrower to repay borrowed money or interest thereon to any person and such default is not rectified within the period provided for rectification in any governing agreement; | |
(h) | if any of the representations and warranties contained herein, or in the Security Agreement shall prove to have been false or misleading in any material respect on the date hereof; | |
(i) | if the Borrower is in default under the Security Agreement; |
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(j)
|
if, without the prior written consent of the Lender, there is any change in the legal or beneficial ownership of the outstanding shares in the share capital of the Borrower, whether or not such is voluntary or involuntary, by operation of law, court order or otherwise, or if any of the outstanding shares of the Borrower are pledged, charged, sold, assigned, transferred, or otherwise encumbered, or if additional shares of the Borrower are issued, such that any of the foregoing cause a change in Control of the Borrower to a person not controlling the Borrower as of the date hereof; | |
(k) | a failure by the Borrower to perform any undertaking in writing given by the Borrower to the Lender, which failure has not been waived in writing by the Lender: and | |
(1) | a determination by the Lender, in its sole discretion, that the Mortgaged Property, the Loan or the Security or repayment of the Indebtedness in full is being impaired or jeopardized including, without limitation, if the rights and interests of the Lender under the Notes or Security are endangered or there is an impairment in the value of the Mortgaged Property of the Borrower. |
5.2 | Acceleration on Default |
Upon the occurrence of a Default which is continuing, the Lender may, in addition to any other rights or remedies provided for herein, in the Security, at law, or in equity, declare the Indebtedness to be immediately and fully due and payable, and the same shall forthwith become immediately and fully due and payable, and the Borrower shall forthwith, without the requirement of reasonable notice, pay to the Lender the Indebtedness and the Security shall become immediately enforceable in each and every such event, and the Lender shall thereupon have all rights and remedies available to it at law or in equity, whether by virtue of this Agreement, the Security or otherwise.
5.3 | Waiver of Default |
The Lender may at any time waive in writing any Default which may have occurred, provided that no such waiver shall extend to, or be taken in any manner whatsoever to affect, any subsequent Default or the rights or remedies resulting therefrom. No delay or failure by the Lender to exercise any right or remedy hereunder shall impair any such right or remedy, or shall be construed to be a waiver of any Default hereunder or under the Security, or acquiescence therein.
5.4 | Remedies Cumulative |
Each of the remedies available to the Lender is a separate remedy and in no way is a limitation on anyone or more of the other remedies otherwise available to the Lender. The rights and remedies herein expressly specified or in the Security are cumulative and not exclusive. The Lender may, in its sole discretion, exercise any and all rights, powers, remedies and recourses available herein or in the Security, or any other remedy available to it, and such rights, powers, remedies and recourses may be exercised concurrently or individually without the necessity of any election.
ARTICLE 6 - ENFORCEMENT OF SECURITY
6.1 | Remedies |
In the event of Default and subject to the provisions hereof, the Lender may proceed to enforce its rights by any action, suit, remedy or proceeding available to it under this Agreement, the Security or otherwise authorized or permitted by law or by equity. No remedy for the enforcement of the rights of the Lender shall be exclusive of, or depend on, any other remedy, but anyone or more remedies may from time to time be exercised independently or in combination.
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6.2 | Remedies Not Prejudiced by Delay |
No delay or omission of the Lender to exercise any remedy shall impair any such remedy, or shall be construed to be a waiver of any Default hereunder or under the Security, or acquiescence therein.
6.3 | Borrower to Yield Possession |
The Borrower binds and obliges itself to yield up possession of the Mortgaged Property to the Lender on demand at any time after Default and prior to the satisfaction in full of the Indebtedness and agrees to put no obstacles in the way of, but to facilitate by all legal means, the actions of the Lender hereunder, and not to interfere with the carrying out of the powers hereby granted to it. The Borrower shall forthwith, by and through its officers and directors, at any time after Default and request in writing by the Lender execute such documents and transfers as may be necessary to place the Lender in legal possession of the Mortgaged Property.
6.4 | Lender Entitled to Perform Covenants |
If the Borrower shall fail to perform any covenant on its part herein contained, the Lender may, in its discretion, perform any of the said covenants capable of being performed by it, and if any such covenant requires the payment or expenditure of money, the Lender may make payments or expenditure with its own funds, or with money borrowed by or advanced to it for such purpose, but shall be under no obligation to do so, and all sums so expended or advanced shall be at once payable by the Borrower on demand, shall bear interest at the rate of Twenty-Five percent (25%) per annum, calculated and payable monthly, in arrears, until paid, and shall be payable out of any funds coming into the possession of the Lender in priority to the Indebtedness, but no such performance or payment shall be deemed to relieve the Borrower from any Default hereunder unless and until the Lender is fully reimbursed for all sums advanced hereunder together with interest thereon as herein provided.
6.5 | The Lender as Agent of Borrower and Power of Attorney |
Effective after Default and written notification by the Lender that it intends to enforce its Security, the Borrower hereby irrevocably appoints the Lender to be its attorney, and in its name and on its behalf, to execute and carry out any deeds, documents, transfers, conveyances, assignments, assurances, consents and things which the Borrower ought to, or may, sign, execute and do hereunder, and generally to use its name in the exercise of all or any of the powers hereby conferred on the Lender, with full power of substitution and revocation. In the exercise of all of its rights hereunder, the Lender shall be, so far as concerns responsibility for its action or inaction, the agent of the Borrower.
6.6 | For the Protection of the Lender |
In realizing upon the Mortgaged Property, the Lender shall not be responsible for any loss occasioned by any demand, collection, enforcement, sale or other realization thereof, or the failure to, or delay in, demand, collect, enforce or sell any portion, and the Lender shall not be bound to protect the Mortgaged Property from depreciating in value. Upon any sale or realization of the Mortgaged Property by way of public auction, the Lender may become purchaser free from any right or equity of redemption, which right or equity is expressly waived by the Borrower, and the Lender may, in paying the purchase price, apply so much of the obligations of the Borrower hereunder on account of the purchase price as may be necessary for such purpose.
6.7 | Interest Late Payment |
Notwithstanding any waiver or enforcement of Default hereunder, the Borrower acknowledges that the Lender shall be paid interest on overdue interest at the rate set forth in Section 2.2 hereof.
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6.8 | Lender's Agents |
The Lender may appoint any agent or representative to exercise any of its rights hereunder.
ARTICLE 7 - NOTICES
7.1 | Notices and Deemed Receipt |
Any demand or notice to be given by any party hereto to any other party shall be in writing and may be given by personal delivery, or except during any period when postal service is interrupted, by prepaid registered mail or by facsimile transmission, transmission confirmed, addressed or sent as follows:
(a) | to the Borrower at: | |
DYNAMIC GOLD CORP. | ||
Suite 506, 675 West Hastings Street
Vancouver, British Columbia V6B IN2 Fax: (604) 408-3884 Attention: President |
||
(b) | to the Lender at: | |
TIM COUPLAND | ||
Suite 506, 675 West Hastings Street
Vancouver, British Columbia V6B IN2 Fax: (604) 408-3884 |
and if given by registered mail shall be deemed to have been received by the party to whom it was addressed on the date falling four (4) Business Days following the date upon which it has been deposited in a post office within a city in Canada with postage and cost of registration prepaid, and if personally delivered to an adult during Business Hours, when so delivered, and if given by other communication the third (3rd) Business Hour after confirmed transmission. Any of the above-named parties may change the address or fax number designated from time to time, by notice in writing to the other party hereto.
ARTICLE 8 - MISCELLANEOUS
8.1 | Formal Date |
For the purpose of convenience this Agreement may be referred to as bearing the formal date first written above, irrespective of the actual date of execution thereof.
8.2 | Plurality and Gender, etc. |
Words importing the singular number shall include the plural and vice versa, and words importing the masculine gender shall include the feminine gender.
8.3 | Headings |
The Article and section headings are not to be considered part of this Agreement, are inserted for convenience of reference only, are not intended to be full or accurate descriptions of the content thereof, and shall not affect the construction or interpretation of this Agreement.
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8.4 | Law Applicable |
This Agreement shall be construed in accordance with the laws of the Province of Alberta and shall be treated in all respects as an Alberta contract. The parties hereto irrevocably attorn to the jurisdiction of the courts situated in Alberta.
8.5 | Currency |
All dollar amounts referred to in this Agreement and all payments to be made hereunder are in United States funds unless otherwise specified herein.
8.6 | Entire Agreement |
This Agreement, including the schedules hereto, the Security, and any agreement collateral hereto or thereto constitutes the entire agreement between the parties, and may not be amended or modified in any respect except by written instrument signed by the parties hereto, and all other agreements, undertakings, representations and writings, oral or written, are entirely replaced thereby and are no longer effective.
8.7 | Successor Legislation |
Any statute referred to herein or in the Security shall be deemed to include that statute as amended, restated and/or replaced from time to time, and any successor legislation to the same general intent and effect.
8.8 | Assignment |
This Agreement shall enure to the benefit of, and shall be binding upon, the parties hereto and their respective successors and permitted assigns. This Agreement may not be assigned by either party without the prior written consent of the other party.
8.9 | Business Day |
If under the provisions of this Agreement any amount is to be paid or any act or thing is to be done or step is to be taken on a day other than a Business Day, then such amount shall be paid or such act, thing or step shall be done or taken on the next Business Day.
8.10 | Financial Terms and Accounting Rules |
All financial terms employed and calculations provided for herein shall, unless otherwise specifically provided, be interpreted and applied in accordance with Canadian Generally Accepted Accounting Principles applied on a consistent basis, and applicable on a consolidated basis.
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8.11 | Conflict |
In the event of any conflict between any term, condition or provision of this Agreement and those of the Security, then the term, condition or provision of this Agreement shall govern.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written.
/ s / Ann-Marie Cederholm | / s / Tim Coupland | |
Witness to signature of Tim Coupland | TIM COUPLAND |
Name: | Ann-Marie Cederholm |
Address:: | 675 West Hastings Street |
Suite 506 |
|
Vancouver, BC V6B 1N2 |
DYNAMIC GOLD CORP.
Per: / s / Rob Hall
Authorized Signature
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SCHEDULE "A"
PERMITTED ENCUMBRANCES
None
44
Exhibit 10.3
PROMISSORY NOTE
$75,000 United States Dollars
January 8, 2008
FOR VALUE RECEIVED, the undersigned, DYNAMIC GOLD CORP. ("Company") , hereby promises to pay to Tim Coupland (herein referred to as the "Payee" ), the principal amount of seventy five thousand ($75,000) dollars in United States currency in accordance with and subject to the terms, conditions and limitations as set forth in the loan agreement (the "Agreement" ) dated January 8, 2008, between Company and the Payee. Except as otherwise specified herein, interest under this promissory note ( "Note" ) shall accrue on the unpaid principal balance hereof from time to time outstanding from and after the date of advance, default and judgment at the rate of ten (10%) percent per annum until the balance due plus accrued interest has been paid in full. Interest shall be computed on the daily principal balance on the basis of a 365 day calendar year for the actual number of days elapsed. Interest shall be payable after maturity, default and judgment, with interest payable on overdue interest at the same rate. All payments under this Note shall be paid to Payee at the address provided by Payee to Company in writing on the date hereof, until such time as Payee notifies Company in writing of a new address at which to make such payments.
No delay or omission on the part of Payee or any holder thereof in exercising any right or portion herein given to such Payee or holder shall impair such right or option or be considered as a waiver thereof or acquiescence in any default hereunder. Company hereby waives presentment, demand, notice of dishonour and protest and consents to any and all extensions and renewals hereof without notice.
Repayment of the principal amount hereof shall be limited in recourse in accordance with and subject to the terms, conditions and limitations as set forth in the Agreement.
This Note shall enure to the benefit of the parties' heirs, executors, administrators and successors but is otherwise non-transferable without the prior written consent of the Payee which consent shall not be unreasonably withheld.
This Note shall be construed, interpreted and governed in accordance with the laws of the Province of Alberta and Canada applicable therein.
If anyone or more provisions of this Note are determined to be unenforceable, in whole or in part, for any reason, the remaining provisions of this Note shall remain in full force and effect. In the event of a default hereunder, Company agrees to pay all costs of collection including reasonable attorneys' fees. Irrespective of any remedy specifically granted to Payee by this Note, Payee shall be entitled to exercise all other remedies provided to it under applicable law. All rights of Payee shall be cumulative and may be exercised concurrently or consecutively at Payee's option.
THIS NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT CALGARY, ALBERTA AND SHALL BE INTERPRETED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE PROVINCE OF CALGARY, ALBERTA.
DYNAMIC GOLD CORP
Per:
/ s / Ann-Marie Cederholm
c/s
Authorized signature |
|
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Exhibit 10.4
GENERAL SECURITY AGREEMENT
1. | SECURITY INTEREST |
(a) For value received, the undersigned (" Debtor ") hereby grants to TIM COUPLAND ("Lender") a security interest, mortgage and charge (hereinafter collectively referred to as the "Security Interest") as hereinafter provided:
(i) | a security interest in the undertaking of Debtor and all of Debtor's present and after acquired personal property including, without limitation, all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles, Money and Securities now owned or hereafter owned or acquired by or on behalf of Debtor (including such as may be returned to or repossessed by Debtor) and including, without limitation, all of the following now owned or hereafter owned or acquired by or on behalf of Debtor: |
(A) | all Inventory of whatever kind and wherever situate; | |
(B) | all equipment (other than Inventory) of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, furniture, fixtures and vehicles of whatsoever nature or kind; | |
(C) | all Accounts and book debts and generally all debts, dues, claims, choses in action and demands of every nature and kind howsoever arising or secured and whether arising in connection with an interest in real or personal property or otherwise, including letters of credit and advices of credit, which are now due, owing or accruing or growing due to or owned by or which may hereafter become due, owing or accruing or growing due to or owned by Debtor (" Debts "); | |
(D) | all deeds, documents, writings, papers, books of account and other books relating to or being records of Debts, Chattel Paper or Documents of Title or by which such are or may hereafter be secured, evidenced, acknowledged or made payable; | |
(E) | all contractual rights and insurance claims; | |
(F) | all patents, industrial designs, trade-marks, trade secrets and know-how including without limitation environmental technology and biotechnology, confidential information, trade-names, goodwill, copyrights, personality rights, plant breeders' rights, integrated circuit topographies, software and all other forms of intellectual and industrial property, and any registrations and applications for registration of any of the foregoing (collectively " Intellectual Property "); and | |
(G) | all lists, records and files relating to debtors, customers, clients and patients; |
(ii) | a mortgage and charge as and by way of a floating charge, in all of Debtor's present and after acquired interest in property, assets and undertaking not secured in (i) above, including all real, immoveable and leaseholds property and all easements, rights-of-way, privileges, benefits, licences, improvements and rights whether connected therewith or appurtenant thereto or separately owned or held, |
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including without limitation, all structures, plant and other fixtures now owned or hereafter owned or acquired by or on behalf of Debtor (hereinafter collectively referred to as " Real Property "); and | ||
(iii) | a security interest in all property described in Schedule "c" or any replacement or additional Schedule "c" now or hereafter annexed hereto; and a security interest in all proceeds and renewals thereof, accretions thereto and substitution therefor, all of the foregoing being hereinafter collectively referred to as the " Collateral " . |
(b) The Security Interest granted hereby shall not extend or apply to and Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term.
(c) The terms " Goods ", " Chattel Paper ", " Document of Title ", " Instrument ", " Intangible ", " Security ", " proceeds ", " Inventory ", " equipment ", " accession ", " Money ", " Account ", " financing statement " and " financing change statement " whenever used herein shall be interpreted pursuant to their respective meanings when used in the Personal Property Security Act (Alberta), which Act, including amendments thereto and any Act substituted therefor and amendments thereto is herein referred to as the "P.P.S.A.". Provided always that the term " Goods " when used herein shall not include "consumer goods" of Debtor as that term is defined in the P.P.S.A. and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such during the term of this Security Agreement. Any reference herein to "Collateral" shall, unless the context otherwise requires, be deemed a reference to "collateral or any part thereof'.
2. | INDEBTEDNESS SECURED |
The Security Interest granted hereby secures payment and performance of any and all obligation, indebtedness and liability of Debtor to Lender (including interest thereon) present or future, direct or indirect, absolute or contingent, matured or not, extended or renewed, wheresoever and howsoever incurred and any ultimate unpaid balance thereof and whether the same is from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again and whether Debtor be bound alone or with another or others and whether as principal or surety (hereinafter collectively called the "Indebtedness"). If the Security Interest in the Collateral is not sufficient, in the event of default, to satisfy all Indebtedness of Debtor, Debtor acknowledges and agrees that Debtor shall continue to be liable for any Indebtedness remaining outstanding and Lender shall be entitled to pursue full payment thereof.
3. | REPRESENTATIONS AND WARRANTIES OF DEBTOR |
Debtor represents and warrants and so long as this Security Agreement remains in effect shall be deemed to continuously represent and warrant that:
(a) the Collateral is owned by Debtor free of all security interests, mortgages, lien claims, charges, licences, leases, infringements by third parties, encumbrances or other adverse claim or interests (hereinafter collectively called "Encumbrances"), save for the Security Interest and those Encumbrances shown on Schedule "A" or hereafter approved in writing by Lender, prior to their creation or assumption;
(b) all Intellectual Property applications and registrations are valid and in good standing and Debtor is the owner of the applications and registrations;
(c) each Debt, Chattel Paper and Instrument constituting Collateral is enforceable in accordance with its terms against the party obligated to pay the same (the " Account Debtor "), and the
47
amount represented by Debtor to Lender from time to time as owing by each Account Debtor or by all Account Debtors will be the correct amount actually and unconditionally owing by such Account Debtor or Account Debtors, except for normal cash discounts where applicable, and no Account Debtor will have any defence, set off, claim or counterclaim against Debtor which can be asserted against Lender, whether in any proceeding to enforce Collateral or otherwise;
(d) the locations specified in Schedule "B" as to business operations and records are accurate and complete and with respect to Real Property and Goods (including Inventory) constituting Collateral, the locations specified in Schedule "B" are accurate and complete save for Goods in transit to such locations and Inventory on lease or consignment; and all buildings, fixtures or Goods about to become fixtures and all crops and all oil, gas or other minerals to be extracted and all timber to be cut which forms part of the Collateral will be situate at one of such locations;
(e) Debtor has disclosed to Lender all environmental and other matters which could have a material effect on the financial condition or operations of Debtor; and
(f) the execution, delivery and performance of the obligations under this Security Agreement and the creation of any security interest in or assignment hereunder of Debtor's rights in the Collateral to Lender will not result in a breach of any agreement to which Debtor is a party.
4. | COVENANTS OF THE DEBTOR |
So long as this Security Agreement remains in effect Debtor covenants and agrees:
(a) to defend the Collateral against the claims and demands of all other parties claiming the same or an interest therein; to diligently initiate and prosecute legal action against all infringers of Debtor's rights in Intellectual Property; to take all reasonable action to keep the Collateral free from all Encumbrances, except for the Security Interest, licences which are compulsory under federal or provincial legislation and those shown in Schedule "A" or hereafter approved in writing by Lender, prior to their creation or assumption; and not to sell, exchange, transfer, assign, lease, license or otherwise dispose of Collateral or any interest therein without the prior written consent of Lender; provided always that, until default, Debtor may, in the ordinary course of Debtor's business, sell or lease Inventory and, subject to Clause 7 hereof, use Money available to Debtor;
(b) | to notify Lender promptly of: | ||
(i) | any change in the information contained herein or III the Schedules hereto relating to Debtor, Debtor's business or Collateral; | ||
(ii) | the details of any significant acquisition of Collateral; | ||
(iii) | the details of any claims or litigation affecting Debtor or Collateral; | ||
(iv) | any loss or damage to Collateral; | ||
(v) | any default by any Account Debtor in payment or other performance of its obligations with respect to Collateral; and | ||
(vi) | the return to or repossession by Debtor of Collateral; |
(c) to keep Collateral in good order, condition and repair and not to use Collateral in violation of the provisions of this Security Agreement or any other agreement relating to Collateral or any policy insuring Collateral or any applicable statute, law, by-law, rule, regulation or ordinance; to keep all
48
agreements, registrations and applications relating to Intellectual Property and intellectual property used by Debtor in its business in good standing and to renew all agreements and registrations as may be necessary or desirable to protect Intellectual Property, unless otherwise agreed in writing by Lender; to apply to register all existing and future copyrights, trade-marks, patents, integrated circuit topographies and industrial designs whenever it is commercially reasonable to do so;
(d) to do, execute, acknowledge and deliver such financing statements, financing change statements and further assignments, transfers, caveats, mortgages, notices, documents, acts, matters and things (including further schedules hereto) as may be reasonably Requested by Lender of or with respect to Collateral in order to give effect to these presents and to pay all costs for searches and filings in connection therewith;
(e) to pay all taxes, rates, levies, assessments and other charges of every nature which may be lawfully levied, assessed or imposed against or in respect of Debtor or Collateral as and when the same become due and payable;
(f) to insure Collateral for such periods, in such amounts, on such terms and against loss or damage by fire and such other risks as Lender shall reasonably direct with loss payable to Lender and Debtor, as insureds, as their respective interests may appear, and to pay all premiums therefor;
(g) to prevent Collateral, save Inventory sold or leased as permitted hereby, from being or becoming an accession to other property not covered by this Security Agreement;
(h) to carry on and conduct the business of Debtor in accordance with all applicable laws, in a proper and efficient manner and so as to protect and preserve Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for Debtor's business as well as accurate and complete records concerning Collateral, and mark any and all such records and Collateral at Lender's request so as to indicate the Security Interest; and
(i) | to deliver to Lender from time to time promptly upon request | ||
(i) | any Documents of Title, Instruments, Securities, Chattel Paper and duplicate certificates of title to Real Property constituting, representing or relating to Collateral; | ||
(ii) | all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings relating to Collateral for the purpose of inspecting, auditing or copying the same; | ||
(iii) | all financial statements prepared by or for Debtor regarding Debtor's business; | ||
(iv) | all policies and certificates of insurance relating to Collateral; and | ||
(v) | such information concerning Collateral, Debtor and Debtor's business and affairs as Lender may reasonably request. |
5. | USE AND VERIFICATION OF COLLATERAL |
Subject to compliance with Debtor's covenants contained herein and Clause 7 hereof, Debtor may, until default, possess, operate, collect, use and enjoy and deal with Collateral in the ordinary course of Debtor's business in any manner not inconsistent with the provisions hereof; provided always that Lender shall have the right at any time and from time to time to verify compliance by Debtor with Debtor's obligations under this Security Agreement (including through inquiries with governmental
49
agencies) and the existence and state of the Collateral in any manner Lender may consider appropriate and Debtor agrees to furnish all assistance and information and to perform all such acts as Lender may reasonably request in connection therewith and for such purpose to grant to Lender or its agents access to all places where Collateral may be located and to all premises occupied by Debtor.
6. | SECURITIES |
If Collateral at any time includes Securities, Debtor authorizes Lender to transfer the same or any part thereof into its own name or that of its nominee(s) so that Lender or its nominee(s) may appear of record as the sole owner thereof; provided that, until default, Lender shall deliver promptly to Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to Debtor or its order a proxy to vote and take all action with respect to such Securities. After default, Debtor waives all rights to receive any notices or communications received by Lender or its nominee(s) as such registered owner and agrees that no proxy issued by Lender to Debtor or its order as aforesaid shall thereafter be effective.
7. | COLLECTION OF DEBTS |
Afte r default under this Security Agreement, Lender may notify all or any Account Debtors of the Security Interest and may also direct such Account Debtors to make all payments on Collateral to Lender. Debtor acknowledges that any payments on or other proceeds of Collateral received by Debtor from Account Debtors, whether before or after notification of this Security Interest to Account Debtors and whether before or after default under this Security Agreement shall be received and held by Debtor in trust for Lender and shall be turned over to Lender upon request.
8. | INCOME FROM AND INTEREST ON COLLATERAL |
(a) Until default, Debtor reserves the right to receive any Money constituting income from or interest on Collateral and if Lender receives any such Money prior to default, Lender shall either credit the same against the Indebtedness or pay the same promptly to Debtor.
(b) After default, Debtor will not request or receive any Money constituting income from or interest on Collateral and if Debtor receives any such Money without any request by it, Debtor will pay the same promptly to Lender.
9. | INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS | ||
(a) | Whether or not default has occurred, Debtor authorizes Lender: | ||
(i) | to receive any increase in or profits on Collateral (other than Money) and to hold the same as part of collateral. Money so received shall be treated as income for the purposes of Clause 8 hereof and dealt with accordingly; and | ||
(ii) | to receive any payment or distribution upon redemption or retirement or upon dissolution and liquidation of the issuer of Collateral; to surrender such Collateral in exchange therefor; and to hold any such payment or distribution as part of Collateral. |
(b) If Debtor receives any such increase or profits (other than Money) or payments or distributions, Debtor will deliver the same promptly to Lender to be held by Lender as herein provided.
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10. | DISPOSITION OF MONEY |
Subject to any applicable requirements of the P.P.S.A. or other applicable law, all Money collected or received by Lender pursuant to or in exercise of any right it possesses with respect to Collateral shall be applied on account of Indebtedness in such manner as Lender deems best or, at the option of Lender, may be held unappropriated in a collateral account or released to Debtor, all without prejudice to the liability of Debtor or the rights of Lender hereunder, and any surplus shall be accounted for as required by law.
11. | EVENTS OF DEFAULT |
The happening of any Event of Default (as that term is defined in the Loan Agreement dated January 8, 2008 between Lender and Debtor (the "Loan Agreement")) shall constitute a default hereunder and is herein referred to as a "default".
12. | ACCELERATION |
In the event of default, Lender, in its sole discretion, may declare all or any part of Indebtedness which is not by its terms payable on demand to be immediately due and payable, without demand or notice of any kind. The provisions of this clause are not intended in any way to affect any rights of Lender with respect to any Indebtedness which may now or hereafter be payable on demand.
13. | REMEDIES |
(a) Upon default, Lender may appoint or reappoint by instrument in writing, any person or persons, whether an officer or officers or an employee or employees of Lender or not, to be a receiver or receivers (hereinafter called a " Receiver ", which term when used herein shall include a receiver and manager) of Collateral (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in its stead. Any such Receiver shall, so far as concerns responsibility for its acts, be deemed the agent of Debtor and not Lender, and Lender shall not be in any way responsible for any misconduct, negligence or nonfeasance on the part of any such Receiver, its servants, agents or employees. Subject to the provisions of the instrument appointing it, any such Receiver shall have power to take possession of Collateral, to preserve Collateral or its value, to carry on or concur in carrying on all or any part of the business of Debtor and to sell, lease, license or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including Debtor, enter upon, use and occupy all premises owned or occupied by Debtor constituting Collateral or wherein Collateral may be situate, maintain Collateral upon such premises, borrow money on a secured or unsecured basis and use Collateral directly in carrying on Debtor's business or as security for loans or advances to enable the Receiver to carry on Debtor's business or otherwise, as such Receiver shall, in its discretion, determine. Except as may be otherwise directed by Lender, all Money received from time to time by such Receiver in carrying out its appointment shall be received in trust for and paid over to Lender. Every such Receiver may, in the discretion of Lender, be vested with all or any of the rights and powers of Lender.
(b) Upon default, Lender may, either directly or through its agents or nominees, exercise any or all of the powers and rights given to a Receiver by virtue of the foregoing sub-clause (a).
(c) Lender may take possession of, collect, demand, sue on, enforce, recover and receive Collateral and give valid and binding receipts and discharges therefor and in respect thereof and, upon default, Lender may sell, lease, license or otherwise dispose of Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to Lender may seem reasonable.
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(d) In addition to those rights granted herein and in any other agreement now or hereafter in effect between Debtor and Lender and in addition to any other rights Lender may have at law or in equity, Lender shall have, both before and after default, all rights and remedies of a secured party under the P.P.S.A. provided always, that Lender shall not be liable or accountable for any failure to exercise its remedies, take possession of, collect, enforce, realize, sell, lease, license or otherwise dispose of Collateral or to institute any proceedings for such purposes. Furthermore, Lender shall have no obligation to take any steps to preserve rights against prior parties to any Instrument or Chattel Paper or prior encumbrances on any Real Property whether Collateral or proceeds and whether or not in Lender's possession and shall not be liable or accountable for failure to do so.
(e) Debtor acknowledges that Lender or any Receiver appointed by it may take possession of Collateral wherever it may be located and by any method permitted by law and Debtor agrees upon request from Lender or any such Receiver to assemble and deliver possession of Collateral at such place or places as directed.
(f) Debtor agrees to be liable for and to pay all costs, charges and expenses incurred by Lender or any Receiver or agent appointed by it, whether directly or for services rendered (including solicitors costs on a solicitor and his own client basis and auditors costs and other legal expenses and Receiver and agent remuneration), in operating Debtor's accounts, preparing or enforcing this Security Agreement, inspecting and determining the state of the Collateral, taking and maintaining custody of, preserving, repairing, processing, preparing for disposition and disposing of Collateral and in enforcing or collecting Indebtedness and all such costs, charges and expenses, together with any amounts owing as a result of any borrowing by Lender or any Receiver appointed by it, as permitted hereby, shall be a first charge on the proceeds of realization, collection or disposition of Collateral and shall be secured hereby.
(g) Lender will give Debtor such notice, if any, of the date, time and place of any public sale or of the date after which any private disposition of Collateral is to be made as may be required by the P.P.S.A. or other applicable law.
(h) Upon default and receiving written demand from Lender, Debtor shall take such further action as may be necessary to evidence and effect an assignment or licensing of Intellectual Property to whomsoever Lender directs, including to Lender. Debtor appoints any officer or director of Lender upon default to be its attorney in accordance with applicable legislation with full power of substitution and to do on Debtor's behalf anything that is required to assign, license or transfer, and to record any assignment, licence or transfer of the Collateral. This power of attorney, which is coupled with an interest, is irrevocable until the release or discharge of the Security Interest.
14. | MISCELLANEOUS |
(a) Debtor hereby authorizes Lender to file such financing statements, financing change statements, caveats, mortgages, forms, security notices and other documents and do such acts, matters and things (including completing and adding schedules hereto identifying Collateral or any permitted Encumbrances affecting Collateral or identifying the locations at which Debtor's business is carried on and Collateral and records relating thereto are situate) as Lender may deem appropriate to perfect on an ongoing basis and continue the Security Interest, to protect and preserve Collateral and to realize upon the Security Interest and Debtor hereby irrevocably constitutes and appoints any officer or director of Lender the true and lawful attorney of Debtor, with full power of substitution, to do any of the foregoing in the name of Debtor whenever and wherever it may be deemed necessary or expedient.
(b) Without limiting any other right of Lender, whenever Indebtedness is immediately due and payable or Lender has the right to declare Indebtedness to be immediately due and payable (whether or not it has so declared), Lender may, in its sole discretion, set off against Indebtedness any and all amounts then owed to Debtor by Lender in any capacity, whether or not due, and Lender shall be deemed
52
to have exercised such right to set off immediately at the time of making its decision to do so even though any charge therefor is made or entered on Lender's records subsequent thereto.
(c) Upon Debtor's failure to perform any of its duties hereunder, Lender may, but shall not be obligated to, perform any or all of such duties, and Debtor shall pay to Lender, forthwith upon written demand therefor, an amount equal to the expense incurred by Lender in so doing plus interest thereon from the date such expense is incurred until it is paid at the rate of 15% per annum.
(d) Lender may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, compromise, settle, grant releases and discharges and otherwise deal with Debtor, debtors of Debtor, sureties and others and with Collateral and other security as Lender may see fit without prejudice to the liability of Debtor or Lender's right to hold and realize the Security Interest. Furthermore, Lender may demand, collect and sue on Collateral in either Debtor's or Lender's name, at Lender's option, and may endorse Debtor's name on any and all cheques, commercial paper, and any other Instruments pertaining to or constituting Collateral.
(e) No delay or omission by Lender in exercising any right or remedy hereunder or with respect to any Indebtedness shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Furthermore, Lender may remedy any default by Debtor hereunder or with respect to any Indebtedness in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by Debtor. All rights and remedies of Lender granted or recognized herein are cumulative and may be exercised at any time and from time to time independently or in combination.
(f) Debtor waives protest of any Instrument constituting Collateral at any time held by Lender on which Debtor is in any way liable and, subject to Clause 13 (g) hereof, notice of any other action taken by Lender.
(g) This Security Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. In any action brought by an assignee of this Security Agreement and the Security Interest or any part thereof to enforce any rights hereunder, Debtor shall not assert against the assignee any claim or defence which Debtor now has or hereafter may have against Lender. If more than one Debtor executes this Security Agreement the obligations of such Debtors hereunder shall be joint and several and, unless the context otherwise requires, a reference to "Debtor" herein shall be deemed to be a reference to each of the undersigned.
(h) Subject to the Loan Agreement, Lender may provide any financial and other information it has about Debtor, the Security Interest and the Collateral to anyone acquiring or who may acquire an interest in the Security Interest or the Collateral from Lender or anyone acting on behalf of Lender.
(i) Save for any schedules which may be added hereto pursuant to the provisions hereof, no modification, variation or amendment of any provision of this Security Agreement shall be made except by a written agreement, executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing.
(j) Subject to the requirements of Clauses 13 (g) and 14 (k) hereof, whenever either party hereto is required or entitled to notify or direct the other or to make a demand or request upon the other, such notice, direction, demand or request shall be in writing and shall be sufficiently given, if given in accordance with the terms and conditions of the Loan Agreement.
(k) This Security Agreement and the security afforded hereby is in addition to and not in substitution for any other security now or hereafter held by Lender.
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(1) The headings used in this Security Agreement are for convenience only and are not to be considered a part of this Security Agreement and do not in any way limit or amplify the terms and provisions of this Security Agreement.
(m) When the context so requires, the singular number shall be read as if the plural were expressed and the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation.
(n) In the event any provisions of this Security Agreement, as amended from time to time, shall be deemed invalid or void, in whole or in part, by any Court of competent jurisdiction, the remaining terms and provisions of this Security Agreement shall remain in full force and effect.
(o) Nothing herein contained shall in any way obligate Lender to grant, continue, renew, extend time for payment of or accept anything which constitutes or would constitute Indebtedness.
(p) The Security Interest created hereby is intended to attach when this Security Agreement is signed by Debtor and delivered to Lender.
(q) Debtor acknowledges and agrees that in the event it amalgamates with any other company or companies it is the intention of the parties hereto that the term " Debtor " when used herein shall apply to each of the amalgamating companies and to the amalgamated company, such that the Security Interest granted hereby:
(i) | shall extend to " Collateral " (as that term is herein defined) owned by each of the amalgamating companies and the amalgamated company at the time of amalgamation and to any " Collateral " thereafter owned or acquired by the amalgamated company; and | |
(ii) | shall secure the " Indebtedness " (as that term is herein defined) of each of the amalgamating companies and the amalgamated company to Lender at the time of amalgamation and any "Indebtedness" of the amalgamated company to Lender thereafter arising. The Security Interest shall attach to " Collateral " owned by each company amalgamating with Debtor, and by the amalgamated company, at the time of amalgamation, and shall attach to any " Collateral " thereafter owned or acquired by the amalgamated company when such becomes owned or is acquired. |
(r) This Security Agreement and the transactions evidenced hereby shall be governed by and construed in accordance with the laws of the Province of Alberta.
(s) This Security Agreement is granted pursuant to the terms of the Loan Agreement and in the event of a conflict between the terms hereof and the Loan Agreement, the Loan Agreement shall prevail to the extent necessary to resolve such conflict.
15. | COPY OF AGREEMENT AND FINANCING STATEMENT |
(a) Debtor hereby acknowledges receipt of a copy of this Security Agreement. |
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(b) Debtor waives Debtor's right to receive a copy of a financing statement or financing change statement registered by Lender or any verification statement pertaining to a registration by Lender.
IN WITNESS WHEREOF Debtor has executed this Security Agreement as of the 8th day of January, 2008.
DYNAMIC GOLD CORP.
Per: / s / Tim Coupland
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SCHEDULE "A"
(ENCUMBRANCES AFFECTING COLLATERAL)
None
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SCHEDULE "B"
1. | Locations of Debtor's Business Operations |
Suite 506, 675 West Hastings St.
Vancouver, British Columbia V6B IN2 |
|
2. | Locations of Records relating to collateral (if different from 1. above) |
As above. | |
3 | Locations of collateral (if different from 1. above) |
As above. |
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SCHEDULE "C"
(DESCRIPTION OF PROPERTY)
All present and after acquired personal property.
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Exhibit 10.5
GENERAL SECURITY AGREEMENT
1. | SECURITY INTEREST |
(a) For value received, the undersigned (" Debtor ") hereby grants to TIM COUPLAND (" Lender ") a security interest, mortgage and charge (hereinafter collectively referred to as the " Security Interest" ) as hereinafter provided:
(i) a security interest in the undertaking of Debtor and all of Debtor's present and after acquired personal property including, without limitation, all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles, Money and Securities now owned or hereafter owned or acquired by or on behalf of Debtor (including such as may be returned to or repossessed by Debtor) and including, without limitation, all of the following now owned or hereafter owned or acquired by or on behalf of Debtor:
(A) | all Inventory of whatever kind and wherever situate; | |
(B) | all equipment (other than Inventory) of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, furniture, fixtures and vehicles of whatsoever nature or kind; | |
(C) | all Accounts and book debts and generally all debts, dues, claims, choses in action and demands of every nature and kind howsoever arising or secured and whether arising in connection with an interest in real or personal property or otherwise, including letters of credit and advices of credit, which are now due, owing or accruing or growing due to or owned by or which may hereafter become due, owing or accruing or growing due to or owned by Debtor (" Debts "); | |
(D) | all deeds, documents, writings, papers, books of account and other books relating to or being records of Debts, Chattel Paper or Documents of Title or by which such are or may hereafter be secured, evidenced, acknowledged or made payable; | |
(E) | all contractual rights and insurance claims; | |
(F) | all patents, industrial designs, trade-marks, trade secrets and know-how including without limitation environmental technology and biotechnology, confidential information, trade-names, goodwill, copyrights, personality rights, plant breeders' rights, integrated circuit topographies, software and all other forms of intellectual and industrial property, and any registrations and applications for registration of any of the foregoing (collectively " Intellectual Property "); and | |
(G) | all lists, records and files relating to debtors, customers, clients and patients; |
(ii) | a mortgage and charge as and by way of a floating charge, in all of Debtor's present and after acquired interest in property, assets and undertaking not secured in (i) above, including all real, immoveable and leaseholds property and all easements, rights-of-way, privileges, benefits, licences, improvements and rights whether connected therewith or appurtenant thereto or separately owned or held, |
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including without limitation, all structures, plant and other fixtures now owned or hereafter owned or acquired by or on behalf of Debtor (hereinafter collectively referred to as " Real Property "); and | ||
(iii) | a security interest in all property described in Schedule "c" or any replacement or additional Schedule "c" now or hereafter annexed hereto; and a security interest in all proceeds and renewals thereof, accretions thereto and substitution therefor, all of the foregoing being hereinafter collectively referred to as the " Collateral " . |
(b) The Security Interest granted hereby shall not extend or apply to and Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term.
(c) The terms " Goods ", " Chattel Paper ", " Document of Title ", " Instrument ", " Intangible ", " Security ", " proceeds ", " Inventory ", " equipment ", " accession ", " Money ", " Account ", "financing statement" and "financing change statement" whenever used herein shall be interpreted pursuant to their respective meanings when used in the Personal Property Security Act (Alberta), which Act, including amendments thereto and any Act substituted therefor and amendments thereto is herein referred to as the "P.P.S.A.". Provided always that the term " Goods " when used herein shall not include " consumer goods " of Debtor as that term is defined in the P.P.S.A. and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such during the term of this Security Agreement. Any reference herein to "Collateral" shall, unless the context otherwise requires, be deemed a reference to "collateral or any part thereof'.
2. | INDEBTEDNESS SECURED |
The Security Interest granted hereby secures payment and performance of any and all obligation, indebtedness and liability of Debtor to Lender (including interest thereon) present or future, direct or indirect, absolute or contingent, matured or not, extended or renewed, wheresoever and howsoever incurred and any ultimate unpaid balance thereof and whether the same is from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again and whether Debtor be bound alone or with another or others and whether as principal or surety (hereinafter collectively called the "Indebtedness"). If the Security Interest in the Collateral is not sufficient, in the event of default, to satisfy all Indebtedness of Debtor, Debtor acknowledges and agrees that Debtor shall continue to be liable for any Indebtedness remaining outstanding and Lender shall be entitled to pursue full payment thereof.
3. | REPRESENTATIONS AND WARRANTIES OF DEBTOR |
Debtor represents and warrants and so long as this Security Agreement remains in effect shall be deemed to continuously represent and warrant that:
(a) the Collateral is owned by Debtor free of all security interests, mortgages, lien claims, charges, licences, leases, infringements by third parties, encumbrances or other adverse claim or interests (hereinafter collectively called "Encumbrances"), save for the Security Interest and those Encumbrances shown on Schedule "A" or hereafter approved in writing by Lender, prior to their creation or assumption;
(b) all Intellectual Property applications and registrations are valid and in good standing and Debtor is the owner of the applications and registrations;
(c) each Debt, Chattel Paper and Instrument constituting Collateral is enforceable in accordance with its terms against the party obligated to pay the same (the " Account Debtor "), and the
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amount represented by Debtor to Lender from time to time as owing by each Account Debtor or by all Account Debtors will be the correct amount actually and unconditionally owing by such Account Debtor or Account Debtors, except for normal cash discounts where applicable, and no Account Debtor will have any defence, set off, claim or counterclaim against Debtor which can be asserted against Lender, whether in any proceeding to enforce Collateral or otherwise;
(d) the locations specified in Schedule "B" as to business operations and records are accurate and complete and with respect to Real Property and Goods (including Inventory) constituting Collateral, the locations specified in Schedule "B" are accurate and complete save for Goods in transit to such locations and Inventory on lease or consignment; and all buildings, fixtures or Goods about to become fixtures and all crops and all oil, gas or other minerals to be extracted and all timber to be cut which forms part of the Collateral will be situate at one of such locations;
(e) Debtor has disclosed to Lender all environmental and other matters which could have a material effect on the financial condition or operations of Debtor; and
(f) the execution, delivery and performance of the obligations under this Security Agreement and the creation of any security interest in or assignment hereunder of Debtor's rights in the Collateral to Lender will not result in a breach of any agreement to which Debtor is a party.
4. | COVENANTS OF THE DEBTOR |
So long as this Security Agreement remains in effect Debtor covenants and agrees:
(a) to defend the Collateral against the claims and demands of all other parties claiming the same or an interest therein; to diligently initiate and prosecute legal action against all infringers of Debtor's rights in Intellectual Property; to take all reasonable action to keep the Collateral free from all Encumbrances, except for the Security Interest, licences which are compulsory under federal or provincial legislation and those shown in Schedule "A" or hereafter approved in writing by Lender, prior to their creation or assumption; and not to sell, exchange, transfer, assign, lease, license or otherwise dispose of Collateral or any interest therein without the prior written consent of Lender; provided always that, until default, Debtor may, in the ordinary course of Debtor's business, sell or lease Inventory and, subject to Clause 7 hereof, use Money available to Debtor;
(b) | to notify Lender promptly of: |
(i) | any change in the information contained herein or III the Schedules hereto | |
relating to Debtor, Debtor's business or Collateral; | ||
(ii) | the details of any significant acquisition of Collateral; | |
(iii) | the details of any claims or litigation affecting Debtor or Collateral; | |
(iv) | any loss or damage to Collateral; | |
(v) | any default by any Account Debtor in payment or other performance of its obligations with respect to Collateral; and | |
(vi) | the return to or repossession by Debtor of Collateral; |
(c) to keep Collateral in good order, condition and repair and not to use Collateral in violation of the provisions of this Security Agreement or any other agreement relating to Collateral or any policy insuring Collateral or any applicable statute, law, by-law, rule, regulation or ordinance; to keep all
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agreements, registrations and applications relating to Intellectual Property and intellectual property used by Debtor in its business in good standing and to renew all agreements and registrations as may be necessary or desirable to protect Intellectual Property, unless otherwise agreed in writing by Lender; to apply to register all existing and future copyrights, trade-marks, patents, integrated circuit topographies and industrial designs whenever it is commercially reasonable to do so;
(d) to do, execute, acknowledge and deliver such financing statements, financing change statements and further assignments, transfers, caveats, mortgages, notices, documents, acts, matters and things (including further schedules hereto) as may be reasonably Requested by Lender of or with respect to Collateral in order to give effect to these presents and to pay all costs for searches and filings in connection therewith;
(e) to pay all taxes, rates, levies, assessments and other charges of every nature which may be lawfully levied, assessed or imposed against or in respect of Debtor or Collateral as and when the same become due and payable;
(f) to insure Collateral for such periods, in such amounts, on such terms and against loss or damage by fire and such other risks as Lender shall reasonably direct with loss payable to Lender and Debtor, as insureds, as their respective interests may appear, and to pay all premiums therefor;
(g) to prevent Collateral, save Inventory sold or leased as permitted hereby, from being or becoming an accession to other property not covered by this Security Agreement;
(h) to carry on and conduct the business of Debtor in accordance with all applicable laws, in a proper and efficient manner and so as to protect and preserve Collateral and to keep, in accordance with generally accepted accounting principles, consistently applied, proper books of account for Debtor's business as well as accurate and complete records concerning Collateral, and mark any and all such records and Collateral at Lender's request so as to indicate the Security Interest; and
(i) | to deliver to Lender from time to time promptly upon request | ||
(i) | any Documents of Title, Instruments, Securities, Chattel Paper and duplicate certificates of title to Real Property constituting, representing or relating to Collateral; | ||
(ii) | all books of account and all records, ledgers, reports, correspondence, schedules, documents, statements, lists and other writings relating to Collateral for the purpose of inspecting, auditing or copying the same; | ||
(iii) | all financial statements prepared by or for Debtor regarding Debtor's business; | ||
(iv) | all policies and certificates of insurance relating to Collateral; and | ||
(v) | such information concerning Collateral, Debtor and Debtor's business and affairs as Lender may reasonably request. |
5. | USE AND VERIFICATION OF COLLATERAL |
Subject to compliance with Debtor's covenants contained herein and Clause 7 hereof, Debtor may, until default, possess, operate, collect, use and enjoy and deal with Collateral in the ordinary course of Debtor's business in any manner not inconsistent with the provisions hereof; provided always that Lender shall have the right at any time and from time to time to verify compliance by Debtor with Debtor's obligations under this Security Agreement (including through inquiries with governmental
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agencies) and the existence and state of the Collateral in any manner Lender may consider appropriate and Debtor agrees to furnish all assistance and information and to perform all such acts as Lender may reasonably request in connection therewith and for such purpose to grant to Lender or its agents access to all places where Collateral may be located and to all premises occupied by Debtor.
6. | SECURITIES |
If Collateral at any time includes Securities, Debtor authorizes Lender to transfer the same or any part thereof into its own name or that of its nominee(s) so that Lender or its nominee(s) may appear of record as the sole owner thereof; provided that, until default, Lender shall deliver promptly to Debtor all notices or other communications received by it or its nominee(s) as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall issue to Debtor or its order a proxy to vote and take all action with respect to such Securities. After default, Debtor waives all rights to receive any notices or communications received by Lender or its nominee(s) as such registered owner and agrees that no proxy issued by Lender to Debtor or its order as aforesaid shall thereafter be effective.
7. | COLLECTION OF DEBTS |
Afte r default under this Security Agreement, Lender may notify all or any Account Debtors of the Security Interest and may also direct such Account Debtors to make all payments on Collateral to Lender. Debtor acknowledges that any payments on or other proceeds of Collateral received by Debtor from Account Debtors, whether before or after notification of this Security Interest to Account Debtors and whether before or after default under this Security Agreement shall be received and held by Debtor in trust for Lender and shall be turned over to Lender upon request.
8. | INCOME FROM AND INTEREST ON COLLATERAL |
(a) Until default, Debtor reserves the right to receive any Money constituting income from or interest on Collateral and if Lender receives any such Money prior to default, Lender shall either credit the same against the Indebtedness or pay the same promptly to Debtor.
(b) After default, Debtor will not request or receive any Money constituting income from or interest on Collateral and if Debtor receives any such Money without any request by it, Debtor will pay the same promptly to Lender.
9. | INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS |
(a) | Whether or not default has occurred, Debtor authorizes Lender: |
(i) | to receive any increase in or profits on Collateral (other than Money) and to hold the same as part of collateral. Money so received shall be treated as income for the purposes of Clause 8 hereof and dealt with accordingly; and | |
(ii) | to receive any payment or distribution upon redemption or retirement or upon dissolution and liquidation of the issuer of Collateral; to surrender such Collateral in exchange therefor; and to hold any such payment or distribution as part of Collateral. |
(b) If Debtor receives any such increase or profits (other than Money) or payments or distributions, Debtor will deliver the same promptly to Lender to be held by Lender as herein provided.
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10. | DISPOSITION OF MONEY |
Subject to any applicable requirements of the P.P.S.A. or other applicable law, all Money collected or received by Lender pursuant to or in exercise of any right it possesses with respect to Collateral shall be applied on account of Indebtedness in such manner as Lender deems best or, at the option of Lender, may be held unappropriated in a collateral account or released to Debtor, all without prejudice to the liability of Debtor or the rights of Lender hereunder, and any surplus shall be accounted for as required by law.
11. | EVENTS OF DEFAULT |
The happening of any Event of Default (as that term is defined in the Loan Agreement dated January 8, 2008 between Lender and Dynamic Gold Corp. (the " Loan Agreement ")) shall constitute a default hereunder and is herein referred to as a "default".
12. | ACCELERA TION |
In the event of default, Lender, in its sole discretion, may declare all or any part of Indebtedness which is not by its terms payable on demand to be immediately due and payable, without demand or notice of any kind. The provisions of this clause are not intended in any way to affect any rights of Lender with respect to any Indebtedness which may now or hereafter be payable on demand.
13. | REMEDIES |
(a) Upon default, Lender may appoint or reappoint by instrument in writing, any person or persons, whether an officer or officers or an employee or employees of Lender or not, to be a receiver or receivers (hereinafter called a " Receiver ", which term when used herein shall include a receiver and manager) of Collateral (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in its stead. Any such Receiver shall, so far as concerns responsibility for its acts, be deemed the agent of Debtor and not Lender, and Lender shall not be in any way responsible for any misconduct, negligence or nonfeasance on the part of any such Receiver, its servants, agents or employees. Subject to the provisions of the instrument appointing it, any such Receiver shall have power to take possession of Collateral, to preserve Collateral or its value, to carry on or concur in carrying on all or any part of the business of Debtor and to sell, lease, license or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including Debtor, enter upon, use and occupy all premises owned or occupied by Debtor constituting Collateral or wherein Collateral may be situate, maintain Collateral upon such premises, borrow money on a secured or unsecured basis and use Collateral directly in carrying on Debtor's business or as security for loans or advances to enable the Receiver to carry on Debtor's business or otherwise, as such Receiver shall, in its discretion, determine. Except as may be otherwise directed by Lender, all Money received from time to time by such Receiver in carrying out its appointment shall be received in trust for and paid over to Lender. Every such Receiver may, in the discretion of Lender, be vested with all or any of the rights and powers of Lender.
(b) Upon default, Lender may, either directly or through its agents or nominees, exercise any or all of the powers and rights given to a Receiver by virtue of the foregoing sub-clause (a).
(c) Lender may take possession of, collect, demand, sue on, enforce, recover and receive Collateral and give valid and binding receipts and discharges therefor and in respect thereof and, upon default, Lender may sell, lease, license or otherwise dispose of Collateral in such manner, at such time or times and place or places, for such consideration and upon such terms and conditions as to Lender may seem reasonable.
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(d) In addition to those rights granted herein and in any other agreement now or hereafter in effect between Debtor and Lender and in addition to any other rights Lender may have at law or in equity, Lender shall have, both before and after default, all rights and remedies of a secured party under the P.P.S.A. provided always, that Lender shall not be liable or accountable for any failure to exercise its remedies, take possession of, collect, enforce, realize, sell, lease, license or otherwise dispose of Collateral or to institute any proceedings for such purposes. Furthermore, Lender shall have no obligation to take any steps to preserve rights against prior parties to any Instrument or Chattel Paper or prior encumbrances on any Real Property whether Collateral or proceeds and whether or not in Lender's possession and shall not be liable or accountable for failure to do so.
(e) Debtor acknowledges that Lender or any Receiver appointed by it may take possession of Collateral wherever it may be located and by any method permitted by law and Debtor agrees upon request from Lender or any such Receiver to assemble and deliver possession of Collateral at such place or places as directed.
(f) Debtor agrees to be liable for and to pay all costs, charges and expenses incurred by Lender or any Receiver or agent appointed by it, whether directly or for services rendered (including solicitors costs on a solicitor and his own client basis and auditors costs and other legal expenses and Receiver and agent remuneration), in operating Debtor's accounts, preparing or enforcing this Security Agreement, inspecting and determining the state of the Collateral, taking and maintaining custody of, preserving, repairing, processing, preparing for disposition and disposing of Collateral and in enforcing or collecting Indebtedness and all such costs, charges and expenses, together with any amounts owing as a result of any borrowing by Lender or any Receiver appointed by it, as permitted hereby, shall be a first charge on the proceeds of realization, collection or disposition of Collateral and shall be secured hereby.
(g) Lender will give Debtor such notice, if any, of the date, time and place of any public sale or of the date after which any private disposition of Collateral is to be made as may be required by the P.P.S.A. or other applicable law.
(h) Upon default and receiving written demand from Lender, Debtor shall take such further action as may be necessary to evidence and effect an assignment or licensing of Intellectual Property to whomsoever Lender directs, including to Lender. Debtor appoints any officer or director of Lender upon default to be its attorney in accordance with applicable legislation with full power of substitution and to do on Debtor's behalf anything that is required to assign, license or transfer, and to record any assignment, licence or transfer of the Collateral. This power of attorney, which is coupled with an interest, is irrevocable until the release or discharge of the Security Interest.
14. | MISCELLANEOUS |
(a) Debtor hereby authorizes Lender to file such financing statements, financing change statements, caveats, mortgages, forms, security notices and other documents and do such acts, matters and things (including completing and adding schedules hereto identifying Collateral or any permitted Encumbrances affecting Collateral or identifying the locations at which Debtor's business is carried on and Collateral and records relating thereto are situate) as Lender may deem appropriate to perfect on an ongoing basis and continue the Security Interest, to protect and preserve Collateral and to realize upon the Security Interest and Debtor hereby irrevocably constitutes and appoints any officer or director of Lender the true and lawful attorney of Debtor, with full power of substitution, to do any of the foregoing in the name of Debtor whenever and wherever it may be deemed necessary or expedient.
(b) Without limiting any other right of Lender, whenever Indebtedness is immediately due and payable or Lender has the right to declare Indebtedness to be immediately due and payable (whether or not it has so declared), Lender may, in its sole discretion, set off against Indebtedness any and all amounts then owed to Debtor by Lender in any capacity, whether or not due, and Lender shall be deemed
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to have exercised such right to set off immediately at the time of making its decision to do so even though any charge therefor is made or entered on Lender's records subsequent thereto.
(c) Upon Debtor's failure to perform any of its duties hereunder, Lender may, but shall not be obligated to, perform any or all of such duties, and Debtor shall pay to Lender, forthwith upon written demand therefor, an amount equal to the expense incurred by Lender in so doing plus interest thereon from the date such expense is incurred until it is paid at the rate of 15% per annum.
(d) Lender may grant extensions of time and other indulgences, take and give up security, accept compositions, compound, compromise, settle, grant releases and discharges and otherwise deal with Debtor, debtors of Debtor, sureties and others and with Collateral and other security as Lender may see fit without prejudice to the liability of Debtor or Lender's right to hold and realize the Security Interest. Furthermore, Lender may demand, collect and sue on Collateral in either Debtor's or Lender's name, at Lender's option, and may endorse Debtor's name on any and all cheques, commercial paper, and any other Instruments pertaining to or constituting Collateral.
(e) No delay or omission by Lender in exercising any right or remedy hereunder or with respect to any Indebtedness shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Furthermore, Lender may remedy any default by Debtor hereunder or with respect to any Indebtedness in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by Debtor. All rights and remedies of Lender granted or recognized herein are cumulative and may be exercised at any time and from time to time independently or in combination.
(f) Debtor waives protest of any Instrument constituting Collateral at any time held by Lender on which Debtor is in any way liable and, subject to Clause 13 (g) hereof, notice of any other action taken by Lender.
(g) This Security Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. In any action brought by an assignee of this Security Agreement and the Security Interest or any part thereof to enforce any rights hereunder, Debtor shall not assert against the assignee any claim or defence which Debtor now has or hereafter may have against Lender. If more than one Debtor executes this Security Agreement the obligations of such Debtors hereunder shall be joint and several and, unless the context otherwise requires, a reference to "Debtor" herein shall be deemed to be a reference to each of the undersigned.
(h) Subject to the Loan Agreement, Lender may provide any financial and other information it has about Debtor, the Security Interest and the Collateral to anyone acquiring or who may acquire an interest in the Security Interest or the Collateral from Lender or anyone acting on behalf of Lender.
(i) Save for any schedules which may be added hereto pursuant to the provisions hereof, no modification, variation or amendment of any provision of this Security Agreement shall be made except by a written agreement, executed by the parties hereto and no waiver of any provision hereof shall be effective unless in writing.
(j) Subject to the requirements of Clauses 13 (g) and 14 (k) hereof, whenever either party hereto is required or entitled to notify or direct the other or to make a demand or request upon the other, such notice, direction, demand or request shall be in writing and shall be sufficiently given, if given in accordance with the terms and conditions of the Loan Agreement.
(k) This Security Agreement and the security afforded hereby is in addition to and not in substitution for any other security now or hereafter held by Lender.
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(1) The headings used in this Security Agreement are for convenience only and are not to be considered a part of this Security Agreement and do not in any way limit or amplify the terms and provisions of this Security Agreement.
(m) When the context so requires, the singular number shall be read as if the plural were expressed and the provisions hereof shall be read with all grammatical changes necessary dependent upon the person referred to being a male, female, firm or corporation.
(n) In the event any provisions of this Security Agreement, as amended from time to time, shall be deemed invalid or void, in whole or in part, by any Court of competent jurisdiction, the remaining terms and provisions of this Security Agreement shall remain in full force and effect.
(0) Nothing herein contained shall in any way obligate Lender to grant, continue, renew, extend time for payment of or accept anything which constitutes or would constitute Indebtedness.
(p) The Security Interest created hereby is intended to attach when this Security Agreement is signed by Debtor and delivered to Lender.
(q) Debtor acknowledges and agrees that in the event it amalgamates with any other company or companies it is the intention of the parties hereto that the term " Debtor " when used herein shall apply to each of the amalgamating companies and to the amalgamated company, such that the Security Interest granted hereby:
(i) shall extend to " Collateral " (as that term is herein defined) owned by each of the amalgamating companies and the amalgamated company at the time of amalgamation and to any " Collateral " thereafter owned or acquired by the amalgamated company; and
(ii) shall secure the " Indebtedness " (as that term is herein defined) of each of the amalgamating companies and the amalgamated company to Lender at the time of amalgamation and any "Indebtedness" of the amalgamated company to Lender thereafter arising. The Security Interest shall attach to " Collateral " owned by each company amalgamating with Debtor, and by the amalgamated company, at the time of amalgamation, and shall attach to any " Collateral " thereafter owned or acquired by the amalgamated company when such becomes owned or is acquired.
(r) This Security Agreement and the transactions evidenced hereby shall be governed by and construed in accordance with the laws of the Province of Alberta.
(s) This Security Agreement is granted pursuant to the terms of the Loan Agreement and in the event of a conflict between the terms hereof and the Loan Agreement, the Loan Agreement shall prevail to the extent necessary to resolve such conflict.
15. | COPY OF AGREEMENT AND FINANCING STATEMENT |
(a) Debtor hereby acknowledges receipt of a copy of this Security Agreement. |
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(b) Debtor waives Debtor's right to receive a copy of a financing statement or financing change statement registered by Lender or any verification statement pertaining to a registration by Lender.
IN WITNESS WHEREOF Debtor has executed this Security Agreement as of the 8th day of January, 2008.
DYNAMIC GRAVEL HOLDINGS LTD.
Per: / s / Tim Coupland
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SCHEDULE "A"
(ENCUMBRANCES AFFECTING COLLATERAL)
None
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SCHEDULE "B"
1. | Locations of Debtor's Business Operations |
Suite 506, 675 West Hastings St.
Vancouver, British Columbia V6B IN2 |
|
2. | Locations of Records relating to collateral (if different from 1. above) |
As above. | |
3 | Locations of collateral (if different from 1. above) |
As above. |
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SCHEDULE "C"
(DESCRIPTION OF PROPERTY)
All present and after acquired personal property.
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Exhibit 10.6
MATERIAL SUBSIDIARY GUARANTEE
TO: | Tim Coupland |
c/o Suite 506 - 675 West Hastings Street | |
Vancouver, British Columbia |
|
V6B IN2 |
PREAMBLE
A. | Dynamic Gold Corp. (the " Borrower ") and Tim Coupland (the " Lender ") are parties to a loan agreement dated January 8, 2008 (such loan agreement, as it may be amended, supplemented or otherwise modified or restated from time to time, the " Loan Agreement ") . |
B. | Pursuant to the Loan Agreement, the Borrower is or may become indebted to the Lender. |
C. | It is in the interests of DYNAMIC GRAVEL HOLDINGS LTD. (the " Guarantor "), as a Material Subsidiary of the Borrower, that the Lender extend credit to the Borrower pursuant to the applicable Credit Documents and therefore the Guarantor is prepared to issue this Guarantee to the Lender. |
AGREEMENT:
For valuable consideration, the receipt and sufficiency of which are hereby conclusively acknowledged by the Guarantor, the Guarantor hereby agrees in favour of the Lender as follows:
1. | Defined Terms . In this Guarantee, capitalized words and phrases which are not otherwise defined have the respective meanings given to such terms in the Loan Agreement. In addition, the term "Credit Documents" when used herein means the Loan Agreement, the Security and any other documents, instruments or agreements entered into pursuant thereto. |
2. | Guarantee. The Guarantor hereby unconditionally and irrevocably guarantees the prompt payment and performance to the Lender forthwith upon demand by the Lender, following a demand by the Lender upon the Borrower made in accordance with the terms of the Credit Documents, of all indebtedness, liabilities and obligations of any kind whatsoever (whether direct or indirect, joint or several, absolute or contingent, matured or unmatured) which the Borrower has from time to time incurred or is under or may hereafter incur or be under to the Lender under, in connection with or with respect to the Credit Documents (collectively, the " Obligations "). All amounts payable by the Guarantor hereunder will be paid to the Lender at the address of the Lender shown above or as otherwise directed in writing by the Lender. Any amounts payable by the Guarantor under this Guarantee which are not paid forthwith upon demand therefor by the Lender will bear interest from the date of such demand at the rate or rates applicable to the corresponding Obligations. |
3. | Continuing, Unconditional and Absolute Guarantee . The obligations of the Guarantor under this Guarantee are continuing, unconditional and absolute and, without limiting the generality of the foregoing, will not be released, discharged, diminished, limited or otherwise affected by (and the Guarantor hereby consents to or waives, as applicable, to the fullest extent permitted by applicable Law): |
(a) | any extension, other indulgence, renewal, settlement, discharge, compromise, waiver, subordination or release in respect of any Obligation, security, Person or otherwise; |
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(b) | any waiver, modification, restatement or amendment of or supplement to any Credit Document or the Obligations, including any increase or decrease in the principal, the rates of interest or other amounts payable thereunder; | |
(c) | any change in the time, manner or place of payment of or in any other term of any Credit Document or the Obligations, or the failure on the part of the Borrower or any Material Subsidiary to carry out any of its Obligations under any Credit Document; | |
(d) | any impossibility, impracticability, frustration of purpose, illegality, force majeure or act of government; | |
(e) | any release, non-perfection or invalidity of any direct or indirect security for any Obligation; | |
(f) | any change in the existence, structure, constitution, name, objects, powers, business, control or ownership of the Borrower or any Material Subsidiary or any other Person, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Borrower or any other Material Subsidiary or any other Person or its assets; | |
(g) | the existence of any claim, set-off or other rights which the Guarantor may have at any time against the Borrower or any Material Subsidiary, the Lender or any other Person, whether in connection herewith or any unrelated transactions; | |
(h) | any invalidity, illegality or unenforceability relating to or against the Borrower or any provision of applicable Law purporting to prohibit the payment by the Borrower or any Material Subsidiary of the principal or interest under the Obligations; | |
(i) | any limitation, postponement, prohibition, subordination or other restriction on the rights of the Lender to receive payment of the Obligations; | |
(j) | any release, substitution or addition of any cosigner, endorser or other guarantor of the Obligations; | |
(k) | any defence arising by reason of any failure of the Lender to make any presentment, demand for performance, notice of non-performance, protest, and any other notice, including notice of all of the following: acceptance of this Guarantee, partial payment or non-payment of all or any part of the Obligations and the existence, creation, or incurring of new or additional Obligations; | |
(1) | any defence arising by reason of any failure of the Lender to proceed against the Borrower or any Material Subsidiary or any other Person, to proceed against, apply or exhaust arty security held from the Borrower or any Material Subsidiary or any other Person for the Obligations, to proceed against, apply or exhaust any security held from the Guarantor or any other Person for this Guarantee or to pursue any other remedy in the power of the Lender whatsoever; | |
(m) | any Law which provides that the obligation of a guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal obligation or which reduces a guarantor's obligation in proportion to the principal obligation; |
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(n) | any defence ansmg by reason of any incapacity, lack of authority, or other defence of the Borrower, any Material Subsidiary or any other Person, or by reason of any limitation, postponement, prohibition on the Lender's right to receive payment of the Obligations or any part thereof, or by reason of the cessation from any cause whatsoever of the liability of the Borrower, any Material Subsidiary or any other Person with respect to all or any part of the Obligations, or by reason of any act or omission of the Lender or others which directly or indirectly results in the discharge or release of the Borrower, any Material Subsidiary or any other Person or all or any part of the Obligations or any security or guarantee therefor, whether by contract, operation of law or otherwise; | |
(o) | any defence arising by reason of any failure by the Lender to obtain, perfect or maintain a perfected or prior (or any) security interest in or Lien upon any property of the Borrower, any Material Subsidiary or any other Person, or by reason of any interest of the Lender in any property, whether as owner thereof or the holder of a security interest therein or Lien thereon, being invalidated, voided, declared fraudulent or preferential or otherwise set aside, or by reason of any impairment by the Lender of any right to recourse or collateral; | |
(p) | any defence arising by reason of the failure of the Lender to marshal any assets; | |
(q) | any defence based upon any failure of the Lender to give to the Borrower or any Material Subsidiary notice of any sale or other disposition of any property securing any or all of the Obligations or any guarantee thereof, or any defect in any notice that may be given in connection with any sale or other disposition of any such property, or any failure of the Lender to comply with any provision of applicable Law in enforcing any Lien upon any such property, including any failure by the Lender to dispose of any such property in a commercially reasonable manner; | |
(r) | any dealing whatsoever with the Borrower, any Material Subsidiary or other Person or any security, whether negligently or not, or any failure to do so; | |
(s) | any defence based upon or arising out of any bankruptcy, insolvency, reorganization, moratorium, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against the Borrower, any Material Subsidiary or any other Person, including any discharge of, or bar against collecting, any of the Obligations, in or as a result of any such proceeding; or | |
(t) | any other act or omission to act or delay of any kind by the Borrower, any Material Subsidiary, the Lender or any other Person or any other circumstance whatsoever, whether similar or dissimilar to the foregoing, which might, but for the provisions of this Section 3, constitute a legal or equitable discharge, limitation or reduction of the Guarantors obligations hereunder (other than the irrevocable and unconditional payment in full of all of the Obligations). | |
The foregoing provisions apply (and the foregoing waivers will be effective) even if the effect of any action (or failure to take action) by the Lender is to destroy or diminish the Guarantors subrogation rights, the Guarantors right to proceed against the Borrower for reimbursement, the Guarantors right to recover contribution from any other guarantor or any other right or remedy.
4. | Release of Obligations . This Guarantee will remain in full force and effect until the Obligations are irrevocably and unconditionally performed and paid in full. |
5. | Validity of Agreements . The Guarantor will not contest or otherwise challenge the legality, validity or enforceability of any term, condition or other provision contained in the Credit Documents. The Guarantor represents to the Lender that it is familiar with and consents to the terms and conditions of the Credit Documents. |
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6. | Assumption of Authority . The Lender is entitled to assume, notwithstanding any investigation by or on behalf of the Lender the power and authority of the officers, directors, agents or other Persons acting or purporting to act on behalf of the Borrower or any Material Subsidiary, and any Obligations made or created in reliance upon the exercise of such power or authority will be guaranteed hereunder. |
7. | Recourse against Borrower . The Lender is not required to exhaust its recourse against the Borrower, any other Material Subsidiary, any other guarantor or other Person or under any other security or other guarantee before being entitled to payment from the Guarantor under this Guarantee. |
8. | Settlement of Accounts . Any account settled or stated between the Lender and the Borrower will be accepted by the Guarantor as prima facie evidence, subject to manifest error, that the amount thereby appearing due by the Borrower to the Lender is so due. |
9. | No Waiver . No delay on the part of the Lender in exercising any of its options, powers or rights, or partial or single exercise thereof, will constitute a waiver thereof. No waiver of any of the Lenders rights hereunder, and no modification or amendment of this Guarantee, will be deemed to be made by the Lender unless the same will be in writing, duly signed by the Lender and the Guarantor, and each such waiver, if any, will apply only with respect to the specific instance involved, and will in no way impair the rights of the Lender or the liabilities of the Guarantor to the Lender in any other respect at any other time. |
10. | Guarantee of all Credit Obtained: Indemnity . All moneys and credits in fact borrowed or obtained by the Borrower from the Lender under the Credit Documents will be deemed to form part of the Obligations notwithstanding any incapacity, disability or lack or limitation of status or power of the Borrower or of the directors, officers, employees, partners or agents thereof, or that the Borrower may not be a legal entity, or any irregularity, defect or informality in the borrowing or obtaining of such moneys or credits. If any amount in respect of the Obligations is not recoverable from the Guarantor hereunder on the basis of a guarantee, then, notwithstanding any other provision hereof, the Guarantor will indemnify and save harmless the Lender from and against any and all losses, damages, costs, expenses or liabilities suffered or incurred by the Lender resulting or arising from or relating to any failure of the Borrower or any other Material Subsidiary to unconditionally and irrevocably pay in full or fully perform the Obligations as and when due provided that the amount of such indemnification shall not exceed the amount of such Obligations and any amounts due and owing hereunder. |
11. | Stay of Acceleration . If acceleration of the time for payment, or the liability of the Borrower to make payment, of any amount specified to be payable by the Borrower in respect of the Obligations is stayed, prohibited or otherwise affected upon the insolvency, bankruptcy, reorganization or winding-up of the Borrower or any moratorium affecting the payment of the Obligations, all such amounts otherwise subject to acceleration or payment will nonetheless be deemed for all purposes of this Guarantee to be and to become due and payable by the Borrower and will be payable by the Guarantor hereunder forthwith on demand by the Lender. |
12. | Reinstatement . If, at any time, all or any part of any payment previously applied by the Lender to any Obligation is or must be rescinded or returned by the Lender for any reason whatsoever (including the insolvency, bankruptcy, or reorganization of the Borrower or any other Material Subsidiary), such Obligation will, for the purpose of this Guarantee, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding such application by the Lender and this Guarantee will continue to be effective or be reinstated, as the case may be, as to such Obligation, all as though such application by the Lender had not been made. |
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13. | Assignment and Postponement . Following the occurrence and during the continuance of a Default or an Event of Default, all present and future indebtedness and liability of the Borrower or any other Material Subsidiary to the Guarantor is hereby assigned by the Guarantor to the Lender and postponed to the Obligations and all moneys received by the Guarantor in respect thereof will be received in trust for and, unless prior written authorization from the Lender to the contrary will have been obtained by the Guarantor, will be paid over to the Lender upon demand by the Lender. If the Lender receives from the Guarantor a payment or payments in full or on account of the liability of the Guarantor hereunder, the Guarantor will not be entitled to claim repayment against the Borrower or any other Material Subsidiary until the Lender's claims against the Borrower have been irrevocably and unconditionally paid in full. In case of liquidation, winding up or bankruptcy of the Borrower or any other Material Subsidiary (whether voluntary or involuntary) or any composition with creditors or scheme of arrangement, the Lender will have the right to rank for its full claims and receive all dividends or other payments in respect thereof in priority to the Guarantor until the claims of the Lender have been irrevocably and unconditionally paid in full, and the Guarantor will continue to be liable hereunder for any balance which may be owing to the Lender by the Borrower or any other Material Subsidiary. In the event of the valuation by the Lender of any of its security and/or the retention thereof by the Lender, such valuation and/or retention will not, as between the Lender and the Guarantor, be considered as a purchase of such security, or as payment or satisfaction of the Obligations or any part thereof. The foregoing provisions of this Section 13 will not in any way limit or lessen the liability of the Guarantor under any other section of this Guarantee. |
14. | No Subrogation . Notwithstanding any payment made by the Guarantor under this Guarantee or any setoff or application of funds of the Guarantor by the Lender the Guarantor will have no right of subrogation to, and waives, to the fullest extent permitted by Law, any right to enforce any remedy which the Lender now has or may hereafter have against the Borrower or any other Material Subsidiary, until all of the Obligations have been irrevocably and unconditionally paid in full; and until that time, the Guarantor waives any benefit of, and any right to participate in, any security, whether real or personal property, now or hereafter held by the Lender for the Obligations. |
15. | Foreign Currency Obligations. The Guarantor will make payment relative to each Obligation in the currency (the " Original Currency ") in which the Borrower is required to pay such Obligation. If the Guarantor makes payment relative to any Obligation to the Lender in a currency (the " Other Currency ") other than the Original Currency (whether voluntarily or pursuant to an order or judgment of a court or tribunal of any jurisdiction), such payment will constitute a discharge of the liability of the Guarantor hereunder in respect of such Obligation only to the extent of the amount of the Original Currency which the Lender is able to purchase at Vancouver, British Columbia with the amount it receives on the date of receipt. If the amount of the Original Currency which the Lender is able to purchase is less than the amount of such currency originally due to it in respect to the relevant Obligation, the Guarantor will indemnify and save the Lender harmless from and against any loss or damage arising as a result of such deficiency. This indemnity will constitute an obligation separate and independent from the other obligations contained in this Guarantee, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by the Lender and will continue in full force and effect notwithstanding any judgment or order in respect of any amount due hereunder or under any judgment or order. |
16. | Taxes and Set-off by Guarantor. All payments to be made by the Guarantor hereunder will be made without set-off or counterclaim and without deduction for any taxes, levies, duties, fees, deductions, withholdings, restrictions or conditions of any nature whatsoever. If at any time any applicable Law, regulation or international agreement requires the Guarantor to make any such deduction or withholding from any such payment, the sum due from the Guarantor with respect to such payment will be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Lender receives a net sum equal to the sum which it would have received had no deduction or withholding been required. |
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17. | Payment of Expenses: Indemnification. The Guarantor will pay on demand, and will indemnify and save the Lender harmless from, any and all liabilities, costs and expenses (including out-of- pocket legal fees and expenses on a solicitor and his own client full indemnity basis and any sales, goods and services or other similar taxes payable to any Administrative Body with respect to any such liabilities, costs and expenses) (a) incurred by the Lender in the preparation, registration, administration or enforcement of this Guarantee, (b) with respect to, or resulting from, any failure or delay by the Guarantor in performing or observing any of its obligations under this Guarantee, or (c) incurred by the Lender in performing or observing any of the other covenants of the Guarantor under this Guarantee. |
18. | Additional Security. This Guarantee is in addition and without prejudice to any security of any kind (including other guarantees) now or hereafter held by or for the benefit of the Lender and any other rights or remedies that the Lender might have. |
19. | Governing Law: Attornment. This Guarantee will be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein, without giving affect to the conflict of law principles thereof. Without prejudice to the ability of the Lender to enforce this Guarantee in any other proper jurisdiction, the Guarantor irrevocably submits and attorns to the non-exclusive jurisdiction of the courts of the Province of Alberta, or any appellate court thereof, for the purposes of this Guarantee. |
20. | Successors and Assigns. The provisions of this Guarantee will be binding upon and enure to the benefit of the Lender and its successors and assigns and will be binding upon the Guarantor and its successors. The Guarantor's obligations hereunder will not be assigned or delegated. The Lender may from time to time, and without notice to or the consent of the Guarantor, assign or transfer all or any of the Obligations or any interest therein in accordance with the Credit Documents and, notwithstanding any such assignment or transfer or any subsequent assignment or transfer thereof, any such Obligation or part thereof so transferred or assigned will remain an "Obligation" for the purposes of this Guarantee and any immediate and successive assignee or transferee of any Obligation or any interest therein will, to the extent of the interest so assigned or transferred, be entitled to the benefit of, and the right to enforce, this Guarantee. |
21. | Time. Time will be of the essence in this Guarantee. |
22. | Severability. If any portion of this Guarantee or the application thereof to any circumstance will be held invalid or unenforceable by a court of competent jurisdiction from which no further appeal has or is taken, to an extent that does not affect in a fundamental way the operation of this Guarantee, the remainder of the provision in question, or its application to any circumstance other than that to which it has been held invalid or unenforceable, and the remainder of this Guarantee will not be affected thereby and will be valid and enforceable to the fullest extent permitted by applicable Law. |
23. | Notice. All notices, demands, offers, consents and other instruments and communications to be made or given pursuant to this Guarantee will be in writing and may be made or given by personal delivery or by transmittal by telecopier or other electronic means of communication addressed to the respective parties as follows: |
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To the Lender:
Tim Coupland | ||
c/o Suite 506 - 675 West Hastings Street | ||
Vancouver, British Columbia | ||
V6B IN2 | ||
Facsimile: | (604) 408-3884 |
To the Guarantor:
Dynamic Gravel Holdings Ltd. | ||
c/o Dynamic Gold Corp. | ||
c/o Suite 506 - 675 West Hastings Street | ||
Vancouver, British Columbia | ||
V6B IN2 | ||
Telecopier: | (604) 408-3884 | |
Attention: | President |
or to such other address or telecopy number as any party may from time to time notify the other in accordance with this Section 23. Any notice, demand, offer, consent, instrument or other communication made or given by personal delivery or by telecopier or other electronic means of communication during normal business hours at the place of receipt on a Business Day will be conclusively deemed to have been made or given at the time of actual delivery or transmittal, as the case may be, on such Business Day. Any notice, demand, offer, consent, instrument or other communication made or given by personal delivery or by telecopier or other electronic means of communication after normal business hours at the place of receipt or otherwise than on a Business Day will be conclusively deemed to have been made or given at 11:00 a.ill. (Vancouver time) on the first Business Day following actual delivery or transmittal, as the case may be.
24. | Borrower's Financial Condition. The Guarantor is fully aware of the financial condition of the Borrower and the other Material Subsidiaries. |
25. | Negotiated Document. This Guarantee is the result of negotiations between the Guarantor and the Lender and has been reviewed by counsel to the Guarantor and the Lender and is the product of both the Guarantor and the Lender. Accordingly, this Guarantee is not to be construed against the Lender merely because of its involvement in this Guarantees preparation. |
26. | Interpretation. The division of this Guarantee into sections and paragraphs, and the insertion of headings, is for convenience of reference only and will not affect the construction or interpretation of this Guarantee. Unless the context otherwise requires, words importing the singular include the plural and vice versa, and words importing gender include all genders. |
When used in this Guarantee, the word "including" (or includes) means "including (or includes) without limitation". |
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27. | Receipt of Copy. The Guarantor acknowledges receipt of an executed copy of this Guarantee. The Guarantor waives the right to receive any amount that it may now or hereafter be entitled to receive (whether by way of damages, fine, penalty or otherwise) by reason of the failure of the Lender to deliver to the Guarantor a copy of any financing statement or any statement issued by any registry that confirms registration of a financing statement relating to this Guarantee. |
THIS GUARANTEE executed effective the 8th day of January, 2008.
DYNAMIC GRAVEL HOLDINGS LTD.
Per:
/ s / Tim Coupland
Name: Tim Coupland
Title: President
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Exhibit 10.7
PURCHASE AND SALE AGREEMENT
BETWEEN
DYNAMIC GRAVEL HOLDINGS LTD.
AND
FARSHAD SHIRVANI
Dated as of the 8th day of January, 2008
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PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made as of the 8th day of January, 2008
BETWEEN:
DYMANIC GRAVEL HOLDINGS LTD. , a company existing under the laws of the Province of Alberta and having its head office at 506 675 West Hastings Street, Vancouver, British Columbia, V6B 1N2
(the Purchaser )
AND:
FARSHAD SHIRVANI, businessman and having an office located at 1405 675 West Hastings Street, Vancouver, British Columbia, V6B 1N2
(the Vendor )
W H E R E A S:
A. | The Vendor is the registered and beneficial owner of a 100% interest in two gravel claims, known as the Northern Gravel claim and the Super Mammoth Gravel claim, located along the British Columbia coast which claims are more particularly described in Schedule A to this Agreement (collectively, the Claims ); |
B. | The Vendor has agreed to sell to the Purchaser, and the Purchaser has agreed to purchase from the Vendor, a 100% right, title and interest in and to the Claims upon the terms and conditions hereinafter set forth; |
THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants, agreements, representations, warranties and indemnities of the parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party), the parties agree as follows:
1. | VENDORS REPRESENTATIONS | |
1.1 | The Vendor represents and warrants to the Purchaser that: | |
(a) | the Vendor is the recorded and beneficial owner of a 100% interest in the Claims and holds the right to transfer all right, title and interest to the Claims; | |
(b) | the Claims are free and clear of all liens, charge(s), encumbrances and claims of others, and the Vendor has a free and unimpeded right of access to the Claims and has use of the Claims surface for the herein purposes; | |
(c) | the Claims have been validly located and are now duly recorded pursuant to the laws of the Province of British Columbia and are in good standing in accordance with the laws of the Province of British Columbia as of the date of this Agreement; | |
(d) | there are no adverse claims or challenges against or to the Vendors ownership of or title to his interest in the Claims nor to the knowledge of the Vendor is there any basis therefor, and there are no outstanding agreements or options to acquire or purchase the Claims or any portion thereof; | |
(e) | the Vendor has the full right, authority and capacity to enter into this Agreement without first obtaining the consent of any other person or body corporate and the consummation of the |
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transaction herein contemplated will not conflict with or result in any breach of any covenants or agreements contained in, or constitute a default under, or result in the creation of any encumbrance under the provisions of any indenture, agreement or other instrument whatsoever to which the Vendor is a party or by which he is bound or to which he is subject; | |||
(f) | no proceedings are pending for, and the Vendor is unaware of any basis for, the institution of any proceedings which could lead to the placing of himself in bankruptcy, or in any position similar to bankruptcy; | ||
(g) | the entering into this Agreement does not conflict with any applicable laws nor does it conflict with, or result in a breach of or accelerate the performance required by any contract or other commitment to which it is party or by which it is bound; | ||
(h) | it has the exclusive right to enter into this Agreement and all necessary authority to sell to the Purchaser a 100% right, title and interest in and to the Claims in accordance with the terms and conditions of this Agreement; | ||
(i) | it has the exclusive right to receive 100% of the proceeds from the sale of gravel, sand, minerals, metals, ores or concentrates removed from the Claims and no person, firm or corporation is entitled to any royalty or other payment in the nature of rent or royalty on such materials removed from the Claims or is entitled to take such materials in kind; | ||
(j) | reclamation and rehabilitation of those parts of the Claims which have been previously worked by the Vendor, if any, have been properly completed in compliance with all applicable laws and the Vendor hereby covenants and agrees to save the Purchaser harmless from and against any loss, liability, claim, demand, damage, expense, injury or death arising out of or in connection with the operations or activities which were carried out on the Claims by the Vendor prior to the Closing Date (as herein after defined); | ||
(k) | to the best of its knowledge and belief after having made reasonable enquiry, reclamation and rehabilitation of those parts of the Claims which have been previously worked by persons other than the Vendor, if any, have been properly completed in compliance with all applicable laws by such other persons, or if not so completed, the Vendor has used its best efforts to mitigate the damage to the environment resulting from such previous work; | ||
(l) | without limiting the generality of subparagraphs 1.1(j) and (k), to the best of the Vendors knowledge, its contractors, if any, | ||
(i) | have operated the Claims and have at all times received, handled, used, stored, treated, shipped and disposed of all environmental or similar contaminants in strict compliance with all applicable environmental, health or safety laws, regulations, orders or approvals, and | ||
(ii) | have removed from and off the Claims all environmental or similar contaminants; | ||
(m) | to the best of the Vendors knowledge there are no orders or directions relating to environmental or similar matters requiring any work, repairs, construction or capital expenditures with respect to the Claims and the conduct of the business related thereto, nor has the Vendor received any notice of such; |
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(n) | to the best of the Vendors knowledge no hazardous or toxic materials, substances, pollutants contaminants or wastes have been released by the Vendors contractors into the environment, or deposited, discharged, placed or disposed of at, on or near the Claims as a result of the contractors operations carried out on the Claims; | ||
(o) | to the best of the Vendors knowledge: | ||
(i) | no notices of any violation or apparent violation of any of the matters referred to in subparagraphs 1.1(k) through 1.1(n) relating to the Claims or its use have been received by the Vendor; and | ||
(ii) | there are no writs, injunctions, orders or judgements outstanding, no law suits, claims, proceedings or investigations pending or threatened, relating to the use, maintenance or operation of the Claim, whether related to environmental or similar matters, or otherwise, nor, to the knowledge of the Vendor, is there any basis for such law suits, claims, proceedings or investigations being instituted or filed; and | ||
(p) | it has advised the Purchaser of all the material information relating to the mineral potential of the Claims of which the Vendor has knowledge; | ||
(q) | the Vendor has complied with all laws, statutes, ordinances, regulations, rules, judgments, decrees or orders applicable to the Claims. Schedule A sets out a complete and accurate list of the Claims held by or granted to the Vendor, and there are no other licences, permits, approvals, consents, certificates, registrations or authorizations necessary to own or lease any of the Claims. Each Claim is valid, subsisting and in good standing and the Vendor is not in default or breach of any Claim and, to the knowledge of the Vendor, no proceeding is pending or threatened to revoke or limit any Claim. The Vendor has provided a true and complete copy of each Claim and all amendments thereto to the Purchaser; | ||
(r) | there are no outstanding liabilities for taxes payable, collectible or remittable by the Vendor, whether assessed or not, which may result in an encumbrance on or other claim against or seizure or sale of all or any part of the Claims or would otherwise adversely affect the Claims or would result in the Purchaser becoming liable or responsible therefor. There are no actions, suits, proceedings, investigations or claims pending or threatened against the Vendor in respect of the taxes or Claims which may result in an encumbrance on or other claim against or seizure or sale of any of the Claims or liability or responsibility on the part of the Purchaser for taxes payable, collectible or remittable by the Vendor nor are any material matters under discussion with any governmental authority relating to taxes; | ||
(s) | there are no actions, suits or proceedings (whether or not purportedly on behalf of the Vendor) pending or, to the best knowledge of the Vendor, after due enquiry, threatened against or affecting the Vendor at law or in equity or before or by any federal, provincial, municipal or other governmental department, court, commission, board, bureau, agency or instrumentality, domestic or foreign, or before or by an arbitrator or arbitration board. The Vendor is not aware of any ground on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success; | ||
(t) | the Vendor is not a non-resident of Canada for the purposes of the Income Tax Act (Canada); and |
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(u) | neither this Agreement nor any document to be delivered by the Vendor nor any certificate, report, statement or other document furnished by the Vendor in connection with the negotiation of this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading. There has been no event, transaction or information that has come to the attention of the Vendor that has not been disclosed to the Purchaser in writing that could reasonably be expected to have a material adverse effect on the Claims. |
1.2 | The representations and warranties hereinbefore set out are conditions upon which the Purchaser has relied on entering into this Agreement and shall survive the sale and purchase of the Claims, and the Vendor hereby forever indemnifies and saves Vendor harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation or warranty made by it and contained in this Agreement. |
2. | PURCHASERS REPRESENTATIONS |
The Purchaser warrants and represents to the Vendor that it is a body corporate, duly incorporated under the laws of the Province of Alberta with full power and absolute capacity to enter into this Agreement and that the terms of this Agreement have been authorized by all necessary corporate acts and deeds in order to give effect to the terms hereof.
3. | SALE OF CLAIMS |
3.1 | The Vendor hereby sells a 100% right, title and interest in and to the Claims to the Purchaser and the Purchaser hereby purchases the Claims from the Vendor in consideration of the Purchaser paying $25,000 USD cash to the Vendor, the receipt of which the Vendor hereby acknowledges. |
3.2 | The Purchaser shall be liable for and shall pay all federal and provincial sales taxes (including any GST, retail sales taxes and land transfer taxes) and all other taxes, duties, fees or other like charges of any jurisdiction properly payable in connection with the transfer of the Claims by the Vendor to the Purchaser. |
3.3 | Subject to the provisions of this Agreement, the Purchaser agrees to assume, pay, satisfy, discharge, perform and fulfil, from and after the Closing Date, only those outstanding obligations and liabilities of the Vendor which, by their terms, are to be paid, satisfied, discharged, performed and fulfilled at and after the Closing Date under the licences, permits, approvals, consents, registrations, certificates and other authorizations relating to the Claims. |
3.4 | For greater certainty, and without limiting the generality of the foregoing, the Vendor shall remain liable for and shall pay, satisfy, discharge, perform and fulfil, all other obligations and liabilities of the Vendor, including, without limitation, the obligations and liabilities of the Vendor under any liability for taxes payable, collectible or remittable by the Vendor in respect of the Claims, provided that taxes levied with respect to the Claims for a taxable period that includes but does not end on the Closing Date shall be apportioned between the Vendor and the Purchaser such that the Vendor shall be liable for the amount determined by multiplying the taxes to be apportioned by a fraction, the numerator of which is the number of days in the taxable period up to and including the Closing Date and the denominator of which is the total number of days in the period, and the Purchaser shall be liable for the balance; and |
3.5 | The Vendor shall deliver to the Purchaser all necessary deeds, conveyances, bills of sale, assurances, transfers, assignments and any other documentation necessary or reasonably required to transfer the Claims to the Purchaser with a good and marketable title, free and clear of all encumbrances whatsoever. |
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4. | CLOSING |
The sale and purchase of the interest in the Claims shall occur on the date of this Agreement (the Closing Date ) at the offices of the Purchaser located at 506 - 675 West Hastings Street, Vancouver, British Columbia, or such other place and time acceptable to both parties.
5. | FORCE MAJEURE |
If the Purchaser is prevented from or delayed in complying with any provisions of this Agreement by reason of strikes, labour disputes, lockouts, labour shortages, power shortages, fires, wars, acts of God, governmental regulations restricting normal operations or any other reason or reasons beyond the control of the Purchaser, the time limited for the performance of the various provisions of this Agreement as set out above shall be extended by a period of time equal in length to the period of such prevention and delay, and the Purchaser, insofar as is possible, shall promptly give written notice to the Vendor of the particulars of the reasons for any prevention or delay under this section, and shall take all reasonable steps to remove the cause of such prevention or delay and shall give written notice to the Vendor as soon as such cause ceases to exist.
6. | ENTIRE AGREEMENT |
This Agreement constitutes the entire agreement to date between the parties hereto and supersedes every previous agreement, communication, expectation, negotiation, representation or understanding, whether oral or written, express or implied, statutory or otherwise, between the parties with respect to the subject matter of this Agreement.
7. | NOTICE |
7.1 | Any notice required to be given under this Agreement shall be deemed to be well and sufficiently given if delivered to the address for each party first noted above. |
7.2 | Either party may from time to time by notice in writing change its address for the purpose of this paragraph. |
8. | RELATIONSHIP OF PARTIES |
Nothing contained in this Agreement shall, except to the extent specifically authorized hereunder, be deemed to constitute either party a partner, agent or legal representative of the other party.
9. | FURTHER ASSURANCES |
This Agreement constitutes the legal transfer by the Vendor of title to, and property in, the Claims to the Purchaser on the date hereof. The Vendor shall, from time to time as and when requested by the Purchaser, and at the expense of the Purchaser, do, execute and cause to be made, done and executed all such further documents, assignments and assurances that may be necessary and that may be reasonably required by the Purchaser for more completely and effectively vesting the Claims in the Purchaser and whether for the purpose of registration or otherwise. The parties hereby agree that they will execute all such documents, instruments and agreements and perform such further acts and supply to any federal or provincial taxing authority such information as may be necessary from time to time to carry out the terms and intent of this Agreement.
10. | TIME OF ESSENCE |
Time shall be of the essence of this Agreement.
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11. | TITLES |
The headings appearing in this Agreement have been inserted for reference and as a matter of convenience only and in no way define, limit or enlarge the scope or meaning of this Agreement or any of its provisions.
12. | CURRENCY |
All funds referred to under the terms of this Agreement shall be funds designated in the lawful currency of the United States of America.
13. | NONSEVERABILITY |
This Agreement shall be considered and construed as a single instrument and the failure to perform any of the terms and conditions in this Agreement shall constitute a violation or breach of the entire instrument or Agreement and shall constitute the basis for cancellation or termination.
14. | APPLICABLE LAW |
The situs of the Agreement is Vancouver, British Columbia, and for all purposes this Agreement will be governed exclusively by and construed and enforced in accordance with the laws prevailing in the Province of British Columbia.
15. | ENUREMENT |
This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.
COUNTERPARTS
This Agreement may be executed in several parts, and by facsimile, in the same form and such parts so executed shall together constitute one original Agreement and such parts, if more than one, shall be read together and construed as if all the signing parties hereto had executed one copy of this Agreement.
IN WITNESS WHEREOF this Agreement has been executed as of the day and year first above written.
DYNAMIC GRAVEL HOLDINGS LTD.
PER:
/ s / Tim Coupland
Tim Coupland, President
/ s / Farshad Shirvani | / s / Ann-Marie Cederholm | ||
FARSHAD SHIRVANI | Witness to signature of Farshad Shirvani | ||
Name: Ann-Marie Cederholm | |||
Address: 506-675 West Hastings Street | |||
Vancouver, BC V6B-1N2 |
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SCHEDULE A
TO THAT CERTAIN AGREEMENT MADE AS OF JANUARY 8, 2008
BETWEEN DYNAMIC GRAVEL HOLDINGS LTD.
AND FARSHAD SHIRVANI
The Claims are located at Lloyd Point in the east arm of Toba Inlet situated 50 kilometers east of Campbell River, British Columbia and 28 kilometers north of Powell River on the British Columbia mainland and has the following description:
Tenure Name | Type | Claim Name | Good Until | Area (ha) |
544952 | Mineral | Northern Gravel | 2014-11-06 | 124.118 |
549843 | Mineral | Super Mammoth 5 | 2015-01-19 | 124.118 |
248.236 |
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Exhibit 21
SUBSIDIARY COMPANIES
We have one subsidiary company:
Dynamic Gravel Holdings Ltd.
88
Exhibit 31.a
CERTIFICATION
I, Tim Coupland, certify that:
1. | I have reviewed this Form 10-QSB of Dynamic Gold Corp.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; | |
4. | The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a15(f) and 15d15(f)) for the small business issuer and have: | |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and | |
5. | The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. |
Date: February 13, 2008
/ s / Tim Coupland
Tim Coupland, President and CEO
(Principal Executive Officer)
89
Exhibit 31.b
CERTIFICATION
I, Ann-Marie Cederholm, certify that:
1. | I have reviewed this Form 10-QSB of Dynamic Gold Corp.;Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
2. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; | |
3. | The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a15(f) and 15d15(f)) for the small business issuer and have: | |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and | |
4. | The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. |
Date: February 13, 2008
/ s / Ann-Marie Cederholm
Ann-Marie Cederholm, CFO
(Principal Accounting Officer)
90
Exhibit 32.a
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Dynamic Gold Corp. (the "Company") on Form 10-QSB for the quarterly period ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Tim Coupland, Principal Executive and I, Ann-Marie Cederholm, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/ s / Tim Coupland
Tim Coupland, Principal Executive
Officer
February 13, 2008
/ s / Ann-Marie Cederholm
Ann-Marie Cederholm,
Principal Financial Officer
February 13, 2008
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