exv4w19






Exhibit 4.19




CREDIT AGREEMENT



THIS AGREEMENT dated for reference December 17, 2009 is between:





IONIC CAPITAL CORP., a British Columbia corporation, having an
office at Suite 1028, Bentall 5, 550 Burrard Street, Vancouver,
British Columbia, V6C 2B5



(the “Lender”)



AND:





NIMIN ENERGY CORP., an Alberta corporation, having an office at 1135
Eugenia Place, Suite C, Carpinteria, CA 93013



(“NiMin”)



AND:





LEGACY ENERGY, INC., a Delaware corporation, having an
office at 1135 Eugenia Place, Suite C, Carpinteria, CA 93013



(the “Borrower”)




BACKGROUND



The Lender has agreed to lend to the Borrower and the Borrower has agreed to borrow from the Lender
the aggregate principal amount of US $5,500,000 (the “U.S. Funds Portion”) and CDN $17,534,550 (the
“Canadian Funds Portion”) on the terms and subject to the conditions of this Agreement.




AGREEMENTS



For good and valuable consideration, the receipt and sufficiency of which each party acknowledges,
the parties agree as follows:





	1.	 	Definitions. In this Agreement:






	 	(a)	 	“Advance” means advance of the Facility hereunder;
	 
	 	(b)	 	“Borrower” shall mean Legacy Energy, Inc., a Delaware corporation, which is a
wholly-owned subsidiary of NiMin.
	 
	 	(c)	 	“Business Day” means a day which is not a Saturday, Sunday or a statutory
holiday in Calgary, Alberta;
	 
	 	(d)	 	“Canadian Funds Portion” has the meaning set forth in the “Background”
paragraph above;










 



-2-


	 	(e)	 	“Event of Default” has the meaning set forth in paragraph 14 below;
	 
	 	(f)	 	“Exchange” means the TSX Exchange;
	 
	 	(g)	 	“Facility” means the credit facility granted by the Lender to the Borrower
pursuant to this Agreement and is comprised of the U.S. Funds Portion and the Canadian
Funds Portion;
	 
	 	(h)	 	“Faulconer PSA” means that certain purchase and sale agreement dated November,
2009 between Vernon E. Faulconer, Inc. as agent for certain Affiliates (as defined
therein), as seller and Borrower, as buyer.
	 
	 	(i)	 	“Interest Shares” has the meaning set forth in paragraph 5 below;
	 
	 	(j)	 	“Permitted Encumbrances” has the meaning set forth in Schedule “A” hereto;
	 
	 	(k)	 	“Subsidiaries” means, with respect to the Borrower or NiMin, respectively, any
corporation of which at least a majority of the outstanding shares to which there is
attached voting power under ordinary circumstances to elect a majority of the board of
directors of such corporation, shall at the relevant time be owned directly or
indirectly by the Borrower or NiMin, as applicable, one or more Subsidiaries of the
Borrower or NiMin, or any combination thereof, and “Subsidiary” shall mean any one of
them;
	 
	 	(l)	 	“Term Sheet” means the Term Sheet for Credit Facility dated October 26, 2009
from the Lender and accepted by the Borrower and NiMin on October 26, 2009;
	 
	 	(m)	 	“U.S. Funds Portion” has the meaning set forth in the “Background” paragraph
above;.






	2.	 	Facility Advance. Subject to and upon the fulfilment of the conditions precedent contained
in paragraph 8 of this Agreement, the Lender will advance the Facility to the Borrower or as
the Borrower may otherwise direct.
	 
	3.	 	Use of Proceeds. The Borrower covenants and agrees with the Lender that the Facility
proceeds will be used by the Borrower for payment of a portion of the purchase price in
respect of the acquisition by Borrower of certain oil & gas properties pursuant to the
Faulconer PSA, and for no other purpose whatsoever without the express written consent of the
Lender.
	 
	4.	 	Term and Prepayment.






	 	(a)	 	The principal amounts of the Advance, together with all accrued but unpaid
interest, bonus and other costs or charges payable hereunder from time to time
(collectively the “Outstanding Balance”), will be immediately due and payable by the
Borrower to the Lender on the earlier of:






	 	(i)	 	December 17, 2010;










 



-3-


	 	(ii)	 	The date of any change of control of the NiMin (“control” being
defined as ownership of or control or direction over, directly or indirectly,
20% or more of the outstanding voting securities of the Borrower); and
	 
	 	(iii)	 	the occurrence of an Event of Default (as defined in paragraph
14 hereof) and a demand for payment by the Lender pursuant to paragraph 15
below;






	 	(b)	 	If after the Advance, the Borrower or NiMin sells or otherwise disposes of any
assets outside of the ordinary course of business, the Borrower or NiMin, as the case
may be, will pay or cause to be paid to the Lender all proceeds from such sale,
disposition, net of reasonable costs, up to the full amount of the Outstanding Balance,
to be applied on account of the Facility;
	 
	 	(c)	 	The Borrower may prepay the Facility in whole at any time before maturity,
without notice, bonus or penalty;
	 
	 	(d)	 	The principal amount of the U.S. Funds Portion, together with all accrued but
unpaid interest shall be paid by the Borrower to the Lender in U.S. funds and the
principal amount of the Canadian Funds Portion, together with all accrued but unpaid
interest shall be paid by the Borrower to the Lender in Canadian funds;
	 
	 	(e)	 	Upon repayments from Borrower to Lender, Lender shall be entitled to apply
payments as to principal, interest or costs. In the event either of the U.S. Funds
Portion or the Canadian Funds Portion of the loan is overpaid by Borrower, Lender shall
have the discretion to apply any overpayment to the remaining portion of the loan, in
Lender’s discretion.






	5.	 	Interest. In consideration for the provision of the Facility by the Lender, the Borrower
shall pay, or arrange to have paid, the following to the Lender on account of interest:






	 	(a)	 	concurrently with the Advance, a one-time fixed amount payable in the form of
2,566,666 common shares in the capital of NiMin (the “Interest Shares”) issued at a
deemed price of CDN $0.90, subject to a maximum hold period of four (4) months from the
date of issuance under applicable securities laws and the rules and policies of the
Exchange, registered in the name of the Lender or as the Lender may otherwise direct;
and
	 
	 	(b)	 	Interest on the outstanding principal amount from time to time and any overdue
interest from the date of the Advance at the rate of twelve percent (12%) per annum,
calculated daily and compounded monthly (effective annual rate of 12.68%), and be
payable by the Borrower to the Lender monthly on the last Business Day of every month,
as well as after maturity, default and judgment.






	6.	 	Structuring Fee. As consideration for the structuring and syndication by the Lender of the
Facility, concurrently with the Advance and in respect thereof, the Borrower shall make a
non-refundable cash payment to the Lender of US $120,000.










 



-4-


	7.	 	Security. As security for the Facility, the Borrower and/or NiMin, as applicable, will:






	 	(a)	 	execute and deliver to the Lender promissory notes from the Borrower, in the
forms attached hereto as Schedule “B” (the “Notes”);
	 
	 	(b)	 	execute and deliver to the Lender, a fixed and floating charge debenture under
which the Borrower will grant to the Lender, inter alia, a security interest in all of
its present and after-acquired real and personal property, subject only to Permitted
Encumbrances;
	 
	 	(c)	 	execute and deliver to the Lender a share pledge agreement, under which NiMin
will pledge and grant to the Lender a first priority security interest in all of the
shares of Borrower held by NiMin, representing all of the outstanding shares of
Borrower;
	 
	 	(d)	 	execute and deliver to the Lender an environmental indemnity agreement in
respect of the Borrower’s properties;
	 
	 	(e)	 	execute and deliver to the Lender a guarantee of NiMin, pursuant to which NiMin
will guarantee the payment and performance of each and every obligation of the Borrower
to the Lender hereunder;
	 
	 	(f)	 	execute and deliver to the Lender a Deed of Trust, Mortgage, Security
Agreement, Financing Statement and Assignment of Production in respect of Borrower’s
property in the State of Wyoming, including without limitation, all assets acquired or
to be acquired by Borrower pursuant to the Faulconer PSA;
	 
	 	(g)	 	execute and deliver any and all other documentation deemed necessary by Lender
to establish or protect Lender’s security interest in Borrower’s property in the State
of Wyoming;
	 
	 	(h)	 	execute and deliver to the Lender a Deed of Trust, Mortgage, Security
Agreement, Financing Statement and Assignment of Production in respect of Borrower’s
property in the State of California;
	 
	 	(i)	 	execute and deliver any and all other documentation deemed necessary by Lender
to establish or protect Lender’s security interest in Borrower’s property in the State
of California;
	 
	 	(j)	 	execute and deliver to the Lender an Act of Mortgage, Pledge, Security
Agreement, and Assignment of Production in respect of Borrower’s property in the State
of Louisiana;
	 
	 	(k)	 	execute and deliver any and all other documentation deemed necessary by Lender
to establish or protect Lender’s security interest in Borrower’s property in the State
of Louisiana;










 



-5-


	 	(l)	 	deliver financing statements pursuant to the UCC in respect of Borrower’s
property in the United States of America; and
	 
	 	(m)	 	execute and deliver or cause to be executed and delivered, any other ancillary
documentation that the Lender or its counsel may reasonably require,






	 	 	all in form and terms satisfactory to the Lender and its counsel (collectively, the
“Security”).
	 
	8.	 	Conditions Precedent to Advance. As conditions precedent to the Advance of the applicable
portion of the Facility by the Lender:






	 	(a)	 	the Borrower and NiMin, as applicable, will have:






	 	(i)	 	executed and delivered or caused to be executed and delivered
all of the Security documents and other items referred to in paragraph 7 above
and the documents, securities and instruments referred to therein, and the
Lender will have completed all registrations and other filings that may be
prudent or necessary to perfect the Lender’s security therein;
	 
	 	(ii)	 	received and provided the Lender with written evidence of the
conditional acceptance of the Exchange to (i) the issuance of the Interest
Shares, and (ii) the transaction contemplated herein;
	 
	 	(iii)	 	delivered a certified copy of the Borrower’s directors’
resolutions authorizing the borrowing of the Facility, the grant of the
Security, as applicable, and the execution and delivery of this Agreement and
all agreements, documents and instruments referred to herein, together with an
officer’s certificate, certifying certain factual matters, in form and terms
satisfactory to the Lender;
	 
	 	(iv)	 	delivered a certified copy of NiMin’s directors’ resolutions
authorizing the guarantee of the Facility, the grant of the Security, as
applicable, and the execution and deliver of all agreements, documents and
instruments applicable thereto, together with an officer’s certificate,
certifying certain factual matters, in form and terms satisfactory to the
Lender;
	 
	 	(v)	 	caused to be executed and delivered legal opinions of counsel
to the Borrower and NiMin, each in form and terms satisfactory to the Lender
and its counsel;
	 
	 	(vi)	 	caused to be executed and delivered by all parties the
intercreditor agreement;






	 	(b)	 	the representations and warranties of the Borrower and NiMin contained in
paragraphs 9 and 10 will be true and correct in all material respects and the Borrower
and NiMin will have complied with all covenants required to be










 



-6-


	 	 	 	complied with by them
under this Agreement and all other documents delivered hereunder, prior to the Advance
by the Lender;
	 
	 	(c)	 	there shall have been no adverse material change in the business, operations,
assets or ownership of the Borrower or NiMin since the date of the Term Sheet;
	 
	 	(d)	 	the Lender will have completed and, in its sole and absolute discretion, be
satisfied with its due diligence review of the Borrower and NiMin and any properties
and assets, including without limitation in respect of all environmental and general
compliance matters, and will be satisfied in respect of all matters relating to the
Faulconer PSA and the transactions related thereto, including without limitation in
respect of the amount of the Borrower’s or NiMin’s contribution to the purchase price
(which amount shall be no less than $5,000,000);
	 
	 	(e)	 	the Lender will have received the approval of the Lender’s board of directors;
	 
	 	(f)	 	the Lender will have made arrangements satisfactory to the Lender for the
syndication of the Facility;
	 
	 	(g)	 	the Lender will be satisfied as to hedging arrangements made by the Borrower,
provided that on or before December 31, 2009, Borrower shall hedge no less than 75% of
the production guaranteed for the properties subject to the Faulconer PSA and that
Lender is satisfied with the resulting cash flow needed for said hedge arrangement; and
	 
	 	(h)	 	the Lender will, in its sole and absolute discretion, be satisfied as to the
creditworthiness of the Borrower and NiMin and the adequacy of the collateral security
contemplated herein.




If any of the foregoing conditions precedent are not satisfied or waived by the Lender in writing
as of the date first above written, this Agreement will terminate, the Lender will be under no
further obligation to the Borrower in connection with the transaction contemplated herein and the
Borrower will forthwith pay to the Lender all fees and expenses (including legal fees) on a full
indemnity basis.





	9.	 	Representations and Warranties of NiMin. NiMin represents and warrants to the Lender as
follows:






	 	(a)	 	NiMin exists as a corporation under the laws of the Province of Alberta and is
in good standing with respect to the filing of annual reports and all other such
requirements pursuant to the laws thereof;
	 
	 	(b)	 	NiMin has the corporate power and authority to (i) carry on its businesses as
now being conducted and is licensed or registered or otherwise qualified in all
jurisdictions where in the nature of its assets or the business transacted makes such
licensing, registration or qualification necessary, (ii) acquire, own, hold,










 



-7-


	 	 	 	lease and
mortgage or grant security in its assets including real property and personal property
and (iii) enter into and perform its obligations under this Agreement and all other
documents or instruments delivered hereunder;
	 
	 	(c)	 	this Agreement and all ancillary instruments or documents issued, executed and
delivered hereunder by NiMin have been duly authorized by all necessary action of NiMin
and each constitutes or will constitute a legal, valid and binding obligation of NiMin,
enforceable against NiMin in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors and to the general principles of equity;
	 
	 	(d)	 	NiMin is not in breach of or in default under any material obligation in
respect of borrowed money, and the execution and delivery of this Agreement and all
ancillary instruments or documents issued and delivered hereunder or thereunder, and
the performance of the terms hereof and thereof will not be, or result in, a violation
or breach of, or default under, NiMin’s constating documents, any law, judgment,
material agreement or instrument to which they are a party or may be bound;
	 
	 	(e)	 	neither the entering into of this Agreement nor of any of the Security to which
it is a party by NiMin will constitute a breach or default under or in respect of any
agreement to which NiMin is bound, and no consent, filing, authorization or approval is
necessary under the terms of any such agreement to proceed with the transactions
contemplated herein, including but not limited to the granting of the Security to which
NiMin is a party;
	 
	 	(f)	 	the Security creates a valid charge, lien and security interest on the property
and assets of NiMin which has been granted in accordance with the terms hereof with the
priority ranking contemplated in paragraph 7 above;
	 
	 	(g)	 	except with respect to any such as have been disclosed to the Lender in
writing, no litigation or administrative proceedings before any court or governmental
authority are presently ongoing, or have been threatened in writing, or to the best of
NiMin’s knowledge are pending, against NiMin or any of its properties or assets or
affecting any of its properties or assets which could have a material adverse effect on
their respective business, properties or assets;
	 
	 	(h)	 	NiMin has made full disclosure to the Lender of all of its properties, business
and assets and is the legal and beneficial owner of or has the right to acquire the
interests in the properties, business and assets so disclosed, and any and all
agreements pursuant to which NiMin holds or will hold any such interest in
property, business or assets are in good standing in all material respects under the
applicable statutes and regulations of the jurisdictions in which they are situated;
	 
	 	(i)	 	NiMin is the legal and beneficial owner of or has the right to acquire the
interests in the properties, business and assets referred to in any information
circulars,










 



-8-


	 	 	 	prospectuses, annual information forms, offering memoranda, financial
statements, material change reports and news releases filed with the Exchange and the
securities regulatory authority or commission in each of the jurisdictions in which
NiMin is a reporting issuer on or during the twelve (12) months preceding the date
hereof, and any other disclosure materials provided to the Lender and its advisers in
conjunction with this Agreement (collectively, the “Disclosure Record”), and any and
all agreements pursuant to which NiMin holds any such interest in property, business or
assets are in good standing in all material respects under the applicable statutes and
regulations of the jurisdictions in which they are situated;
	 
	 	(j)	 	there has been no adverse material change (actual, contemplated or threatened)
in the property, assets, business or operations of NiMin within the past twelve (12)
months, except as may be disclosed in the Disclosure Record;
	 
	 	(k)	 	the Disclosure Record is complete and accurate in all material respects and
omits no facts, the omission of which makes the Disclosure Record, or any particulars
therein, misleading, misrepresentative or incorrect in any material respect;
	 
	 	(l)	 	the information provided to the Lender by NiMin in connection herewith is
complete and accurate in all material respects and omits no facts, the omission of
which makes such information, or any particulars therein, misleading, misrepresentative
or incorrect in any material respect;
	 
	 	(m)	 	NiMin has conducted and is conducting its businesses in material compliance
with all applicable laws, bylaws, rules and regulations of each jurisdiction in which
its businesses are now carried on and hold all licenses, registrations, permits,
consents or qualifications (whether governmental, regulatory or otherwise) required in
order to enable its businesses to be carried on as now conducted or as proposed to be
conducted, and all such licenses, registrations, permits, consents and qualifications
are valid and subsisting and in good standing and NiMin has not received any notice of
proceedings relating to the revocation or modification of any such licenses,
registrations, permits, consents or qualifications which, if the subject of an
unfavourable decision, ruling or finding, would materially adversely affect the
condition of such businesses, operations, condition (financial or otherwise) or income
of NiMin;
	 
	 	(n)	 	no order ceasing or suspending trading in securities of NiMin or prohibiting
the sale or trading of securities by NiMin has been issued and no proceedings for this
purpose have been instituted, are pending, contemplated or threatened;
	 
	 	(o)	 	neither Canada Revenue Agency nor any other taxation authority has asserted or,
to the best of NiMin’s knowledge, has threatened to assert any assessment, claim or
liability for taxes due or to become due in connection with any review or examination
of the tax returns of NiMin filed for any year which would have a material adverse
effect on the assets, properties, business, results of operations, prospects or
condition (financial or otherwise) of NiMin;











 



-9-

	 	(p)	 	NiMin is not a party to any material contract other than as disclosed in the
Disclosure Record;
	 
	 	(q)	 	as at the date of this Agreement, except as disclosed in the Disclosure Record,
no holder of outstanding shares in the capital of NiMin will be entitled to any
pre-emptive or any similar rights to subscribe for any of the shares in the capital of
NiMin or other securities of NiMin, and no rights, warrants or options to acquire, or
instruments convertible into or exchangeable for any shares in the capital of NiMin are
outstanding and NiMin, as the sole owner of Borrower, shall receive valuable
consideration from the granting of the Facility from Lender to Borrower;
	 
	 	(r)	 	as at the date of this Agreement, except as disclosed in writing to the Lender,
no holder of outstanding shares in the capital of NiMin will be entitled to any
pre-emptive or any similar rights to subscribe for any of the shares in the capital of
NiMin or other securities of NiMin, and no rights, warrants or options to acquire, or
instruments convertible into or exchangeable for any shares in the capital of NiMin are
outstanding;
	 
	 	(s)	 	NiMin has no direct or indirect subsidiary corporations other than Borrower;
	 
	 	(t)	 	except as disclosed to the Lender in writing prior to the date of this
Agreement, NiMin owns its business, operations and assets, and holds good title
thereto, free and clear of all liens, claims or encumbrances whatsoever, except for
Permitted Encumbrances;
	 
	 	(u)	 	after giving effect to the transactions contemplated in this Agreement, NiMin
is generally able to pay its debts as they come due; and
	 
	 	(v)	 	the chief executive office, principal place of business and place where NiMin
keeps its books and records is located at 1135 Eugenia Place, Suite C, Carpinteria, CA
93013.






	10.	 	Representations and Warranties of Borrower. Borrower represents and warrants to the Lender
as follows:






	 	(a)	 	Borrower exists as a corporation under the laws of the State of Delaware and is
in good standing with respect to the filing of annual reports and all other such
requirements pursuant to the laws thereof;
	 
	 	(b)	 	Borrower has the corporate power and authority to (i) carry on its businesses
as now being conducted and is licensed or registered or otherwise qualified in all
jurisdictions where in the nature of its assets or the business transacted makes such
licensing, registration or qualification necessary, (ii) acquire, own, hold, lease and
mortgage or grant security in its assets including real property and personal property
and (iii) enter into and perform its obligations under this Agreement and all other
documents or instruments delivered hereunder;










 



-10-


	 	(c)	 	this Agreement and all ancillary instruments or documents issued, executed and
delivered hereunder by Borrower have been duly authorized by all necessary action of
Borrower and each constitutes or will constitute a legal, valid and binding obligation
of Borrower enforceable against Borrower in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the rights and remedies of creditors and to the general principles of equity;
	 
	 	(d)	 	Borrower is not in breach of or in default under any material obligation in
respect of borrowed money, and the execution and delivery of this Agreement and all
ancillary instruments or documents issued and delivered hereunder or thereunder, and
the performance of the terms hereof and thereof will not be, or result in, a violation
or breach of, or default under, Borrower’s constating documents, any law, judgment,
material agreement or instrument to which they are a party or may be bound;
	 
	 	(e)	 	neither the entering into of this Agreement nor of any of the Security to which
it is a party by Borrower will constitute a breach or default under or in respect of
any agreement to which Borrower is bound, and no consent, filing, authorization or
approval is necessary under the terms of any such agreement to proceed with the
transactions contemplated herein, including but not limited to the granting of the
Security to which Borrower is a party;
	 
	 	(f)	 	except with respect to any such as have been disclosed to the Lender in
writing, no litigation or administrative proceedings before any court or governmental
authority are presently ongoing, or have been threatened in writing, or to the best of
Borrower’s knowledge are pending, against Borrower or any of its properties or assets
or affecting any of their respective properties or assets which could have a material
adverse effect on their respective business, properties or assets;
	 
	 	(g)	 	there has been no material adverse change (actual, contemplated or threatened)
in the property, assets, business or operations of Borrower within the past twelve (12)
months;
	 
	 	(h)	 	the information provided to the Lender by Borrower in connection herewith is
complete and accurate in all material respects and omits no facts, the omission of
which makes such information, or any particulars therein, misleading, misrepresentative
or incorrect in any material respect;
	 
	 	(i)	 	Borrower has conducted and is conducting its businesses in material compliance
with all applicable laws, bylaws, rules and regulations of each jurisdiction in which
its businesses are now carried on and hold all licenses, registrations, permits,
consents or qualifications (whether governmental, regulatory or otherwise) required in
order to enable its businesses to be carried on as now conducted or as proposed to be
conducted, and all such licenses, registrations, permits, consents and qualifications
are valid and subsisting and in good standing and Borrower has not received any notice
of proceedings relating to the 










 



-11-


	 	 	 	revocation or modification of any such licenses,
registrations, permits, consents or qualifications which, if the subject of an
unfavourable decision, ruling or finding, would materially adversely affect the
condition of such businesses, operations, condition (financial or otherwise) or income
of Borrower;
	 
	 	(j)	 	neither the Internal Revenue Service nor any other taxation authority has
asserted or, to the best of Borrower’s knowledge, has threatened to assert any
assessment, claim or liability for taxes due or to become due in connection with any
review or examination of the tax returns of Borrower filed for any year which would
have material adverse effect on the assets, properties, business, results of
operations, prospects or condition (financial or otherwise) of Borrower;
	 
	 	(k)	 	Borrower is not a party to any material contract other than as disclosed to the
Lender in writing;
	 
	 	(l)	 	Borrower has no direct or indirect subsidiary corporations;
	 
	 	(m)	 	except as disclosed to the Lender in writing prior to the date of this
Agreement, Borrower owns its business, operations and assets, and holds good title
thereto, free and clear of all liens, claims or encumbrances whatsoever, except for
Permitted Encumbrances;
	 
	 	(n)	 	all factual information previously or contemporaneously furnished to the Lender
by or on behalf of Borrower for purposes of or in connection with this Agreement or any
transaction contemplated hereby, is true and accurate in every material respect and
such information is not incomplete by the omission of any material fact necessary to
make such information not misleading;
	 
	 	(o)	 	after giving effect to the transactions contemplated in this Agreement,
Borrower is generally able to pay its debts as they come due;
	 
	 	(p)	 	the chief executive office, principal place of business and place where
Borrower keeps its books and records is located at 1135 Eugenia Place, Suite C,
Carpinteria, CA 93013;
	 
	 	(q)	 	Borrower is a wholly owned subsidiary of NiMin and shall receive the benefit of
the Facility.






	11.	 	Representations and Warranties of the Lender. The Lender represents and warrants to the
Borrower as follows:






	 	(a)	 	the Lender is an “accredited investor”, as such term is defined in National
Instrument 45-106 entitled “Prospectus and Registration Exemptions” (NI 45-106)
promulgated under the securities legislation of the provinces of British Columbia and
Alberta by virtue of the fact that the Lender is a person in respect of which all of
the owners of interests, direct, indirect or beneficial, except the










 



-12-


	 	 	 	voting securities
required by law to be owned by directors, are persons that are accredited investors;
and
	 
	 	(b)	 	the Lender was not created and is not being used solely to purchase or hold
securities as an accredited investor as described in paragraph (m) of the definition of
“accredited investor” in NI 45-106.






	12.	 	Positive Covenants. Each of the Borrower and NiMin covenant and agree (unless such covenant
is restricted below to NiMin, in which case NiMin covenants and agrees) that so long as any
obligations will be outstanding under this Agreement, it shall:






	 	(a)	 	at all times maintain its corporate existence;
	 
	 	(b)	 	duly perform its obligations under this Agreement and all other agreements and
instruments executed and delivered hereunder or thereunder;
	 
	 	(c)	 	promptly pay when due all agency or finders’ fees payable in connection with
the Facility or this Agreement and indemnify and save harmless the Lender from all
claims in respect of any such fees;
	 
	 	(d)	 	carry on and conduct its business in a proper business-like manner in
accordance with good business practice and will keep or cause to be kept proper books
of account in accordance with generally accepted accounting principles in its
jurisdiction;
	 
	 	(e)	 	at all times comply with all applicable laws, except such voluntary
non-compliance as shall, in its good faith business judgment, not have a material
adverse effect on the business of the Borrower or NiMin, taken as a whole;
	 
	 	(f)	 	at all times maintain any material contracts in good standing and fulfill all
obligations thereunder, and immediately notify the Lender of any facts or circumstances
which may arise which could constitute a default thereunder and give rise to a right of
termination under either such agreement, and take all commercially reasonable steps as
may be prudent or necessary to rectify or cure any such default;
	 
	 	(g)	 	provide the Lender with not less than thirty (30) days notice of the expiry or
termination of any material options, rights or other benefits held by or available to
the Borrower or NiMin;
	 
	 	(h)	 	pay and discharge promptly when due, all taxes, assessments and other
governmental charges or levies imposed upon it or upon its properties or assets or upon
any part thereof, as well as all claims of any kind (including claims for labour,
materials and supplies) which, if unpaid, would by law become a lien, charge, trust or
other claims upon any such properties or assets, provided however that the Borrower and
NiMin shall not be required to pay any such tax, assessment, charge or levy or claim if
the amount, applicability or validity thereof 










 



-13-


	 	 	 	shall currently be contested in good
faith by appropriate proceedings and if the Borrower or NiMin, as applicable, shall
have set aside on its books the reserve the extent required by generally accepted
accounting principles in an amount which is reasonably adequate with respect thereto;
	 
	 	(i)	 	in respect of NiMin only, furnish to the Lender quarterly and annual financial
statements filed on SEDAR by NiMin within 3 Business Days of such filings;
	 
	 	(j)	 	furnish to the Lender no later than 15 days following the end of each month,
and in respect of such month, a report in form and substance satisfactory to the Lender
including the following information with respect to the Borrower and NiMin:






	 	(i)	 	field estimates of net oil and gas sales along with detailed
explanations in respect of month to month variances;
	 
	 	(ii)	 	the average price of oil and gas received at the wellhead;
	 
	 	(iii)	 	any and all wells that were shut-in during that month, along
with detailed explanations citing the reasons therefore and indicating the
future potential of such wells;
	 
	 	(iv)	 	any and all new wells and any and all existing wells with new
zone on production and including details of the net oil and gas sales in
respect of such wells;
	 
	 	(v)	 	details showing the trend of operating costs on both a cash and
basis and accrual basis;
	 
	 	(vi)	 	detailed breakdowns of capital expenditures, including a
comparison of actual expenditures to budgeted expenditures; and
	 
	 	(vii)	 	estimates of reserve additions in respect of that month;






	 	(k)	 	furnish to the Lender financial summaries in form and substance satisfactory to
the Lender, promptly upon request by the Lender;
	 
	 	(l)	 	upon the closing of any equity or debt financing, pay or cause to be paid to
the Lender all proceeds from such financing, net of reasonable costs, up to the full
amount of the Outstanding Balance;
	 
	 	(m)	 	promptly furnish and give to the Lender such other information with respect to
the Borrower or NiMin as the Lender may reasonably request from time to time during the
term of this Agreement;
	 
	 	(n)	 	furnish and give to the Lender (if such is the case) notice that an Event of
Default has occurred and, if applicable, is continuing or notice in respect of any
event which would constitute an Event of Default hereunder and specifying the nature of
same;










 



-14-


	 	(o)	 	in respect of NiMin, raise additional equity of not less than CDN $10,000,000,
including exercise of options or warrants, on or prior to June 30, 2010, on terms and
conditions satisfactory to the lender, failing which, arrangements satisfactory to the
Lender shall be made pursuant to which, inter alia, all of NiMin’s revenue shall be
deposited directly into a blocked account from which NiMin shall be permitted to
withdraw no more than 25% of such amount, after all other monies are swept from the
account and paid directly to the Lender on account of principal and interest in respect
of the Outstanding Balance;
	 
	 	(p)	 	perform and do all such acts and things as are necessary to perfect and
maintain the security provided to the Lender pursuant to this Agreement.






	13.	 	Negative Covenants of the Borrower and NiMin. Each of the Borrower and NiMin covenants and
agrees with the Lender that, while any obligations remain outstanding hereunder, neither the
Borrower nor NiMin will, without first obtaining the written consent of the Lender:






	 	(a)	 	make, give, create or permit or attempt to make, give or create any mortgage,
charge, lien or encumbrance over any assets of the Borrower or NiMin, other than
Permitted Encumbrances or any other such contemplated hereby;
	 
	 	(b)	 	change the name of the Borrower or NiMin;
	 
	 	(c)	 	allot and issue any new shares of Borrower or NiMin, other than any such
contemplated hereunder, declare or provide for any dividends or other payments based on
share capital;
	 
	 	(d)	 	redeem or purchase any of its shares;
	 
	 	(e)	 	make or permit any sale or transfer of or disposition of any part of its
business, assets or undertaking outside of the ordinary course of business;
	 
	 	(f)	 	save and except for purchase money security interests and equipment leases
entered into in the ordinary course of business, borrow money from any person other
than the Lender;
	 
	 	(g)	 	pay out or permit the payment out of any shareholders loans or other
indebtedness to non-arm’s length parties; or
	 
	 	(h)	 	guarantee or permit the guarantee of the obligations of any other person,
directly or indirectly, except in favour of the Lender.






	14.	 	Events of Default. Each and every of the events set forth in this paragraph will be an event
of default (“Event of Default”):










 



-15-








	 	(a)	 	if the Borrower fails to make any payment of principal or interest when due
hereunder, and such failure continues for two (2) Business Days;
	 
	 	(b)	 	if the Borrower or NiMin defaults in observing or performing any material term,
covenant or condition of this Agreement, the Security or any other collateral document
delivered hereunder or in connection with the Facility, other than the payment of
monies as provided for in subparagraph (a) hereof, on its part to be observed or
performed and such failure continues for five (5) Business Days;
	 
	 	(c)	 	if any of the Borrower’s or NiMin’s representations, warranties or other
statements in this Agreement or any other collateral document delivered hereunder or in
connection with the Facility were at the time given false or misleading in any material
respect;
	 
	 	(d)	 	if the Borrower or NiMin is in default (after the expiry of any cure period
related thereto), in any material respect, in respect of observing or performing any
term, covenant or condition of any material debt instrument or material debt obligation
by which it is bound;
	 
	 	(e)	 	if the Borrower or NiMin permits any sum, in excess of $100,000, which has been
admitted as due by it, or is not disputed to be due by it, and which forms or is
capable of being made a charge upon any of its assets or undertaking to remain unpaid
or not challenged for thirty (30) days after proceedings have been taken to enforce the
same;
	 
	 	(f)	 	if the Borrower or NiMin ceases or threatens to cease to carry on business;
	 
	 	(g)	 	if any order is made or issued by a competent regulatory authority prohibiting
the trading in shares of the Borrower or NiMin, or any successor thereof, or if the
Borrower’s common shares are suspended or de-listed from trading on any stock exchange;
	 
	 	(h)	 	if, in the reasonable opinion of the Lender, a material adverse change occurs
in the financial condition of the Borrower or NiMin;
	 
	 	(i)	 	if the Lender in good faith and on commercially reasonable grounds believes
that the ability of the Borrower to pay any of the Outstanding Balance to the Lender,
or the ability or the Borrower or NiMin to perform any of the covenants contained in
this Agreement or any other collateral agreement or other document is impaired or
any security granted by the Borrower or NiMin to the Lender is or is about to be
impaired or in jeopardy;
	 
	 	(j)	 	if the Borrower or NiMin petitions or applies to any tribunal for the
appointment of a trustee, receiver or liquidator or commences any proceedings under any
bankruptcy, insolvency, readjustment of debt or liquidation law of any jurisdiction,
whether now or hereafter in effect; or










 



-16-


	 	(k)	 	if any petition or application for appointment of a trustee, receiver or
liquidator is filed, or any proceedings under any bankruptcy, insolvency, readjustment
of debt or liquidation law are commenced, against the Borrower or NiMin which is not
opposed by the Borrower or NiMin in good faith, or an order, judgment or decree is
entered appointing any such trustee, receiver, or liquidator, or approving the petition
in any such proceeding.






	15.	 	Effect of Event of Default. If any one or more of the Events of Default occur or occurs and
is or are continuing, the Lender may without limitation in respect of any other rights it may
have in law or pursuant to this Agreement or any other document or instrument delivered
hereunder, demand immediate payment of all monies owing hereunder.
	 
	16.	 	Lender’s Legal Fees. The Borrower will pay for the Lender’s reasonable legal fees and other
costs, charges and expenses (including due diligence expenses) of and incidental to the
preparation, execution and completion of this Agreement and the security hereunder, as may be
required by the Lender to complete this transaction on a full indemnity basis. Any amounts
will be payable upon presentment of an invoice. If not paid within thirty (30) days of
presentment of an invoice, such amount will be added to and form part of the principal amount
of the Facility and shall accrue interest from such date as if it had been advanced by the
Lender to the Borrower hereunder.
	 
	17.	 	Indemnity. Each of the Borrower and NiMin agrees to indemnify and save harmless the Lender
and each of its directors, officers, employees and agents from and against all liabilities,
claims, losses, damages and reasonable costs and expenses in any way caused by or arising
directly or indirectly from or in consequence of the occurrence of any Event of Default under
this Agreement, except in respect of any such caused by the gross negligence, fraud or wilful
misconduct of the Lender.
	 
	18.	 	Further Assurances. Each of the Borrower and NiMin will from time to time, whether before or
after the occurrence of an Event of Default, do all such acts and things and execute and
deliver all such documents, deeds, transfers, assignments and instruments as the Lender may
require for perfecting the Security granted or to be granted pursuant to this Agreement. Each
of the Borrower and NiMin covenants and agrees with the Lender to discharge or cause to be
discharged forthwith any encumbrances which may rank equal or in priority to the Lender’s
Security referred to herein, except any such as are expressly stated herein to be permissible.
The Borrower covenants and agrees to take all steps and proceedings as may be necessary to
give effect to this Agreement.










 



-17-


	19.	 	Notices. In this Agreement:






	 	(a)	 	any notice or communication required or permitted to be given under this
Agreement will be in writing and will be considered to have been given if delivered by
hand or transmitted by facsimile transmission to each party set out below:






	 	(i)	 	if to the Lender:
	 
	 	 	 	Ionic Capital Corp.

Suite 1028, Bentall 5

550 Burrard Street

Vancouver, BC V6C 3P1
	 
	 	 	 	Attention:    Michael Atkinson

Fax No:        (604) 681-4692
	 
	 	(ii)	 	if to NiMin:

NiMin Energy Corp.

1135 Eugenia Place, Suite C

Carpinteria, CA 93013
	 
	 	 	 	Attention:    Clancy Cottman

Fax No:        (805) 566-1917
	 
	 	(iii)	 	if to the Borrower:

Legacy Energy, Inc.

1135 Eugenia Place, Suite C

Carpinteria, CA 93013
	 
	 	 	 	Attention:    Clancy Cottman

Fax No:        (805) 566-1917






	 		 	or to such other address or facsimile transmission number as any party may designate
in the manner set out above; and
	 
	 	(b)	 	notice or communication will be considered to have been received:






	 	(i)	 	if delivered by hand during business hours on a Business Day,
upon receipt by a responsible representative of the receiver, and if not
delivered during business hours, upon the commencement of business on the next
Business Day; or
	 
	 	(ii)	 	if sent by facsimile transmission during business hours on a
Business Day, upon the sender receiving confirmation of the transmission, and
if not transmitted during business hours, upon the commencement of business on
the next Business Day.










 



-18-



	20.	 	Assignment. Each of the Borrower and NiMin acknowledges and agrees that the Lender may
assign all or part of the Facility, this Agreement and all collateral agreements, documents or
instruments delivered hereunder to one or more assignees, free from any right of set-off or
counterclaim or equity, subject only to the Lender’s notification of such assignment or
assignments being given in writing to the Borrower. Neither the Borrower nor NiMin may assign
their respective rights and obligations pursuant to this agreement without the prior written
consent of the Lender.
	 
	21.	 	Agreement to Pay. Upon receipt of written notice and direction from the Lender, the Borrower
covenants and agrees to make all payments of interest, principal and structuring fees due
under this Agreement to the Lender and any assignee, pro rata in accordance with their
respective proportionate interests in the Facility as set out in such written notice and
direction, absent which all such payments may be made to the Lender.
	 
	22.	 	Enurement. This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
	 
	23.	 	Waivers. No failure or delay on the Lender’s part in exercising any power or right hereunder
will operate as a waiver thereof.
	 
	24.	 	Remedies are Cumulative. The Lender’s rights and remedies hereunder are cumulative and not
exclusive of any rights or remedies at law or in equity.
	 
	25.	 	Time. Time is of the essence of this Agreement and all documents or instruments delivered
hereunder.
	 
	26.	 	Criminal Code Compliance. In this paragraph the terms “interest”, “criminal rate” and
“credit advanced” have the meanings ascribed to them in Section 347 of the Criminal Code
(Canada) as amended from time to time. Each of the Borrower, NiMin and the Lender agree that,
notwithstanding any agreement to the contrary, no interest on the Facility or the credit
advanced by the Lender under this Agreement will be payable in excess of that permitted under
the laws of Canada. If the effective rate of interest, calculated in accordance with
generally accepted actuarial practices and principles, would exceed the criminal rate on the
credit advanced, then:






	 	(a)	 	the elements of return which fall within the term “interest” will be reduced to
the extent necessary to eliminate such excess;
	 
	 	(b)	 	any remaining excess that has been paid will be credited towards prepayment of
the Facility; and
	 
	 	(c)	 	any overpayment that may remain after such crediting will be returned forthwith
to the Borrower upon demand, and, in the event of dispute, a Fellow of the Canadian
Institute of Actuaries appointed by the Lender will perform the relevant calculations
and determine the reductions, modifications and credits necessary to effect the
foregoing and the same will be conclusive and binding on the parties. This Agreement,
the Notes and all related agreements and documents will automatically be modified to
reflect such modifications without the necessity of any further act or deed of the
Borrower and the Lender to give effect to them.










 



-19-








	27.	 	Invalidity. If at any time any one or more of the provisions hereof is or becomes invalid,
illegal or unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be affected or impaired
thereby to the fullest extent possible by law.
	 
	28.	 	Governing Laws. Except as otherwise provided in the documents attached hereto, this
Agreement will be governed by and interpreted in accordance with the laws of the Province of
Alberta, Canada applicable therein. Each of the Borrower and NiMin submits to the
non-exclusive jurisdiction of the Courts of the Province of Alberta and agrees to be bound by
any suit, action or proceeding commenced in such Courts and by any order or judgment resulting
from such suit, action or proceeding, but the foregoing will in no way limit the right of the
Lender to commence suits, actions or proceedings based on this Agreement in any jurisdiction
it may deem appropriate. Any Security granted in connection herewith will be governed in
accordance with the laws of the jurisdiction wherein the collateral granted pursuant to such
Security is located.
	 
	29.	 	Amendment. This Agreement supersedes the Term Sheet and all prior agreements and discussions
between the parties with respect to the subject matter set forth herein. This Agreement may
be varied or amended only by or pursuant to an agreement in writing signed by the parties
hereto.
	 
	30.	 	Schedules. All Schedules attached hereto will be deemed fully a part of this Agreement.
	 
	31.	 	Canadian Funds. All dollar amounts referred to in this agreement are in Canadian funds unless
otherwise specified.
	 
	32.	 	Judgment Currency. If, for the purposes of obtaining or enforcing judgment in any court in
any jurisdiction, it becomes necessary to convert into the currency of the jurisdiction giving
such judgment (the “Judgment Currency”) an amount due under any Note in any other currency
(the “Original Currency”), then the date on which the rate of exchange for conversion is
selected by that court is referred to herein as the “Conversion Date”. If there is a change
in the rate of exchange between the Judgment Currency and the Original Currency between the
Conversion Date and the actual receipt by the Lender of the amount due to it under such Note
or under such judgment, the Borrower shall, notwithstanding such judgment, pay all such
additional amounts as may be necessary to ensure that the amount received by the Lender in the
Judgment Currency, when converted at the rate of exchange prevailing on the date of receipt,
will produce the amount due in the Original Currency. The Borrower’s liability hereunder
constitutes a separate and independent liability which shall not merge with any judgment or
any partial payment or enforcement or payment of sums due under this Agreement.
	 
	33.	 	Withholding Taxes Generally






	 	(a)	 	No Withholding; Gross-Up Requirement. Each payment required to be made by the
Borrower under each of the Notes shall be made without set-off or counterclaim, free
and clear of, and without deduction or withholding for or on account of, any
Indemnified Taxes, except to the extent such deduction or withholding is required by
any Applicable Law, as modified by the administrative practice of any relevant
governmental authority, then in effect. To the extent and










 



-20-


	 	 	 	each time the Borrower is so required to deduct or withhold Indemnified Taxes from
or in respect of any such payment to or for the account of the Lender, then the
Borrower will:






	 	(1)	 	promptly notify the Lender of such requirement;
	 
	 	(2)	 	pay to the relevant governmental authority when
due the full amount required to be deducted or withheld (including the
full amount of Indemnified Taxes required to be deducted or withheld
from any additional amount paid by the Borrower to or for the account
of the Lender under this Subsection 33(a));
	 
	 	(3)	 	promptly forward to the Lender an official
receipt (or a certified copy), or other documentation reasonably
acceptable to the Lender, evidencing such payment to such governmental
authority; and
	 
	 	(4)	 	forthwith pay to the Lender, in addition to the
payment to which the Lender is otherwise entitled under such Loan
Document, such additional amount as is necessary to ensure that the net
amount actually received by the Lender (free and clear of, and net of,
any such Indemnified Taxes, including the full amount of Taxes required
to be deducted or withheld from any additional amount paid by the
Borrower under this Subsection (a), whether assessed against the
Borrower or the Lender) will equal the full amount the Lender would
have received had no such deduction or withholding been required.






	 	(b)	 	Indemnity. If the Borrower fails to pay to the relevant governmental authority
when due any Indemnified Taxes that it was required to deduct or withhold under
Subsection (a) in respect of any payment to or for the benefit of the Lender under any
Loan Document, or fails to promptly furnish the Lender with the documentation referred
to in Subsection 33(a)(3), the Borrower shall forthwith on demand indemnify the Lender
on a full indemnity after-Taxes basis from and against the full amount of any Taxes
(including interest and penalties), losses and expenses which the Lender may suffer or
incur as a result of such failure.
	 
	 	(c)	 	Indemnity for Additional Income Tax. The Borrower shall also indemnify the
Lender on a full indemnity after-Tax basis, for any additional Taxes on net income that
the Lender may be obliged to pay as a result of the payment of additional amounts under
this Section 33.






	 	 	“Indemnified Taxes” means Taxes that are not Excluded Taxes.
	 
	 	 	“Tax” or “Taxes” means all taxes of any kind or nature whatsoever, including income taxes,
capital taxes, levies, imposts, transfer taxes, stamp taxes, documentary taxes, royalties, duties,
charges to taxes, value added taxes, goods and services taxes, sales










 



-21-


	 	 	taxes, business transfer taxes, excise taxes, property taxes, and all fees, deductions,
withholdings and charges, imposed, levied, collected, withheld or assessed by any authority of or
within any jurisdiction whatsoever having power to tax, together with penalties, fines, additions
to tax and interest thereon.
	 
	34.	 	Counterparts. This Agreement may be signed in one or more counterparts, originally or by
facsimile, each such counterpart taken together will form one and the same agreement.




TO EVIDENCE THEIR AGREEMENT each of the parties has executed this Agreement on the date first above
written.




	 	 	 	 	 
	IONIC CAPITAL CORP.

 	 	 
	
Per:
 	 	 
	/s/
Brian E. Bayley
 	 	 
	Authorized Signatory 	 	 
	 	 	 
	
Per:
 	 	 
	/s/
A. Murray Sinclair
 	 	 
	Authorized Signatory 	 	 
	 
	NIMIN ENERGY CORP.

 	 	 
	
Per:
 	 	 
	/s/
Earl Sven Hagen
 	 	 
	Authorized Signatory 	 	 
	 	 	 
	
Per:
 	 	 
	/s/
Jonathan S. Wimbish
 	 	 
	Authorized Signatory 	 	 
	 
	LEGACY ENERGY, INC.

 	 	 
	
Per:
 	 	 
	/s/
Earl Sven Hagen
 	 	 
	Authorized Signatory 	 	 
	 	 	 
	
Per:
 	 	 
	/s/
Jonathan S. Wimbish
 	 	 
	Authorized Signatory 	 	 









 







SCHEDULE “A”




PERMITTED ENCUMBRANCES




	1.	 	undetermined or inchoate liens arising in the ordinary course of and incidental to
construction or current operations which have not been filed pursuant to law against the
Borrower or NiMin or in respect of which no steps or proceedings to enforce such lien have
been initiated or which relate to obligations which are not yet due or delinquent;
	 
	2.	 	liens incurred or created in the ordinary course of business and in accordance with sound
industry practice in respect of the joint operation of oil and gas properties or related
production or processing facilities as security in favour of any other person conducting the
development or operation of the property to which such liens relate, for the portion of the
costs and expenses of such development or operation of the Borrower or NiMin, provided such
costs or expenses are not due or delinquent;
	 
	3.	 	easements, rights-of-way, servitudes, zoning or other similar rights or restrictions in
respect of land held by the Borrower or NiMin (including, without limitation, rights-of-way
and servitudes for railways, sewers, drains, pipelines, gas and water mains, electric light
and power and telephone or telegraph or cable television conduits, poles, wires and cables)
which, either alone or in the aggregate, do not materially detract from the value of such land
or materially impair its use in the operation of the business of the Borrower or NiMin;
	 
	4.	 	any lien or trust arising in connection with worker’s compensation, employment insurance,
pension and employment laws or which relate to obligations which are not due or delinquent;
	 
	5.	 	the right reserved to or vested in any municipality or governmental or other public authority
by the terms of any lease, license, franchise, grant or permit acquired by the Borrower or
NiMin, or by any statutory provision to terminate any such lease, license, franchise, grant or
permit or to require annual or other periodic payments as a condition of the continuance
thereof, but only to the extent that such right has not been exercised and no proceedings or
other steps have been taken to exercise such rights;
	 
	6.	 	all reservations in the original grant from the government of any lands and premises or any
interests therein and all statutory exceptions, qualifications and reservations in respect of
title;
	 
	7.	 	public statutory and similar liens arising by operation of law or which relate to obligations
which are not due or delinquent;
	 
	8.	 	all agreements pursuant to which the Borrower or NiMin, as applicable, has agreed to (or is
committed to) sell, for fair market value, petroleum, natural gas and/or related hydrocarbons
from any petroleum, natural gas or related hydrocarbon property to an arm’s length purchaser
and in the ordinary course of its business;










 



2


	9.	 	any lien arising in the ordinary course of business on any oil and gas interest or right or
the production therefrom as security in favour of any other person who is conducting the
development or operation of the property to which such oil and gas interest or right relates
for the Borrower’s or NiMin’s portion of the costs and expenses of such development or
operation;
	 
	10.	 	any interest of a third party under any pooling unit, development, farmout or operating
agreement, entered into the ordinary course of business affecting oil and gas interests or
rights forming part of the property which is the subject matter of the mortgaged property;
	 
	11.	 	minor defects in title not materially adversely affecting any petroleum, natural gas or
related hydrocarbon property;
	 
	12.	 	overriding royalty interests, farmouts, net profit interests, reversionary interests, carried
interests and lessor royalties or other similar burdens on production in respect of the
Borrower’s or NiMin’s oil and gas properties that are entered into with or granted to arm’s
length third parties in the ordinary course of business and in accordance with sound oil and
gas industry practice;
	 
	13.	 	“purchase money security interests” as such term is defined by the Personal Property Security
Act (Alberta) which are not otherwise prohibited or restricted by any other agreement made
between the Borrower or NiMin, as applicable, and the Lender and which liens charge only the
asset subject to the applicable purchase money security interest;
	 
	14.	 	any lien in the nature of a capitalized lease obligation made in the ordinary course of
business;
	 
	15.	 	any claim or encumbrance which is disclosed by the Borrower or NiMin, as applicable to the
Lender and which is consented to in writing;
	 
	16.	 	liens for taxes, assessments or governmental charges not due or delinquent or the validity of
which the Borrower or NiMin, as applicable, shall be contesting in good faith and in respect
of which such contest will involve no risk of forfeiture of any material property, assets or
undertaking; and
	 
	17.	 	to the extent a security interest is created thereby, equipment leases made in the ordinary
course of business.










 











SCHEDULE “B”




[See Attached Notes]









 



 


PROMISSORY NOTE




Principal Amount: US $5,500,000



For value received, LEGACY ENERGY, INC. (the “Borrower”) hereby promises to pay to the order of
IONIC CAPITAL CORP. (the “Lender”) the principal sum of Five Million Five Hundred Thousand United
States Dollars (US $5,500,000) on the earlier of:





	 	(a)	 	December 17, 2010;
	 
	 	(b)	 	The date of any change of control of the Borrower (“control” being defined as
ownership of or control or direction over, directly or indirectly, 20% or more of the
outstanding voting securities of the Borrower); and
	 
	 	(c)	 	the occurrence of an Event of Default (as defined in the Credit Agreement
between the Borrower and the Lender dated for reference December 17, 2009, as may be
amended from time to time),




together with interest accruing on the outstanding principal amount from the date hereof at a rate
of TWELVE PERCENT (12%) per annum, compounded monthly (effective rate of 12.68% per annum), before
and after each of maturity, default and judgment, payable monthly on the last Business Day of every
month. All payments under this promissory note will be made by certified cheque, bank draft or
wire transfer (pursuant to wire transfer instructions provided by the Lender from time to time) and
delivered to the Lender at office at Suite 1028, 550 Burrard Street, Vancouver, British Columbia
V6C 2B5.



The undersigned is entitled to prepay this promissory note, in whole or in part, without penalty,
provided that such prepayment is made on the last Business Day of a calendar month and the Borrower
has provided not less than ten (10) business days’ prior notice of its intention to prepay the
Facility. The undersigned waives demand and presentment for payment, notice of non-payment,
protest, notice of protest and notice of dishonour. This promissory note will be governed by and
construed in accordance with the laws of Alberta and the federal laws of Canada applicable therein.
In this promissory note, “Business Day” means a day which is not a Saturday, Sunday or a statutory
holiday in Alberta.



Dated: _________________




	 	 	 	 	 
	LEGACY ENERGY, INC.



Per:
 	 	 
	
 	 	 
	Name:  	 	 	 	 
	Title:  	 	 	 	 









 



 




PROMISSORY NOTE




Principal Amount: CDN $17,534,550



For value received, LEGACY ENERGY, INC. (the “Borrower”) hereby promises to pay to the order of
IONIC CAPITAL CORP. (the “Lender”) the principal sum of Seventeen Million Five Hundred Thirty-Four
Thousand Five Hundred Fifty Canadian Dollars (CDN $17,534,550) on the earlier of:





	 	(d)	 	December 17, 2010;
	 
	 	(e)	 	The date of any change of control of the Borrower (“control” being defined as
ownership of or control or direction over, directly or indirectly, 20% or more of the
outstanding voting securities of the Borrower); and
	 
	 	(f)	 	the occurrence of an Event of Default (as defined in the Credit Agreement
between the Borrower and the Lender dated for reference December 17, 2009, as may be
amended from time to time),




together with interest accruing on the outstanding principal amount from the date hereof at a rate
of TWELVE PERCENT (12%) per annum, compounded monthly (effective rate of 12.68% per annum), before
and after each of maturity, default and judgment, payable monthly on the last Business Day of every
month. All payments under this promissory note will be made by certified cheque, bank draft or
wire transfer (pursuant to wire transfer instructions provided by the Lender from time to time) and
delivered to the Lender at office at Suite 1028, 550 Burrard Street, Vancouver, British Columbia
V6C 2B5.



The undersigned is entitled to prepay this promissory note, in whole or in part, without penalty,
provided that such prepayment is made on the last Business Day of a calendar month and the Borrower
has provided not less than ten (10) business days’ prior notice of its intention to prepay the
Facility. The undersigned waives demand and presentment for payment, notice of non-payment,
protest, notice of protest and notice of dishonour. This promissory note will be governed by and
construed in accordance with the laws of Alberta and the federal laws of Canada applicable therein.
In this promissory note, “Business Day” means a day which is not a Saturday, Sunday or a statutory
holiday in Alberta.



Dated: _______________




	 	 	 	 	 
	LEGACY ENERGY, INC.



Per:
 	 	 
	
 	 	 
	Name:  	 	 	 	 
	Title: