Document:

CC Filed by Filing Services Canada Inc. 403-717-3898

  
	
	TERM SHEET

MGC Resources Inc.  (Spring Valley Project)

  

1. Parties: Barrick Gold Exploration Inc. (“BGEI”) and MGC Resources Inc. (MGC)

2. Property:  See attached Exhibit A (the “Property”).

3. Area of Interest:

Area of Interest as defined in the Confidentiality Agreement dated August 31, 2008

4. Underlying royalties and obligations:  

·

MGC’s interest in the Property is subject to royalties as described in Exhibit B.

5. Exploration Agreement with Option to Joint Venture:  BGEI and MGC will enter into an agreement (“Agreement”) granting BGEI the exclusive and irrevocable right to earn a 60% interest in the subject property by spending $30,000,000 on the property ($4,000,000 guaranteed in the first year) over 5 years. BGEI may at its sole discretion increase its interest by 10% (70% total) by spending an additional $8,000,000 by the 6th anniversary of the agreement.  At MGC’s election, BGEI may also earn an additional 5% (75% total) by carrying MGC to a production decision and arranging financing for MGC’s share of mine construction expenses.  The carrying and financing costs plus interest would be recouped by BGEI once production has been established.

6. Work Commitment: Subject to BGEI’s right to terminate as set out below, in order to maintain the Agreement in effect BGEI shall expend the following minimum Work Expenditures on or for the benefit of the Property:

			
	Date

	Work Expenditures

	Aggregate

	By 1st Anniversary of Agreement

December 31, 2009

	 US$  4,000,000

	US$   4,000,000

	By 2nd Anniversary of Agreement

December 31, 2010

	 US$  5,000,000

	US$   9,000,000

	By 3rd Anniversary of Agreement

December 31, 2011

	 US$  7,000,000

	US$   16,000,000

	By 4th Anniversary of Agreement

December 31, 2012

	 US$  7,000,000

	US$   23,000,000

	By 5th Anniversary of Agreement

December 31, 2013

	 US$  7,000,000

	US$   30,000,000

“Work Expenditures” shall include all direct and indirect costs of land holdings, evaluation, exploration and development of the Property, including without limitation drilling, drilling and tunneling costs, machinery, equipment and supply costs, salaries, benefits and wages of employees, contractor charges and fees, assay, metallurgical and other lab fees, permitting and environmental compliance costs, land maintenance costs, bonding and insurance costs, local office and camp expenses, and utility and infrastructure costs..  The first year’s obligation will be a hard commitment.  Excess Work Expenditures in any period shall apply against any future years’ obligation. In the event of any shortfall in Work Expenditures BGEI may elect to pay the shortfall in cash and thereby satisfy the obligation.

7. Termination: BGEI may terminate the agreement at any time by giving written notice after meeting the first year’s commitment as described in Section 6 above.  Upon such termination, BGEI shall be relieved of all obligations under the Agreement, except the obligation to reclaim any disturbance created by its activities on the property in accordance with applicable laws and regulations.

 

Page 1   Term Sheet – BGEI – MGC October 17 2008

8. Reports:  Within 60 days following each anniversary of the Agreement, BGEI shall provide MGC with a report on all work conducted on the Property during the preceding Agreement year, with a copy of all data, including a detailed expenditure statement. In addition to annual reports, BGEI will provide a quarterly report to keep MGC generally advised of operations and significant results.

9. Administrative Fee: MGC shall coordinate geologic and administrative activities under the direction of BGEI, billing monthly at cost (in accordance with agreed-upon accounting procedures) plus an administrative fee of 5.0%.  The value of all such work by MGC shall be included as Work Expenditures. 

10. Options upon Completion of Initial Earn-in:

At the completion of the initial earn-in above, one of the following occurs:

1)

BGEI and MGC enter into a  55/45 JV with BGEI as operator;

2)   BGEI at its sole discretion elects to spend an additional $8,000,000 during the year after vesting at 60% to increase its interest in the JV to 70%. At MGC’s election, BGEI may earn an additional 5% (75% total interest) by carrying MGC to a production decision and arranging financing for MGC’s share of mine construction expenses with the carrying and financing costs plus interest to be recouped by BGEI once production has been established.  

3)  If at any of the decisions points above MGC elects to not participate in a JV, BGEI would have the option to purchase MGC’s remaining interest for $40,000,000 within one year of vesting with MGC retaining a 2% NSR (MGC will work with BGEI to reduce the current  royalties).

11. Confidentiality/News Releases: The terms of this Term Sheet and the Agreement, and all data and information coming into the possession of the parties pursuant thereto shall be deemed strictly confidential and shall be kept strictly confidential by the parties and no party shall make any public announcement or disclosure related to this Term Sheet, the Agreement or the Property without the prior written consent of the other party.

12. Assignment: No assignment, except to an affiliate, without express prior written consent, and subject to a Right Of First Refusal in favor of the non-assigning party.  

	
	The terms and conditions set forth in this letter are agreed upon by the parties and shall serve as the basis for finalization of a Joint Venture agreement to be completed by the parties.

 

Agreed and accepted This 17th of October 2008

Midway Gold Corp., MGC Resources Inc.

Barrick Gold Exploration Inc.

By: _/s/ Alan Branham

By: /s/ Edward Cope

President and CEO

VP Exploration

Page
2   Term Sheet – BGEI – MGC October 17 2008

Exhibit A

“Property”

Page
3   Term Sheet – BGEI – MGC October 17 2008EXHIBIT 10.1

                       FORBEARANCE AGREEMENT -EXTENSION
                       --------------------------------

THIS AGREEMENT made as of November 12, 2008.

AMONG:

          ROYAL BANK OF CANADA
          (hereinafter referred to as the "BANK")

          -and-

          SENTRY TECHNOLOGY CANADA INC.
          (hereinafter referred to as the "BORROWER")

          -and-

          SENTRY TECHNOLOGY CORPORATION
          (hereinafter referred to as the "SENTRY")

          - and -

          CUSTOM SECURITY INDUSTRIES INC.
          (hereinafter referred to as "CSI")

WHEREAS:

A.     The Bank and the Borrower entered into a Forbearance Agreement made as of
the  29th  day  of May, 2008, a copy of which is attached hereto as Appendix "A"
("Forbearance  Agreement").

B.     By  letter  dated  October  31,  2008, the Borrower has advised the Bank,
among  other  things,  that  it is making steady progress towards profitability,
will  be implementing further expense cuts, and requires further time to attract
investment  capital  sufficient  to  repay  the  Indebtedness.

C.     Accordingly, the Borrower has requested that the Bank extend the
Forbearance Period.

 D.     As  an inducement to the Bank agreeing to extend the Forbearance Period,
the  Borrower  has  agreed  to enter into this Extension Agreement and to comply
with  the  terms  and  conditions  contained  in  the  Forbearance Agreement and
contained  herein.

NOW THEREFORE in consideration of the acknowledgements, confirmations, covenants
and  agreements contained herein, and other good and valuable consideration (the
receipt  and  sufficiency of which is hereby acknowledged by each of the Parties
hereto),  each  of  the  Parties  hereto  hereby  agrees  as  follows:

<PAGE>
                                      -2-

1.   All capitalized words and phrases not specifically defined herein shall
     have the meaning as defined in the Forbearance Agreement.

2.   Subsection 5.02(a) of the Forbearance Agreement is hereby amended by
     deleting "October 31, 2008" and inserting "May 15, 2009".

3.   Subsection 5.06(a) of the Forbearance Agreement is hereby amended by
     deleting "the Bank's Prime Rate plus 3 and 1/4% per annum", and inserting
     "the Bank's Prime Rate plus 3 and 3/4% per annum".

4.     Section  5.06  of  the Forbearance Agreement is hereby amended by adding:

       "(b)   the availability under Facility #1 of the Credit Facilities shall
              be reduced to $3,000,000, effective immediately."

5.   The Borrower shall pay to the Bank an extension fee in the sum of $5,000 in
     consideration for the Bank's agreement to extend the Forbearance Period as
     set out herein. Such extension fee shall be and is hereby deemed to form
     part of the Indebtedness and secured by the Security. The Borrower
     authorizes the Bank to debit the account it maintains with the Bank in the
     foresaid sum immediately following the execution of this Extension
     Agreement by the Borrower.

6.   The Borrower and each of the Guarantors shall provide to the Consultant
     access to the books and records of the Borrower and Sentry on or before
     April 30, 2009 for the purpose of reviewing the financial performance of
     the Borrower and Sentry, and in particular, it's most recent quarterly
     results.

7.  The  following  shall  be  added  to Article 6 of the Forbearance Agreement:

     "(w) Additional Financial Information:  On or before December 15, 2008,
     the Borrower and Sentry shall provide to the Bank and the Consultant their
     sales  backlog  report  and shipping schedules as at December 31, 2008, for
     the  upcoming  quarter;

     (x)  Additional Financial Reporting and Cash Flow Projections: The Borrower
     shall provide to the Bank, and the Guarantors shall ensure that the
     Borrower provides to the Bank consolidated and unconsolidated (i) monthly
     financial statements on the 30th day of each month for the previous month;
     and (ii) monthly 3 way projections (balance sheet, income statement and
     cash flow) for fiscal 2009 on a rolling, quarterly basis, to be provided
     every month, commencing November 30, 2008 and on the last day of each month
     thereafter."

8.   The agreement of the Bank to extend the Forbearance Period as provided for
     herein is conditional upon: (i) Brascan Technology Fund providing to the
     Bank, by no later than November 21, 2008, with written confirmation that it
     has agreed to extend the date for the repayment of the indebtedness owing
     to it by the Borrower to July 30, 2009, in form and content satisfactory to
     the Bank; (ii) the Borrower providing to the Bank, by no later than
     November 21, 2008, with written confirmation, in form and content
     satisfactory to the Bank, from Tradition Capital Bank, that the revolving
     credit agreement made as of September 26, 2007 between Sentry and Tradition
     has been extended to at least  July  30,

<PAGE>
                                     -3-

     2009;  and  (iii)  LaSalle Bank N.A. confirming the extension of its
     irrevocable standby letter of credit number 6591288 in favour of the Bank
     for the account of Robert  Furst,  Jr.  to  July  30,  2009.

9.   The Borrower and each of the Guarantors acknowledge that the disbursements
     and legal fees incurred by it, as well as the fees of the Consultant
     incurred by it, in the aggregate sum of $64,272.97, has been added to, and
     continues to be deemed to form part of, the Indebtedness. In addition, the
     most recent invoice of the Consultant shall be paid directly by the
     Borrower, within 30 days of it having been received by the Borrower.

10.  The Forbearance Agreement shall remain in full force and effect and
     unamended, except as amended hereby.

IN WITNESS WHEREOF the parties hereto have executed this Extension Agreement
with effect as and from the date first above written.

                         ROYAL BANK OF CANADA

                         Per:     /s/ Colin Cochrane
                                 ---------------------------
                                 Authorized Signing Officer

                         SENTRY TECHNOLOGY CANADA INC.

                         Per:    /s/ Peter L. Murdoch
                                ----------------------------
                                Authorized Signing Officer

                         Per:    /s/ Joan Miller
                                ----------------------------
                                Authorized Signing Officer

                         SENTRY TECHNOLOGY CORPORATION

                         Per:    /s/ Peter L. Murdoch
                                ----------------------------
                                Authorized Signing Officer

                         Per:    /s/ Joan Miller
                                ----------------------------
                                Authorized Signing Officer

                         CUSTOM SECURITY INDUSTRIES INC.

                         Per:   /s/ Morton Roseman
                               -----------------------------
                               Authorized Signing Officer

                         Per:
                               -----------------------------
                               Authorized Signing Officer

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