UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of JANAURY, 2007.
Commission File Number: 0-30196
HALO RESOURCES LTD
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(Translation of registrant's name into English)
#1305 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7, Canada
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F: FORM 20-F [X] FORM 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form, is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
YES [ ] NO [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
HALO RESOURCES LTD.
-------------------------------------
Date: January 12, 2007 /s/ Marc Cernovitch
----------------------------- -------------------------------------
Marc Cernovitch
President and CEO
HALO RESOURCES LTD.
Suite 1208 - 625 Howe Street
Vancouver, BC V6C 2T6
MANAGEMENT PROXY CIRCULAR
(Containing information as at January 10, 2007 unless indicated otherwise)
SOLICITATION OF PROXIES
THIS MANAGEMENT PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION
OF PROXIES BY THE MANAGEMENT OF HALO RESOURCES LTD. (THE "CORPORATION") FOR USE
AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF THE CORPORATION (AND ANY
ADJOURNMENT THEREOF) TO BE HELD ON FEBRUARY 15, 2007 (THE "MEETING") AT THE TIME
AND PLACE AND FOR THE PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF MEETING.
While it is expected that the solicitation will be primarily by mail, proxies
may be solicited personally or by telephone by the regular employees of the
Corporation at nominal cost. All costs of solicitation by management will be
borne by the Corporation.
The contents and the sending of this Management Proxy Circular have been
approved by the directors of the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
The individuals named in the accompanying form of proxy are the President and a
director, respectively, of the Corporation. A Shareholder wishing to appoint
some other person (who need not be a shareholder) to represent him at the
Meeting has the right to do so, either by stroking out the names of those
persons named in the accompanying form of proxy and inserting the desired
person's name in the blank space provided in the form of proxy or by completing
another form of proxy. A PROXY WILL NOT BE VALID UNLESS THE COMPLETED FORM OF
PROXY IS RECEIVED BY COMPUTERSHARE INVESTOR SERVICES INC., OF 100 UNIVERSITY
AVENUE, 9TH FLOOR, TORONTO, ONTARIO M5J 2Y1 NOT LESS THAN 48 HOURS (EXCLUDING
SATURDAYS, SUNDAYS AND HOLIDAYS) BEFORE THE TIME FOR HOLDING THE MEETING OR ANY
ADJOURNMENT THEREOF.
A Shareholder who has given a proxy may revoke it by an instrument in writing
executed by the Shareholder or by his attorney authorized in writing or, where
the Shareholder is a corporation, by a duly authorized officer or attorney of
the corporation, and delivered to the registered and records office of the
Corporation, Suite 1305, 1090 West Georgia Street, Vancouver, British Columbia
V6E 3V7 at any time up to and including the last business day preceding the day
of the Meeting, or if adjourned, any reconvening thereof, OR TO THE CHAIRMAN OF
THE MEETING ON THE DAY OF THE MEETING or, if adjourned, any reconvening thereof
or in any other manner provided by law. A revocation of a proxy does not affect
any matter on which a vote has been taken prior to the revocation.
ADVICE TO BENEFICIAL SHAREHOLDERS
Only registered Shareholders or duly appointed proxyholders are permitted to
vote at the Meeting. Shareholders who do not hold their shares in their own name
(referred to herein as "Beneficial Shareholders") are advised that only proxies
from Shareholders of record can be recognized and voted at the Meeting.
Beneficial Shareholders who complete and return an instrument of proxy must
indicate thereon the person (usually a brokerage house) who holds their shares
as a registered shareholder. Every intermediary (broker)
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has its own mailing procedure, and provides its own return instructions, which
should be carefully followed. The instrument of proxy supplied to Beneficial
Shareholders is identical to that provided to registered Shareholders. However,
its purpose is limited to instructing the registered Shareholder how to vote on
behalf of the Beneficial Shareholder.
If common shares are listed in an account statement provided to a Shareholder by
a broker, then in almost all cases those shares will not be registered in such
Shareholder's name on the records of the Corporation. Such shares will more
likely be registered under the name of the Shareholder's broker or an agent of
that broker. In Canada, the majority of such shares are registered under the
name of CDS & Co. (the registration name for The Canadian Depository for
Securities Limited, which company acts as nominee for many Canadian brokerage
firms). Common shares held by brokers or their nominees can only be voted (for
or against resolutions) upon the instructions of the Beneficial Shareholder.
Without specific instructions, brokers/nominees are prohibited from voting
shares for their clients. The directors and officers of the Corporation do not
know for whose benefit the common shares registered in the name of CDS & Co. are
held.
In accordance with National Instrument 54 -101 of the Canadian Securities
Administrators, the Corporation has distributed copies of the Notice of Meeting,
this Management Proxy Circular and the Proxy to the clearing agencies and
intermediaries for onward distribution to non-registered Shareholders.
Applicable regulatory policy requires intermediaries/brokers to seek voting
instructions from Beneficial Shareholders in advance of Shareholders' Meetings
unless the Beneficial Shareholders have waived the right to receive Meeting
materials. Every intermediary/broker has its own mailing procedures and provides
its own return instructions, which should be carefully followed by Beneficial
Shareholders in order to ensure that their common shares are voted at the
Meeting. Often the form of proxy supplied to a Beneficial Shareholder by its
broker is identical to the form of proxy provided by the Corporation to the
registered Shareholders. However, its purpose is limited to instructing the
registered shareholder how to vote on behalf of the Beneficial Shareholder
should a Beneficial Shareholder receiving such a form wish to vote at the
Meeting, the Beneficial Shareholder should strike out the names of the
Management Proxyholders named in the form and insert the Beneficial
Shareholder's name in the blank provided.
The majority of brokers now delegate responsibility for obtaining instructions
from clients to ADP Investor Communications Corporation ("ADP"). ADP typically
applies a special sticker to the proxy forms, mails those forms to the
Beneficial Shareholders and asks Beneficial Shareholders to return the proxy
forms to ADP. ADP then tabulates the results of all instructions received and
provides appropriate instructions respecting the voting of common shares to be
represented at the Meeting. A BENEFICIAL SHAREHOLDER RECEIVING A PROXY WITH AN
ADP STICKER ON IT CANNOT USE THAT PROXY TO VOTE COMMON SHARES DIRECTLY AT THE
MEETING -- THE PROXY MUST BE RETURNED TO ADP WELL IN ADVANCE OF THE MEETING IN
ORDER TO HAVE THE COMMON SHARES VOTED. All references to Shareholders in this
Management Proxy Circular and the accompanying form of Proxy and Notice of
Meeting are to Shareholders of record unless specifically stated otherwise.
VOTING OF PROXIES
Shares represented by properly executed proxies in favour of persons designated
in the enclosed form of proxy will be voted in favour of the matters to be
brought before the Meeting as set out in this management proxy circular or
withheld from voting if so indicated on the form of proxy.
The shares represented by proxies will, on any poll where a choice with respect
to any matter to be acted upon has been specified in the form of proxy, be voted
in accordance with the specification made.
SUCH SHARES WILL ON A POLL BE VOTED IN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE
HAS BEEN SPECIFIED OR WHERE BOTH CHOICES HAVE BEEN SPECIFIED BY THE SHAREHOLDER.
The enclosed form of proxy when properly completed and delivered and not revoked
confers discretionary authority upon the person appointed proxy thereunder to
vote with respect to amendments or variations of matters identified in the
Notice of Meeting, and with respect to other matters which may properly come
before the Meeting. In the event that amendments or variations to matters
identified in the Notice of Meeting are properly brought before the Meeting or
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any further or other business is properly brought before the Meeting, it is the
intention of the persons designated in the enclosed form of proxy to vote in
accordance with their best judgment on such matters or business. At the time of
the printing of this Management Proxy Circular, the management of the
Corporation knows of no such amendment, variation or other matter which may be
presented to the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
Authorized Capital: unlimited common shares without par value
Issued and Outstanding: 34,617,049(1) common shares without par value
(1) As at January 10, 2007
Only Shareholders of record at the close of business on January 10, 2007 (the
"Record Date") who either personally attend the Meeting or who have completed
and delivered a form of proxy in the manner and subject to the provisions
described above shall be entitled to vote or to have their shares voted at the
Meeting.
On a show of hands, every individual who is present as a Shareholder or as a
representative of one or more corporate Shareholders, or who is holding a proxy
on behalf of a Shareholder who is not present at the Meeting, will have one
vote, and on a poll every Shareholder present in person or represented by a
proxy and every person who is a representative of one or more corporate
Shareholders, will have one vote for each common share registered in his/its
name on the list of Shareholders, which is available for inspection during
normal business hours at COMPUTERSHARE INVESTOR SERVICES INC. and will be
available at the Meeting.
To the knowledge of the directors and senior officers of the Corporation, there
are no persons or companies who beneficially own, directly or indirectly or
exercise control or direction over shares carrying more than 10% of the voting
rights attached to all outstanding shares of the Corporation.
APPOINTMENT OF AUDITORS
Unless such authority is withheld, the persons named in the accompanying proxy
intend to vote for the appointment of D & H Group LLC, Chartered Accountants, as
auditors of the Corporation and to authorize the directors to fix their
remuneration.
ELECTION OF DIRECTORS
The Board of Directors presently consists of seven directors and it is intended
to determine the number of directors at seven and to elect seven directors for
the ensuing year.
The term of office of each of the present directors expires at the Meeting. The
persons named below will be presented for election at the Meeting as
management's nominees and the persons named in the accompanying form of proxy
intend to vote for the election of these nominees. Management does not
contemplate that any of these nominees will be unable to serve as a director.
Each director elected will hold office until his successor is elected or
appointed, unless his office is earlier vacated in accordance with the Articles
of the Corporation, or with the provisions of the BUSINESS CORPORATIONS ACT.
Pursuant to National Instrument 54-101, a Notice of Meeting and Record Date has
been filed with all securities administrators of jurisdictions wherein the
Corporation's registered shareholders have their addresses and has been given to
the TSX Venture Exchange at least 25 days before the Record Date.
In the following table and notes thereto is stated the name of each person
proposed to be nominated by management for election as a director, the country
in which he is ordinarily resident, all offices of the Corporation now held by
him, his principal occupation, the period of time for which he has been a
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director of the Corporation, and the number of shares of the Corporation
beneficially owned by him, directly or indirectly, or over which he exercises
control or direction, as at the date hereof.
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NAME, POSITION AND PROVINCE & PRINCIPAL OCCUPATION AND IF NOT AT PRESENT AN NO. OF SHARES
COUNTRY OF RESIDENCE(1) ELECTED DIRECTOR, OCCUPATION DURING THE PAST DIRECTOR BENEFICIALLY
FIVE YEARS(1) SINCE HELD(2)
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MARC CERNOVITCH President and CEO of Halo Resources Ltd. Feb. 9, 94,800
President, Chief Executive 2005
Officer and Director
British Columbia, Canada
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NICK DEMARE(3) Chartered Accountant. President and owner of Jan. 30, 425,961(4)
Chief Financial Officer, Chase Management Ltd., a private company 1996
Chairman and Director providing accounting, administrative and
British Columbia, Canada management services.
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TOM HEALY Professional Mining Engineer. President of Feb. 9, 100,000(5)
Senior Vice-President, Chief Kamcot International Ltd., a private company 2005
Operating Officer and Director providing management and engineering services.
Alberta, Canada
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WILLIAM LEE(3) Chartered Accountant. Chief Financial Feb. 12, 5,300
Director Officer of Jinshan Gold Mines, Inc. 2004
British Columbia, Canada
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ANDREW CARTER(3) President of Tinka Resources Limited. Feb. 12, 22,000
Director 2004
British Columbia, Canada
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EWAN DOWNIE President and CEO of Wolfden Resources Inc. May 31, 830,000
Director and Chairman of Sabina Resources Inc. 2004
Ontario, Canada
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LYNDA BLOOM Geologist. President, CEO and director of Nov.27, Nil
Director Canadian Shield Resources Inc. from January 2006
Ontario, Canada 1998 to January 2007. President and owner of
Analytical Solutions Ltd. from September 1987
to present.
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NOTES:
(1) The information as to country of residence and principal occupation, not
being within the knowledge of the Corporation, has been furnished by the
respective directors individually.
(2) The information as to shares beneficially owned or over which a director
exercises control or direction, not being within the knowledge of the
Corporation, has been furnished by the respective directors individually.
(3) Denotes member of Audit Committee.
(4) Includes 319,691 common shares held directly and 97,404 common shares and
8,866 common shares held by DNG Capital Corp. ("DNG") and 888 Capital Corp.
("888"), respectively. DNG is a private company wholly-owned by Mr. DeMare.
888 is a private company 50% owned by Mr. DeMare.
(5) Held through Kamcot International Ltd., a private company wholly-owned by
Mr. Healy.
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STATEMENT OF EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
"Named Executive Officers" means the Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO") of the Corporation, regardless of the amount of
compensation of those individuals, and each of the Corporation's three most
highly compensated executive officers, other than the CEO, who were serving as
executive officers at the end of the most recent fiscal year and whose total
salary and bonus amounted to $150,000 or more. In addition, disclosure is also
required for any individuals whose total salary and bonus during the most recent
fiscal year was $150,000 whether or not they are an executive officer at the end
of the fiscal year.
During the fiscal year ended August 31, 2006, the Corporation had two Named
Executive Officers, Mr. Marc Cernovitch, the Corporation's President and CEO,
and Mr. Nick DeMare, the Corporation's Chairman and CFO. The following table
sets forth the compensation awarded, paid to or earned by the Named Executive
Officers during the financial years ended August 31, 2004, 2005 and 2006:
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ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------- --------------------------------
AWARDS PAYOUTS
---------------------- -------
SECURITIES RESTRICTED
UNDER SHARES OR ALL
NAME AND OTHER OPTIONS/ RESTRICTED OTHER
PRINCIPAL ANNUAL SARS SHARE LTIP COMPEN-
POSITION YEAR(1) SALARY BONUS COMPENSATION GRANTED UNITS PAYOUTS SATION
($) ($) ($) (#)(2) ($) ($) ($)
- ------------------------------- -------------------------------- ---------------------- ------- ---------
Marc Cernovitch(3) 2006 93,000 Nil Nil 330,000 N/A N/A Nil
President, CEO 2005 51,500 Nil Nil 275,000 N/A N/A Nil
and Director 2004 N/A N/A N/A N/A N/A N/A N/A
- ------------------------------- -------------------------------- ---------------------- ------- ---------
Nick DeMare 2006 Nil Nil 30,000(4) 133,000 N/A N/A 69,700(4)
Chairman, CFO and 2005 Nil Nil 28,000(4) 73,000 N/A N/A 62,450(4)
Director 2004 Nil Nil 8,000(4) 150,000(5) N/A N/A 55,638(4)
- ------------------------------- -------------------------------- ---------------------- ------- ---------
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NOTES:
(1) Financial years ended August 31, 2004, 2005 and 2006.
(2) Figures represent options granted during a particular year; see "Aggregate
Option" table for the aggregate number of options outstanding at year end.
(3) Mr. Cernovitch was appointed on February 9, 2005 as the President and CEO
of the Corporation.
(4) Paid to Chase Management Ltd. ("Chase"), a private company owned by Mr.
DeMare, for accounting, administration, management and professional
services rendered by Mr. DeMare and Chase personnel. See "Management
Contracts".
(5) Includes 50,000 options granted to Chase.
LONG-TERM INCENTIVE PLANS -- AWARD IN MOST RECENTLY COMPLETED FINANCIAL YEAR
The Corporation has no long-term incentive plans in place and therefore there
were no awards made under any long-term incentive plan to the Name Executive
Officers during the Corporation's most recently completed financial year. A
"Long-Term Incentive Plan" is a plan under which awards are made based on
performance over a period longer than one financial year, other than a plan for
options, SARs (stock appreciation rights) or restricted share compensation.
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OPTIONS AND SHARE APPRECIATION RIGHTS
OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
The following table sets forth stock options granted to the Named Executive
Officers during the financial year ended August 31, 2006:
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% OF TOTAL MARKET VALUE OF
SECURITIES OPTIONS/SARS SECURITIES
UNDER GRANTED TO UNDERLYING
OPTIONS/SARS EMPLOYEES IN EXERCISE OR OPTIONS/SARS ON EXPIRATION
NAME GRANTED FINANCIAL YEAR BASE PRICE THE DATE OF GRANT DATE
(#) (%) ($/SECURITY) ($/SECURITY)
- --------------- ------------ -------------- ------------ ----------------- ----------
Marc Cernovitch 80,000 3.69% 0.75 0.74 Sep. 29/08
250,000 11.53% 0.45 0.50 Feb. 02/09
------- -----
330,000 15.22%
======= =====
- --------------- ------------ -------------- ------------ ----------------- ----------
Nick DeMare 60,000 2.77% 0.75 0.74 Sep. 29/08
73,000 3.36% 0.45 0.50 Feb. 02/09
------- -----
133,000 6.13%
======= =====
- --------------- ------------ -------------- ------------ ----------------- ----------
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AGGREGATED OPTION/ SAR EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL
YEAR AND FINANCIAL YEAR -END OPTION/ SAR VALUES
The following table sets out details of all the incentive stock options, both
exercised and unexercised, for the Named Executive Officers during the financial
year ended August 31, 2006:
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UNEXERCISED VALUE OF UNEXERCISED
SECURITIES OPTIONS/SARS AT IN THE MONEY OPTIONS AT
ACQUIRED ON AGGREGATE VALUE FINANCIAL YEAR -END FINANCIAL YEAR -END (1)
NAME EXERCISE REALIZED EXERCISABLE / EXERCISABLE /
(#) ($) UNEXERCISABLE UNEXERCISABLE
(#) ($)
- --------------- ---------- --------------- ------------------- -----------------------
Marc Cernovitch Nil N/A 480,000 / N/A Nil / N/A
- --------------- ---------- --------------- ------------------- -----------------------
Nick DeMare Nil N/A 283,000(2) / N/A Nil / N/A
- --------------- ---------- --------------- ------------------- -----------------------
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NOTES:
(1) The closing price of the Corporation's shares on August 31, 2006 was $0.40.
(2) Includes 50,000 options granted to Chase.
TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS
The Corporation does not have any compensatory plan(s), contract(s) or
arrangement(s) with respect to the resignation, retirement or any other
termination of the Named Executive Officers' employment, a change of control of
our corporation or a change in the Named Executive Officers' responsibilities
following a change in control, which entitle a Named Executive Officer to
receive from the Corporation an amount, including all period payments or
installments, exceeding $100,000.
COMPENSATION OF DIRECTORS
CASH COMPENSATION
During the financial year ended August 31, 2006, the Corporation paid $116,400
for professional fees to a director who is not a Named Executive Officer of the
Corporation.
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NON-CASH COMPENSATION
The following table sets forth stock options granted by the Corporation during
the financial year ended August 31, 2006 to the directors who are not the Named
Executive Officers of the Corporation:
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% OF TOTAL MARKET VALUE OF
SECURITIES OPTIONS/SARS SECURITIES
UNDER GRANTED TO UNDERLYING
OPTIONS/SARS EMPLOYEES IN EXERCISE OR OPTIONS/SARS ON EXPIRATION
NAME GRANTED FINANCIAL YEAR BASE PRICE THE DATE OF GRANT DATE
(#) (%) ($/SECURITY) ($/SECURITY)
- -------------------- ------------ -------------- ------------ ----------------- ----------
Directors as a group 180,000 8.30% 0.75 0.74 Sep. 29/08
who are not Named 295,000 13.61% 0.45 0.50 Feb. 2/09
Executive Officers ------- -----
475,000 21.91%
======= =====
- -------------------- ------------ -------------- ------------ ----------------- ----------
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The following table sets forth details of all exercises of stock options during
the financial year ended August 31, 2006 by the directors who are not the Named
Executive Officers of the Corporation, and the financial year end value of
unexercised options:
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UNEXERCISED VALUE OF UNEXERCISED
SECURITIES OPTIONS/SARS AT IN THE MONEY OPTIONS AT
ACQUIRED ON AGGREGATE VALUE FINANCIAL YEAR -END FINANCIAL YEAR -END (1)
NAME EXERCISE REALIZED EXERCISABLE / EXERCISABLE /
(#) ($) UNEXERCISABLE UNEXERCISABLE
(#) ($)
- --------------- ---------- --------------- ------------------- -----------------------
Directors as a group Nil N/A 935,000 / N/A Nil / N/A
who are not Named
Executive Officers
- --------------- ---------- --------------- ------------------- -----------------------
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NOTE:
(1) The closing price of the Corporation's shares on August 31, 2006 was $0.40.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets out, as of the end of the Corporation's financial year
ended August 31, 2006, all information required with respect to compensation
plans under which equity securities of the Corporation are authorized for
issuance:
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE EXERCISE AVAILABLE FOR FUTURE ISSUANCE
BE ISSUED UPON EXERCISE PRICE OF OUTSTANDING UNDER EQUITY COMPENSATION
OF OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND PLANS (EXCLUDING SECURITIES
WARRANTS AND RIGHTS RIGHTS REFLECTED IN COLUMN (A))
- ------------------------- ----------------------- ------------------------- ------------------------------
Plan Category (a) (b) (c)
- ------------------------- ----------------------- ------------------------- ------------------------------
Equity compensation plans 2,903,000 (1) $0.56 See Note (1)
approved by
securityholders
- ------------------------- ----------------------- ------------------------- ------------------------------
Equity compensation plans N/A N/A N/A
not approved by
securityholders
- ------------------------- ----------------------- ------------------------- ------------------------------
Total 2,903,000 $0.56 See Note (1)
- ------------------------- ----------------------- ------------------------- ------------------------------
- ------------------------------------------------------------------------------------------------------------------
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NOTE:
(1) The Corporation has in place a "rolling" stock option plan (the "Plan")
whereby the maximum number of Common shares that may be reserved for
issuance pursuant to the Plan will not exceed 10% of the issued shares of
the Corporation at the time of the stock option grant. As of the date
hereof, Common shares may be reserved for issuance pursuant to the Plan.
See "Particulars of Other Matters to be Acted Upon -- Stock Option Plan"
for further particulars of the Plan.
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
No executive officers, directors, employees or former executive officers and
directors of the Corporation are indebted to the Corporation. None of the
directors, executive officers or proposed nominees of the Corporation nor any
associate or affiliate of these individuals, is or has been indebted to the
Corporation since September 1, 2005.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other than as disclosed herein or in the Financial Statements, no informed
person of the Corporation, any proposed director of the Corporation, or any
associate or affiliate of any informed person or proposed director has any
material interest, direct or indirect, in any transaction since the commencement
of our most recently completed financial year or in any proposed transaction
which has materially affected or would materially affect the Corporation. An
"informed person" means a director or executive office of a reporting issuer; a
director or executive officer of a person or company that is itself an informed
person or subsidiary of a reporting issuer; any person or company who
beneficially owns, directly or indirectly, voting shares of a reporting issuer
or who exercises control or direction over shares of the reporting issuer or a
combination of both carrying more than 10% of the voting rights attached to all
outstanding voting securities of the reporting issuer; and a reporting issuer
that has purchased, redeemed or otherwise acquired any of its securities, for so
long as it holds any of its securities.
MANAGEMENT CONTRACTS
The Corporation has a management contract with Chase Management Ltd. ("Chase"),
of Suite 1305 - 1090 W. Georgia Street, Vancouver, BC, V6E 3V7, a company
wholly-owned by Nick DeMare, whereby the Corporation has retained Chase to
provide ongoing administrative, accounting, professional and management
services. In return for providing such services, Chase is paid a monthly fee of
$3,000 plus any out-of-pocket disbursements made by Chase on the Corporation's
behalf. In addition, the Corporation may engage Chase to perform extra services
in which case Chase will charge the Corporation for its employees at competitive
rates. The Corporation is also paying Chase $2,000 per month for the services of
Mr. DeMare in his capacity as Chairman and CFO of the Corporation. Payment for
these services have been included as part of "Other Annual Compensation" and
"All Other Compensation" of the Summary Compensation Table for Mr. DeMare.
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
Effective June 30, 2005, NATIONAL INSTRUMENT 58-101 - DISCLOSURE OF CORPORATE
GOVERNANCE PRACTICES ("NI 58-101") was adopted by the Canadian Securities
Administrators. NI 58-101 requires issuers to disclose their governance
practices in accordance with that instrument. The Corporation is a "venture
issuer" within the meaning of NI 58-101. A discussion of the Corporation's
governance practices within the context of NI 58-101 is set out below:
BOARD OF DIRECTORS
The Corporation has four independent directors, namely: Messrs. William Lee,
Andrew Carter and Ewan Downie and Ms. Lynda Betty Bloom. The Corporation has
three directors who are not independent because they are executive officers of
the Corporation, namely: Mr. Marc Cernovitch, President and CEO, Mr. Nick
DeMare, CFO and Chairman and Mr. Tom Healy, Senior Vice-President and Chief
Operating Officer.
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DIRECTORSHIPS
As of the date of this information circular, certain directors of the
Corporation are also serving as directors of other reporting issuers, details of
which are as follows:
NICK DEMARE: Aguila American Resources Ltd., Andean American Mining Corp.,
Astral Mining Corporation, Centrasia Mining Corp., Consolidated Kookaburra
Resources Ltd., GeoPetro Resources Company, GGL Diamond Corp., Gold Point
Energy Corp., Golden Peaks Resources Ltd., Goldmarca Limited, Lariat Energy
Ltd., Mawson Resources Limited, Mirasol Resources Ltd., Mulligan Capital
Corp., Sinchao Metals Corp., Tinka Resources Limited and Tumi Resources
Limited.
WILLIAM LEE: Golden Peaks Resources Ltd., Rochester Resources Ltd. and
Tinka Resources Limited.
ANDREW CARTER: Astral Mining Corporation, Gold Point Energy Corp.,
Rochester Resources Ltd. and Tinka Resources Limited.
EWAN DOWNIE: Anaconda Gold Corp., Benton Resources Corp., Newstrike
Resources Ltd., Pediment Exploration Ltd., Premier Gold Mines Limited and
Sabina Silver Corporation.
LYNDA BLOOM: Augen Capital Corp. and Canadian Shield Resources Inc.
ORIENTATION AND CONTINUING EDUCATION
The CEO and/or the CFO are responsible for providing an orientation for new
directors. Director orientation and on-going training will include presentations
by senior management to familiarize directors with the Corporation's strategic
plans, its significant financial, accounting and risk management issues, its
compliance programs, its principal officers and its internal and independent
auditors.
ETHICAL BUSINESS CONDUCT
The Corporation does not have a written code of ethical business conduct for its
directors, officers and employees. Each director, officer and employee is
expected to comply with relevant corporate and securities laws and, where
applicable, the terms of their employment agreements.
NOMINATION OF DIRECTORS
When a board vacancy occurs or is contemplated, any director may make
recommendations to the board as to qualified individuals for nomination to the
board.
In identifying new candidates, the directors will take into account the mix of
director characteristics and diverse experiences, perspectives and skills
appropriate for the Corporation at that time.
COMPENSATION
From time to time, the independent directors of the Board will review the
compensation payable to the CEO and CFO. The directors receive no compensation
in their capacity as directors other than the grant of stock options from time
to time, which allocation is made by the Board as a whole.
OTHER BOARD COMMITTEES
The board has no standing committees other than the Audit Committee.
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ASSESSMENTS
The Board of Directors of the Corporation does not conduct any formal evaluation
of the performance and effectiveness of the members of the Board, the Board as a
whole or any committee of the Board.
AUDIT COMMITTEE
THE AUDIT COMMITTEE'S CHARTER
The following is the text of the Corporation's Audit Committee Charter:
"MANDATE
The primary function of the audit committee (the "Committee") is to
assist the Board of Directors in fulfilling its financial oversight
responsibilities by reviewing the financial reports and other financial
information provided by the Corporation to regulatory authorities and
shareholders, the Corporation's systems of internal controls regarding
finance and accounting and the Corporation's auditing, accounting and
financial reporting processes. The Committee's primary duties and
responsibilities are to:
- Serve as an independent and objective party to monitor the
Corporation's financial reporting and internal control system
and review the Corporation's financial statements.
- Review and appraise the performance of the Corporation's
external auditors (the "Auditor").
- Provide an open avenue of communication among the Corporation's
auditors, management and the Board of Directors.
COMPOSITION
The Committee shall be comprised of at least three members. Each member
must be a director of the Corporation. A majority of the members of the
Committee shall not be officers or employees of the Corporation or of an
affiliate of the Corporation. At least one member of the Committee shall
be financially literate. All members of the Committee who are not
financially literate will work towards becoming financially literate to
obtain a working familiarity with basic finance and accounting
practices. For the purposes of this Audit Committee Charter, the term
"financially literate" means the ability to read and understand a set of
financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of the issues that can reasonably be expected to be raised by
the Corporation's financial statements.
The members of the Committee shall be appointed by the Board of
Directors at its first meeting following the annual shareholders'
meeting. Unless a Chair is elected by the full Board of Directors, the
members of the Committee may designate a Chair by a majority vote of the
full Committee membership. The Chair shall be financially literate.
MEETINGS
The Committee shall meet a least twice annually, or more frequently as
circumstances dictate. As part of its job to foster open communication,
the Committee will meet at least annually with the CFO and the external
auditors in separate sessions. Unless all members are present and waive
notice, or those absent waive notice before or after a meeting, the
Chairman will give Committee members 24 hours' advance notice of each
meeting and the matters to be discussed at it. Notice may be given
personally, by telephone, facsimile or e-mail.
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The Auditor shall be given reasonable notice of, and be entitled to
attend and speak at, each meeting of the Committee concerning the
Corporation's annual financial statements and, if the Committee feels it
is necessary or appropriate, at any other meeting. On request by the
Auditor, the Chair shall call a meeting of the Committee to consider any
matter that the Auditor believes should be brought to the attention of
the Committee, the Board of Directors or the shareholders of the
Corporation.
At each meeting of the Committee, a quorum shall consist of a majority
of members that are not officers or employees of the Corporation or of
an affiliate of the Corporation. A member may participate in a meeting
of the Committee in person or by telephone if all members participating
in the meeting, whether in person or by telephone or other
communications medium, are able to communicate with each other. A member
may participate in a meeting of the Committee by a communications medium
other than telephone if all members participating in the meeting,
whether in person or by telephone or other communications medium, are
able to communicate with each other and if all members who wish to
participate in the meeting agree to such participation.
As part of its goal to foster open communication, the Committee may
periodically meet separately with each of management and the Auditor to
discuss any matters that the Committee or any of these groups believes
would be appropriate to discuss privately. In addition, the Committee
should meet with the Auditor and management annually to review the
Corporation's financial statements.
The Committee may invite to its meetings any director, any manager of
the Corporation, and any other person whom it deems appropriate to
consult in order to carry out its responsibilities. The Committee may
also exclude from its meetings any person it deems appropriate to
exclude in order to carry out its responsibilities.
RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Committee shall:
DOCUMENTS/REPORTS REVIEW
(a) Review and update the Charter annually.
(b) Review the Corporation's financial statements, MD&A and any
annual and interim earnings, press releases before the
Corporation publicly discloses this information and any reports
or other financial information (including quarterly financial
statements), which are submitted to any governmental body, or to
the public, including any certification, report, opinion, or
review rendered by the external auditors.
(c) Review and satisfy itself that adequate procedures are in place
for the review of the Corporation's public disclosure of
financial information extracted or derived from its financial
statements, other than disclosure described in the previous
paragraph, and periodically assess the adequacy of those
procedures.
EXTERNAL AUDITORS
(a) Be directly responsible for overseeing the work by the Auditor
(including resolution of disagreements between management and
the Auditor regarding financial reporting) engaged for the
purpose of preparing or issuing an audit report or performing
other audit or review services for the Corporation.
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(b) Require the Auditor to report directly to the Committee.
(c) Review, annually, the performance of the Auditor who shall be
ultimately accountable to the Board of Directors and the
Committee as representatives of the shareholders of the
Corporation.
(d) Review and discuss with the Auditor any disclosed relationships
or services that may impact the objectivity and independence of
the Auditor.
(e) Take, or recommend that the Board of Directors take,
appropriate action to oversee the independence of the Auditor.
(f) Recommend to the Board of Directors the external auditor to be
nominated at the annual general meeting for appointment as the
Auditor for the ensuing year and the compensation for the
Auditors, or, if applicable, the replacement of the Auditor.
(g) Review and approve the Corporation's hiring policies regarding
partners, employees and former partners and employees of the
Auditor and former independent external auditor of the
Corporation.
(h) Be directly responsible for the oversight of the work by the
Auditor (including resolution of disagreements between
management and the Auditor regarding financial reporting) for
the purpose of preparing or issuing an audit report or related
work.
(i) Review with management and the Auditor the audit plan for the
annual financial statements.
(j) Review and pre-approve all audit and audit-related services and
the fees and other compensation related thereto, and any
non-audit services provided by the Auditor. The pre-approval
requirement is waived with respect to the provision of
non-audit services if:
(i) the aggregate amount of all such non-audit services that
were not pre-approved is reasonably expected to
constitute not more than 5% of the total amount of fees
paid by the Corporation and its subsidiary entities to
the Auditor during the fiscal year in which the
non-audit services are provided;
(ii) such services were not recognized by the Corporation at
the time of the engagement to be non-audit services; and
(iii) such services are promptly brought to the attention of
the Committee and approved, prior to the completion of
the audit, by the Committee or by one or more members of
the Committee to whom authority to grant such approvals
has been delegated by the Committee.
The Committee may delegate to one or more independent members of the
Committee the authority to pre-approve non-audit services in
satisfaction of the pre-approval requirement set out in this section
provided the pre-approval of non-audit services by any member to whom
authority has been delegated must be presented to the Committee at its
first scheduled meeting following such pre-approval.
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FINANCIAL REPORTING PROCESSES
(a) In consultation with the Auditor, review with management the
integrity of the Corporation's financial reporting process, both
internal and external.
(b) Consider the Auditor's judgments about the quality and
appropriateness of the Corporation's accounting principles as
applied in its financial reporting.
(c) Consider and approve, if appropriate, changes to the
Corporation's auditing and accounting principles and practices
as suggested by the Auditor and management.
(d) Review significant judgments made by management in the
preparation of the financial statements and the view of the
Auditor as to the appropriateness of such judgments.
(e) Following completion of the annual audit, review separately with
management and the Auditor any significant difficulties
encountered during the course of the audit, including any
restrictions on the scope of work or access to required
information.
(f) Review any significant disagreement among management and the
Auditor in connection with the preparation of the financial
statements.
(g) Review with the Auditor and management the extent to which
changes and improvements in financial or accounting practices
have been implemented.
(h) Discuss with the Auditor the Auditor's perception of the
Corporation's financial and accounting personnel, any material
recommendations which the Auditor may have, the level of
cooperation which the Auditor received during the course of
their review and the adequacy of their access to records, data
and other requested information.
(i) Review any complaints or concerns about any questionable
accounting, internal accounting controls or auditing matters.
(j) Review certification process.
(k) Establish procedures for:
(i) the receipt, retention and treatment of complaints
received by the Corporation regarding accounting, internal
accounting controls, or auditing matters; and
(ii) the confidential, anonymous submission by employees of the
Corporation of concerns regarding questionable accounting
or auditing matters.
OTHER
(a) Perform such other duties as may be assigned to it by the Board
of Directors from time to time or as may be required by
applicable regulatory authorities or legislation.
(b) Report regularly and on a timely basis to the Board of Directors
on matters coming before the Committee.
(c) Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board of Directors for
approval.
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AUTHORITY
The Committee is authorized to:
(a) seek any information it requires from any employee of the
Corporation in order to perform its duties;
(b) engage, at the Corporation's expense, independent legal
counselor other professional advisors on any matter within the
scope of the role and duties of the Committee under this
Charter;
(c) set and pay the compensation for any advisors engaged by the
Committee; and
(d) communicate directly with the internal and external auditors of
the Corporation.
This Charter supersedes and replaces all prior charters and other terms
of reference pertaining to the Committee."
COMPOSITION OF THE AUDIT COMMITTEE
The following are the members of the Committee (1):
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INDEPENDENT (1) FINANCIALLY LITERATE
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Nick DeMare N Y
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William Lee Y Y
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Andrew Carter Y Y
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NOTE:
(1) As defined by Multilateral Instrument 52-110 ("MI 52-110").
The Corporation is relying on the exemption provided under Section 6.1 of
MI52-110.
RELEVANT EDUCATION AND EXPERIENCE
William Lee is a Chartered Accountant with significant experience working with
resource issuers as a chief financial officer. In addition, from 2004 to January
2006, Mr. Lee provided consulting services to a resource energy group in meeting
their compliance obligations under the Sarbanes-Oxley Act. Nick DeMare is a
Chartered Accountant with significant experience working with resource issuers
as a chief financial officer and Andrew Carter is a business executive with
extensive experience in the industry. As such each has acquired knowledge and
understanding of the financial issues and accounting principles that are
relevant in assessing this Corporation's financial disclosures and internal
control systems.
AUDIT COMMITTEE OVERSIGHT
At no time since the commencement of the Corporation's most recently completed
financial year was a recommendation of the Committee to nominate or compensate
an external auditor not adopted by the Board of Directors.
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RELIANCE ON CERTAIN EXEMPTIONS
At no time since the commencement of the Corporation's most recently completed
financial year has the Corporation relied on the exemption in Section 2.4 of MI
52-110 (De Minimis Non-audit Services), or an exemption from MI 52-110, in whole
or in part, granted under Part 8 of Multilateral Instrument 52-110.
PRE-APPROVAL POLICIES AND PROCEDURES
The Committee has adopted specific policies and procedures for the engagement of
non-audit services as described above under the heading "External Auditors".
EXTERNAL AUDITOR SERVICE FEES (BY CATEGORY)
The aggregate fees billed by the Corporation's external auditors in each of the
last two fiscal years for audit fees are as follows:
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AUDIT ALL
FINANCIAL YEAR AUDIT RELATED TAX OTHER
ENDING FEES FEES FEES FEES
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August 31, 2006 $23,831 $5,637 $22,944 Nil
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August 31, 2005 $13,356 $1,419 $2,202 Nil
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NOTE:
(1) Estimated audit fee for the financial year ended August 31, 2006.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
A. RATIFICATION OF APPROVED STOCK OPTION PLAN
The Corporation has a rolling stock option plan (the "Plan"), which makes a
total of 10% of the issued and outstanding shares of the Corporation available
for issuance thereunder. The Corporation's Plan was approved by the shareholders
at the last annual general meeting held in February 2006. In accordance with the
policies of the TSX Venture Exchange (the "Exchange"), a rolling plan, which is
the type of plan the Corporation has adopted, requires the approval of the
shareholders of the Corporation on an annual basis. Accordingly, the Corporation
requests that the shareholders ratify and approve the Plan, with or without
amendments as may be required by the Exchange.
The purpose of the Plan is to provide the Corporation with a share related
mechanism to enable the Corporation to attract, retain and motivate qualified
directors, officers, employees and other service providers, to reward directors,
officers, employees and other service providers for their contribution toward
the long term goals of the Corporation and to enable and encourage such
individuals to acquire shares of the Corporation as long term investments.
The Plan provides that it is solely within the discretion of the Board to
determine who should receive options and in what amounts. The Board may issue a
majority of the options to insiders of the Corporation. However, the Plan
provides that in no case will the Plan or any existing share compensation
arrangement of the Corporation result, at any time, in the issuance to any
option holder, within a one year period, of a number of shares exceeding 5% of
the Corporation's issued and outstanding share capital.
The following information is intended to be a brief description of the Plan and
is qualified in its entirety by the full text of the Plan which is available for
review by any shareholder up until the day preceding the Meeting at the
Corporation's registered and records office at Suite 1305, 1090 West Georgia
Street, Vancouver, British Columbia, and will be available at the Meeting:
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1. The maximum number of common shares that may be issued upon exercise of
stock options granted under the Plan will be that number of Shares
which is 10% of the issued and outstanding shares of the Corporation.
The Corporation currently has 3,460,000 options outstanding. The
exercise price of the stock options, as determined by the Board in its
sole discretion, shall not be less than the closing price of the
Corporation's shares traded through the facilities of the Exchange on
the date prior to the date of grant, less allowable discounts, in
accordance with the policies of the Exchange or, if the shares are no
longer listed for trading on the Exchange, then such other exchange or
quotation system on which the shares are listed and quoted for trading.
2. The Board will not grant options to any one person which will, when
exercised, exceed 5% of the issued and outstanding shares of the
Corporation.
3. Upon expiry of the option, or in the event an option is otherwise
terminated for any reason, without having been exercised in full, the
number of shares in respect of the expired or terminated option shall
again be available for the purposes of the Plan. All options granted
under the Plan may not have an expiry date exceeding ten years from the
date on which the Board grant and announce the granting of the option.
4. If the option holder ceases to be a director of the Corporation or
ceases to be employed by the Corporation (other than by reason of
death), as the case may be, then the option granted shall expire on the
90th day following the date that the option holder ceases to be a
director or ceases to be employed by the Corporation, subject to the
terms and conditions set out in the Plan.
The Plan may be administered by the Corporation's secretary or such other
officer or employee as may be designated by the Board from time to time. Upon
the approval of the Plan by the Corporation's shareholders, shareholder approval
will not be required or sought on a case-by-case basis for the purpose of the
granting of options to and the exercise of options by employees of the
Corporation regularly employed on a full-time or part-time basis, directors of
the Corporation and persons who perform services for the Corporation on an
ongoing basis or who have provided, or are expected to provide, services of
value to the Corporation.
The Exchange policies require that the Plan be approved by the affirmative vote
of a majority of the votes cast at the Meeting. Accordingly, the Corporation
requests that the shareholders pass the following resolution:
"RESOLVED, AS AN ORDINARY RESOLUTION, THAT:
1. the Plan, substantially in the form approved by the
shareholders of the Corporation at the last annual general
meeting held on February 9, 2006, with or without amendments,
as may be required by the TSX Venture Exchange, is hereby
ratified, confirmed and approved;
2. the Corporation is authorized to grant stock options pursuant
and subject to the terms and conditions of the Plan entitling
all of the optionholders in aggregate to purchase up to such
number of common shares of the Corporation as is equal to 10%
of the number of common shares of the Corporation issued and
outstanding on the applicable grant date; and
3. any one or of the directors or officers of the Corporation be
authorized and directed to perform all such acts, deeds and
things and execute, under the seal of the Corporation or
otherwise, all such documents and other writings, including
treasury orders, stock exchange and securities commission
forms, as may be required to give effect to the true intent of
this resolution."
An ordinary resolution requires the approval of a simple majority (>50%) of the
votes cast by the shareholders of the Corporation being entitled to vote in
person or by proxy at the Meeting.
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OTHER MATTERS
Management of the Corporation knows of no other matters to come before the
Meeting other than those referred to in the Notice of Meeting accompanying this
Information Circular. However, if any other matters properly come before the
Meeting, it is the intention of the persons named in the form of proxy
accompanying this Information Circular to vote the same in accordance with their
best judgment of such matters.
ADDITIONAL INFORMATION
Additional information relating to the Corporation is on SEDAR at WWW.SEDAR.COM.
Shareholders may contact the Corporation at #1305 - 1090 West Georgia Street,
Vancouver, BC, V6E 3V7 or by telephone at 604-685-9316 to request copies of the
Corporation's financial statements and MD&A for its most recently completed
financial year. Financial information is provided in the Corporation's
comparative financial statements and MD&A for its most recently completed
financial year.
HALO RESOURCES LTD.
(THE "CORPORATION")
2007 REQUEST FOR ANNUAL AND INTERIM FINANCIAL STATEMENTS
National Instrument 51-102 requires the Corporation to send annually to the
registered holders and beneficial owners of its securities ("Securityholders") a
form to allow Securityholders to request a copy of the Corporation's annual
financial statements and related MD&A and/or interim financial statements and
related MD&A. If you wish to receive such mailings, please complete and return
this form to:
HALO RESOURCES LTD.
C/O #1305 - 1090 WEST GEORGIA STREET
VANCOUVER, BC V6E 3V7
The undersigned Securityholder hereby elects to receive or not receive:
[ ] Yes [ ] No Interim Financial Statements for the first, second and third
financial quarters of 2007 and the related MD&A,
-- and / or --
[ ] Yes [ ] No Annual Financial Statements for the fiscal year ended
August 31, 2007 and related MD&A.
PLEASE NOTE THAT A REQUEST FORM WILL BE MAILED EACH YEAR AND SECURITYHOLDERS
MUST RETURN SUCH FORM EACH YEAR TO RECEIVE THE DOCUMENTS INDICATED ABOVE.
NAME: ___________________________________________________________________
ADDRESS: ___________________________________________________________________
___________________________________________________________________
POSTAL CODE: ___________________________________________________________________
I confirm that I am a: [ ] REGISTERED SHAREHOLDER OR [ ] BENEFICIAL SHAREHOLDER
of the Corporation.
Signature of
Securityholder: __________________________________ Date: __________________
CUSIP: 40637D108