-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PHNj0tCrsgSYIK5LoHGNcymiwOM6ghLosFOB+E8/Su41tZnWYXCltpg0xIYBiNLU GGVA/lZYWYnchLu2q5rj9Q== 0001019687-07-002745.txt : 20070822 0001019687-07-002745.hdr.sgml : 20070822 20070821173652 ACCESSION NUMBER: 0001019687-07-002745 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070822 DATE AS OF CHANGE: 20070821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Dhanoa Minerals Ltd. CENTRAL INDEX KEY: 0001343845 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 980470528 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 333-129864 FILM NUMBER: 071071628 BUSINESS ADDRESS: STREET 1: 15 OCEANVIEW ROAD CITY: LIONS BAY STATE: A1 ZIP: V0N 2E0 BUSINESS PHONE: 405-721-7300 MAIL ADDRESS: STREET 1: 15 OCEANVIEW ROAD CITY: LIONS BAY STATE: A1 ZIP: V0N 2E0 10QSB 1 dhanoa_10qsb-063007.txt United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2007 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ______________ to ________________ Commission File Number: 333-129864 DHANOA MINERALS LTD. -------------------------------------------- (Exact name of small business issuer as specified in its charter) Nevada 98-0470528 ------ ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 15 Oceanview Road, Lions Bay, B.C., Canada V0N 2E0 ------------------------------------------------------------------------- (Address of principal executive offices) (604) 925-0716 ----------------------------------------------- (Issuer's telephone number) _______________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 45,127,332 shares as of August 9, 2007. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] DHANOA MINERALS LTD. INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheet as of June 30, 2007.......................... 3 Condensed Statements of Operations for the three and the nine months ended June 30, 2007........................................... 4 Condensed Statements of Stockholders' Equity for the period from July 11, 2005 (Inception) to June 30, 2007 ..................... 5 Condensed Statements of Cash Flows for the three and the nine months ended June 30, 2007........................................... 6 Notes to the Condensed Financial Statements.......................... 7 Item 2. Management's Discussion and Analysis or Plan of Operation............14 Item 3. Controls and Procedures .............................................16 PART II. OTHER INFORMATION Item 1. Legal Proceedings....................................................16 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds..........16 Item 3. Defaults upon Senior Securities......................................16 Item 4. Submission of Matters to a Vote of Security Holders..................16 Item 5. Other Information....................................................16 Item 6. Exhibits ............................................................18 Signatures....................................................................18 i PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DHANOA MINERALS LTD. FINANCIAL STATEMENTS AS OF JUNE 30, 2007 (EXPRESSED IN US DOLLARS) (UNAUDITED) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The following discussion should be read in conjunction with the Consolidated Financial Statements of the Company and the notes thereto included elsewhere herein. The statements contained in this report include forward-looking statements about information of possible or assumed results of operations, business strategies, financing plans, competitive position and potential growth opportunities. Forward-looking statements include all statements that are not historical facts and are generally accompanied by words such as "may," "will," "intend," "anticipate," "believe," "estimate," "expect," "should" or similar expressions or the negative of such words or expressions. These statements also relate to the Company's contingent payment obligations relating to acquisitions, future capital requirements, potential acquisitions and the Company's future development plans and are based on current expectations. Forward-looking statements involve various risks, uncertainties and assumptions. The Company's actual results may differ materially from those expressed in these forward-looking statements. Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate these estimates, including those related to useful lives of real estate assets, cost reimbursement income, bad debts, impairment, net lease intangibles, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates. RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2007 AND 2006 For the three month period ended June 30, 2007 compared to the three month period ended June 30, 2006, Dhanoa had a net loss of $637,082 and $18,354, respectively, a increase of approximately 3407%. Mining exploration costs decreased 41% to $8,889 during the three month period ended June 30, 2007 as compared to $15,000 for the comparable period in 2006. General and administrative expenses increased 18,828% to $634,847 during the three month period ended June 30, 2007 as compared to $ 3,354 for the comparable period in 2006. COMPARISON OF THE NINE MONTHS ENDED JUNE 30, 2007 AND 2006 Dhanoa anticipates incurring a loss as a result of exploration and development expenses, and expenses associated with the operations of the Company. Additional expenditures are necessary to determine the extent future revenues will be generated from its properties. For the nine month period ended June 30, 2007 compared to the nine month period ended June 30, 2006, Dhanoa had a net loss of $1,028,600 and $38,697, respectively, a 2558% increase in net loss. Mining exploration costs decreased 697% to $159,341 during the nine month period ended June 30, 2007 as compared to $20,000 for the comparable period in 2006. General and administrative expenses decreased 4622% to $875,922 during the nine months ended June 30, 2007 as compared to $18,551 for the comparable period in 2006. 14 LIQUIDITY AND CAPITAL RESOURCES The Company is a development stage mining exploration company and had no revenues during the nine month period ended June 30, 2007. The Company has financial commitments related to the January 23, 2007 Share Purchase Agreement ("Agreement") to purchase an 80% interest in Promenasa, S.A. a mining company located in Ecuador. The Agreement obligates the Company to loan its subsidiary, Promenasa, $7,300,000 at the rate of approximately $1,000,000 per month until the loan obligation is satisfied. As of June 30, 2007, the Company has loaned Promenasa $3,781,285. The Company is obligated to loan Promenasa an additional $3,518,715. Additionally, pursuant to the Agreement, the Company placed $1,300,000 in escrow to pay the remaining installment of the purchase price once the Company is satisfied that the former owners have verified certain employee payroll tax obligations. The Company took title to on Promenasa August 1, 2007, however it is still negotiating the precise amount of the final installment which may be reduced to offset certain tax obligations it may assume. At June 30, 2007, the Company had $140,948 in cash on hand. The Company does not have enough cash on hand to satisfy our minimum cash requirements for the next twelve months. The Company anticipates incurring additional losses as a result of its contractual obligations and mining development expenses, and expenses associated with the operations of the Company. The Company may generate some revenue in the near future from its mineral interests but it is unlikely that those revenues will be adequate to meet the all of the Company's financial obligations. The Company must rely on corporate officers, directors and outside investors in order to meet its budget. The Company may seek capital from the sale of its common stock or other securities, however, there is no assurance that an offering of its securities can be completed on terms satisfactory to the Company. If the Company is unable to obtain additional financing from any of one of these aforementioned sources, the Company would not be able to complete its financial obligations regarding the development of its Ecuadorian properties or to continue as a going concern. The following table is a summary of the Company's contractual obligations as of June 30, 2007. Contractual Obligations Payments Due by Period - ----------- ---------------------- One Three to Less Than to Three Five Total One Year Years Years ------------ ------------ ----------- ----------- Long-term Debt $ -- $ -- $ -- $ -- Loans to subsidiary $ 3,518,715 $ 3,518,785 $ -- $ -- Purchase Obligation $ 1,300,000* $ 1,300,000* $ -- $ -- Total Contractual Cash Obligations $ 4,818,715 $ 4,818,715 $ -- $ -- * $1,300,000 is in escrow to the make final installment of the purchase price. The exact total may be offset to cover some tax obligations that Dhanoa may agree to assume in the transfer of ownership. 15 ITEM 3. CONTROLS AND PROCEDURES The Company's Chief Executive Officer/President and its principal accounting officer (collectively, the "Certifying Officer") are responsible for establishing and maintaining disclosure controls and procedures for the Company. Such officers have concluded (based upon their evaluation of these controls and procedures as of a date within 90 days of the filing of this report) that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in this report is accumulated and communicated to the Company's management, including its principal executive officers as appropriate, to allow timely decisions regarding required disclosure. The management of the Company became aware that the assistant treasurer, committed the Company to expenditures totaling $994,995 during the six months ended March 31, 2007 which lacked adequate supporting documentation and/or proper approvals from the board of directors. Management conducted an inquiry into the expenditures and further reviewed its internal controls policies and procedures. The management discovered that while the identified expenses lacked supporting documentation and were not fully authorized, the former assistant treasurer was largely acting to further the legitimate business interests of the Company. The management and the former assistant treasurer reached an agreement whereby he reimbursed the Company for all such expenses plus interest in exchange for a full release. The Certifying Officer states that the Company made material changes in its internal controls and the management took corrective actions to cure any deficiencies and material weaknesses. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS On June 20, 2007, the Company sold 2,090,164 shares of its restricted Common Stock to Lee Balak at $.61 per share in reliance upon Regulation S under the Securities Act of 1933, as amended. On June 20, 2007, the Company sold 2,090,164 shares of its restricted Common Stock to Arcobel Investments, Inc. at $.61per share in reliance upon Regulation S under the Securities Act of 1933, as amended. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEMS 5. OTHER INFORMATION RESIGNATION AND APPOINTMENT OF DIRECTORS. On May 12, 2007 Mr. Micheal Dehn resigned as a Director of the Company. There were no disagreements between the Company and Mr. Dehn regarding the Company's operations, policies or practices. The Board of Directors of the Company appointed Mr. Lee A. Balak as a director to fill the vacancy created by the resignation of Mr. Dehn. Mr. Paul Roberts resigned from his positions of President, Secretary and a Director of the Company at the close of business on May 23, 2007. Mr. Roberts resigned to pursue other opportunities and for personal reasons. There were no disagreements between the Company and Mr. Roberts regarding the Company's operations, policies or practices. 16 Mr. Lee Andrew Balak was appointed to be a Director of the Company on May 12, 2007 and was appointed Chief Executive Officer and President of the Company on May 31, 2007. From June of 2005 to January of 2007, Mr. Balak has served as the President of Britannica Resources Corp., a Canadian mining exploration company (symbol BRR.V). He is still serving as a Director of Britannica. From February 1996 to June of 2004, Mr. Balak served as a director and as the Chief Executive Officer and President of Power Technology Inc. (symbol PWTC). He remained as a consultant to Power Technology Inc. until January of 2005. From February 2000 to December 6, 2002, Mr. Balak served as a director and President of Fluidic/Microwave Systems, Inc., a Nevada corporation. Mr. Balak was the owner and President of No. 90 Corporate Ventures, a Canadian corporation located in Vancouver, B.C.. From 1983 to 1993, he was a corporate finance consultant. From 1977 to 1982, he was a registered representative of Canarim Investment Corporation. Mr. Balak attended the University of Winnipeg. Mr. William E. McNerney was appointed as a director, Secretary and Treasurer of the Company on May 31, 2007. From July of 2005 to May 2007, Mr. McNerney has been a consultant to Emco S.A., and other junior mining entities, assisting with the acquisition of undeveloped gold, silver and uranium properties in North and South America. He has served as President and Chief Executive Officer of Impactive Tech Inc., a Nevada corp., managing mining stock portfolios. Mr. McNerney served Power Technology, Inc. as a Director from June of 1997 to May 2004 and as its Executive Vice President from June of 2001 until May 2004. From February 2000 to March 2003, Mr. McNerney has served as a Director and Secretary of Fluidic/Microwave Systems, Inc., a Nevada corporation. From 1993 to 1999, he was a Director and Executive Vice President Officer of Revolutionary Technology Industries, Inc. From 1984 to 1993, Mr. McNerney was retired. From 1974 to 1984, Mr. McNerney owned and operated an oil and gas operating company, Golden Exploration, Inc.. From 1954 to 1976, Mr. McNerney was a commercial airline pilot, employed by Northwest Airlines. He attended the University of Minnesota. On July 1, 2007, the Company appointed Mr. Thomas Daniel Kuhn as its Vice-President of Mining Operations. Mr. Kuhn has 40 years of experience working in the mining industry. His experience includes being a mine manager for INCO in Ontario, Canada and he has worked as a consultant with International Minerals. Mr. Kuhn has experience and training in Loss Control Management and security. He is fluent in Spanish and English languages. Mr. Khun is living and working exclusively at the Company's mine site in Ecuador. MATERIAL ACQUISITIONS In June 2007, the Company's subsidiary Promenasa, S.A., acquired full ownership of the San Jorge a.k.a. "Spanish Plant' which is a centralized mineral processing facility. The processing facility was purchased for $550,000 from an unrelated party. Promenasa used loaned funds from the Company to purchase this asset. The facility is strategically located on a level area near the base of the mountain where the Company's three mines are located. The majority of antiquated equipment that came with the purchase of the plant will be sold and replaced with more efficient equipment and technology. The San Jorge facility is secured by ten to twenty foot walls that enclose the entire structure. Additionally, the plant has approximately three thousand square feet of office space and living quarters. Construction has already begun on renovating the living quarters so Company representatives can be onsite 24 hours a day overseeing mineral processing. SUBSEQUENT EVENTS On August 1, 2007, the Company received the share certificates for 80% ownership of Promenasa, S.A. which is the Ecuadorian company that has title to the Company's mineral rights and other associated assets in Ecuador. The Company has placed $1,300,000 in escrow and is negotiating the exact amount of the final payment of the purchase price which may be offset if the Company assumes certain tax liabilities. 17 ITEM 6. EXHIBITS (a) Exhibits. --------- 10.1 Executive Employment Agreement between Dhanoa and Lee A. Balak 10.2 Executive Employment Agreement between Dhanoa and William E. McNerney 10.3 Regulation S. Purchase Agreement of Lee A. Balak 10.4 Warrant of Lee A. Balak 10.5 Regulation S Purchase Agreement of Arcobel Investments Inc. 10.6 Warrant of Arcobel Investments Inc. 10.7 Release and Indemnification Agreement of June 11, 2007 31.1 Certification of Lee A. Balak 31.2 Certification of William E. McNerney 32 Sarbanes Oxley Certification of Lee A. Balak and William E. McNerney SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dhanoa Minerals Ltd. Date: August 21, 2007 By: /s/ Lee A. Balak ------------------------------ Lee A. Balak Chief Executive Officer and President By: /s/ William E. McNerney ------------------------------------------ William E. McNerney Treasurer and principal accounting officer 18 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DHANOA MINERALS LTD. FINANCIAL STATEMENTS AS OF JUNE 30, 2007 (EXPRESSED IN US DOLLARS) (UNAUDITED) F-1 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) CONTENTS PAGE 3 CONDENSED BALANCE SHEET AS OF JUNE 30, 2007 (UNAUDITED) PAGE 4 CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2007 AND 2006 AND FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JUNE 30, 2007 (UNAUDITED) PAGE 5 CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JUNE 30, 2007 (UNAUDITED) PAGE 6 CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2007 AND 2006 AND FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JUNE 30, 2007 (UNAUDITED) PAGES 7 - 13 NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) F-2 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) CONDENSED BALANCE SHEET AS OF JUNE 30, 2007 (UNAUDITED) (EXPRESSED IN US DOLLARS) ASSETS CURRENT ASSETS Cash $ 140,948 Prepaid expenses 188,426 ----------- 329,374 Deposit in escrow on mineral properties 2,400,000 Loan receivable - Promenasa 3,781,285 ----------- TOTAL ASSETS $ 6,510,659 =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 1,867 ----------- TOTAL LIABILITIES 1,867 ----------- STOCKHOLDERS' EQUITY Preferred stock, $0.001 par value, 3,000,000 shares authorized, none issued and outstanding -- Common stock, $0.001 par value, 65,000,000 shares authorized, 38,309,151 shares issued and outstanding 38,309 Additional paid in capital 7,568,688 Accumulated deficit during exploration stage (1,098,205) ----------- Total Stockholders' Equity 6,508,792 ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,510,659 =========== See accompanying notes to unaudited condensed financial statements. F-3 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (EXPRESSED IN US DOLLARS) For the Period from July 11, 2005 For The Three Months Ended For The Nine months Ended (Inception) June 30, June 30, to June 30, ------------------------------ ------------------------------ ------------ 2007 2006 2007 2006 2007 ------------ ------------ ------------ ------------ ------------ OPERATING EXPENSES Exploration costs and expenses $ 8,898 $ 15,000 $ 159,341 $ 20,000 $ 183,341 General and administrative 634,847 3,354 875,922 18,551 924,293 ------------ ------------ ------------ ------------ ------------ Total Operating Expenses 643,745 18,354 1,035,263 38,551 1,107,634 ------------ ------------ ------------ ------------ ------------ LOSS FROM OPERATIONS (643,745) (18,354) (1,035,263) (38,551) (1,107,634) OTHER INCOME (EXPENSE) Interest Income 6,663 -- 6,663 -- 6,663 Foreign currency transaction (loss) gain -- -- -- (146) 2,766 ------------ ------------ ------------ ------------ ------------ Total Other Income (Expense) 6,663 -- 6,663 (146) 9,429 ------------ ------------ ------------ ------------ ------------ LOSS BEFORE PROVISION FOR INCOME TAXES (637,082) (18,354) (1,028,600) (38,697) (1,098,205) Provision for Income Taxes -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ NET LOSS $ (637,082) $ (18,354) $ (1,028,600) $ (38,697) $ (1,098,205) ============ ============ ============ ============ ============ Net (loss) earnings per share - basic and diluted $ (0.02) $ (0.00) $ (0.02) $ (0.00) $ (0.03) ============ ============ ============ ============ ============ Weighted average number of shares outstanding during the period - basic and diluted 34,542,262 9,500,000 41,760,815 9,500,000 30,055,770 ============ ============ ============ ============ ============ See accompanying notes to unaudited condensed financial statements. F-4 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JUNE 30, 2007 (UNAUDITED) (EXPRESSED IN US DOLLARS) Accumulated Deficit Preferred Stock Common Stock Additional During ------------------------ ------------------------- Paid-In Subscription Exploration Shares Amount Shares Amount Capital Receivable Stage Total ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Common stock issued to founders for cash ($0.001 per share) -- $ -- 35,000,000 $ 35,000 $ (28,000) $ -- $ -- $ 7,000 Common stock issued for cash ($0.02 per share) -- -- 12,500,000 12,500 37,500 -- -- 50,000 Stock subscription receivable -- -- -- -- -- (4,813) -- (4,813) Net loss for the period from July 11, 2005 (inception) to September 30, 2005 -- -- -- -- -- -- (4,210) (4,210) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance, September 30, 2005 -- -- 47,500,000 47,500 9,500 (4,813) (4,210) 47,977 Stock subscription receivable -- -- -- -- -- 4,813 -- 4,813 Net loss for the year ended September 30, 2006 -- -- -- -- -- -- (65,395) (65,395) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance, September 30, 2006 -- -- 47,500,000 47,500 9,500 -- (69,605) (12,605) Common stock and warrants issued for cash ($0.50 per share) -- -- 2,400,000 2,400 1,197,600 -- -- 1,200,000 Common stock and warrants issued for cash ($2.75 per share) -- -- 909,090 909 2,499,088 -- -- 2,499,997 Common stock and warrants issued for cash ($2 per share) -- -- 650,000 650 1,299,350 -- -- 1,300,000 Common stock and warrants issued for cash ($0.61 per share) -- -- 4,180,328 4,180 2,545,820 -- -- 2,550,000 Cancelled shares -- -- (17,330,267) (17,330) 17,330 -- -- -- Net loss for the period ended June 30, 2007 -- -- -- -- -- -- (1,028,600) (1,028,600) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- BALANCE, JUNE 30, 2007 -- $ -- 38,309,151 $ 38,309 $ 7,568,688 $ -- $(1,098,205) $ 6,508,792 =========== =========== =========== =========== =========== =========== =========== =========== See accompanying notes to unaudited condensed financial statements. F-5 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (EXPRESSED IN US DOLLARS) For The Nine For The Nine For the Period Months Months From July 11, 2005 Ended Ended (Inception) June 30, June 30, to June 30, 2007 2006 2007 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(1,028,600) $ (38,697) $(1,098,205) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Changes in operating assets and liabilities: Prepaid expenses (182,000) (925) (188,426) Accounts payable (20,833) (600) 1,867 ----------- ----------- ----------- Net Cash Provided by (Used In) Operating Activities (1,231,433) (40,222) (1,284,764) ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Deposits made to acquire mineral properties (2,400,000) -- (2,400,000) Loan to Promenasa (3,781,285) -- (3,781,285) ----------- ----------- ----------- Net Cash Used In Investing Activities (6,181,285) -- (6,181,285) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 7,549,997 4,813 7,606,997 ----------- ----------- ----------- Net Cash Provided By Financing Activities 7,549,997 4,813 7,606,997 ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH 137,279 (35,409) 140,948 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,669 48,477 -- ----------- ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 140,948 $ 13,068 $ 140,948 =========== =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ -- $ -- $ -- =========== =========== =========== Cash paid for taxes $ -- $ -- $ -- =========== =========== =========== During the nine months ended June 30, 2007, the Company cancelled 17,330,267 of the founding shareholders common stock with no consideration given to the founding shareholders. See accompanying notes to unaudited condensed financial statements. F-6
DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2007 ------------------- (UNAUDITED) (EXPRESSED IN US DOLLARS) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION - ------ ----------------------------------------------------------- (A) ORGANIZATION AND BASIS OF PRESENTATION ------------------------------------------ The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations. It is management's opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. Dhanoa Minerals Ltd (an exploration stage company) (the "Company") was incorporated under the laws of the State of Nevada on July 11, 2005. The Company is a natural resource exploration company with an objective of acquiring, exploring and if warranted and feasible, developing natural resource properties. Activities during the exploration stage include developing the business plan and raising capital. (B) USE OF ESTIMATES -------------------- In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. (C) CASH AND CASH EQUIVALENTS ----------------------------- For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. F-7 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2007 ------------------- (UNAUDITED) (EXPRESSED IN US DOLLARS) (E) INCOME TAXES ---------------- The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (F) LOSS PER SHARE ------------------ Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by Financial Accounting Standards No. 128, "Earnings per Share." For the three and nine month periods ended June 30, 2007 and 2006, and for the period from inception through June 30, 2007, the assumed exercise of 3,504,545 shares were not included in the calculation of dilutive net loss per share as the amounts were anti-dilutive. Per share amounts have been adjusted to reflect the 1:5 forward stock split approved on October 9, 2006. (G) LONG-LIVED ASSETS --------------------- The Company accounts for long-lived assets under the Statements of Financial Accounting Standards Nos. 142 and 144 "Accounting for Goodwill and Other Intangible Assets" and "Accounting for Impairment or Disposal of Long-Lived Assets" ("SFAS No. 142 and 144"). In accordance with SFAS No. 142 and 144, long-lived assets, goodwill and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, goodwill and intangible assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. (H) FOREIGN CURRENCY TRANSLATION -------------------------------- In accordance with SFAS 52 "Foreign Currency Translation", the Company has determined that its functional currency is the United States Dollar. F-8 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2007 ------------------- (UNAUDITED) (EXPRESSED IN US DOLLARS) (I) BUSINESS SEGMENTS --------------------- The Company operates in one segment and therefore segment information is not presented. (J) CONCENTRATION OF CREDIT RISK -------------------------------- At June 30, 2007, the Company had total cash of $140,948 in a Canadian bank which is uninsured. (K) RECENT ACCOUNTING PRONOUNCEMENTS ------------------------------------ In July 2006, the FASB issued Interpretation 48, "ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES" ("FIN 48"), an interpretation of FASB Statement No. 109,"ACCOUNTING FOR INCOME TAXES." FIN 48 clarifies the accounting and reporting for income taxes where interpretation of the law is uncertain. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken in income tax returns. FIN 48 is effective for fiscal years beginning after December 15, 2006 and has no current applicability to the Company's financial statements In September 2006, the FASB issued Statement No. 157, "FAIR VALUE MEASUREMENTS" ("SFAS No. 157"). SFAS No. 157 addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands the required disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, with earlier adoption permitted. Management is assessing the impact of the adoption of SFAS No. 157. In September 2006, the FASB issued Statement No. 158, "EMPLOYERS' ACCOUNTING FOR DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT PLANS" ("SFAS No. 158"), an amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158 requires (a) recognition of the funded status (measured as the difference between the fair value of the plan assets and the benefit obligation) of a benefit plan as an asset or liability in the employer's statement of financial position, (b) measurement of the funded status as of the employer's fiscal year-end with limited exceptions, and (c) recognition of changes in the funded status in the year in which the changes occur through comprehensive income. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. The requirement to measure the plan assets and benefit obligations as of the date of the employer's fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. SFAS No. 158 has no current applicability to the Company's financial statements. F-9 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2007 ------------------- (UNAUDITED) (EXPRESSED IN US DOLLARS) In September 2006, the Securities Exchange Commission issued Staff Accounting Bulletin No. 108 ("SAB No. 108"). SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. When the effect of initial adoption is material, companies will record the effect as a cumulative effect adjustment to beginning of year retained earnings and disclose the nature and amount of each individual error being corrected in the cumulative adjustment. In February 2007, the FASB issued Statement No. 159, "THE FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES" ("SFAS No. 159"), an amendment of FASB Statement No. 115. SFAS No. 159 addresses how companies should measure many financial instruments and certain other items at fair value. The objective is to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, with earlier adoption permitted. Management is assessing the impact of the adoption of SFAS No. 159. NOTE 2 GOING CONCERN - ------ ------------- As reflected in the accompanying financial statements, the Company is in the exploration stage with no revenue and a negative cash flow from operations of $1,284,764 from inception. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding (See Note 4) and implement its strategic plans (See Note 3) provide the opportunity for the Company to continue as a going concern. F-10 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2007 ------------------- (UNAUDITED) (EXPRESSED IN US DOLLARS) NOTE 3 MINERAL PROPERTIES - ------ ------------------ MINERA PARAISO MINELPARASA S.A. The Company has entered into a Letter of Intent to purchase an interest in mining property in Ecuador. Under the terms of the Letter of Intent with Overseas Mining, S.A., the Company has agreed, subject to completion of due diligence, to acquire an 80 % interest in the share capital of the Ecuador company, Minera Paraiso Minelparsa S.A. ("Paraiso"), which owns the operating mine and all related assets. The purchase consideration for the 80% interest consists of 5,000,000 restricted common shares and cash payments totaling US $10,000,000. As of June 30, 2007, the Company paid a $500,000 refundable deposit on the signing of the Letter of Intent. Upon completion of due diligence however, the Company has decided to abandon the acquisition of Paraiso. The Company has agreed with Overseas Mining, S.A. to use the $400,000 refundable deposit toward the Company's loan obligation to Promenasa and $100,000 towards the purchase price. PROMENASA, S.A. Effective January 23, 2007, the Company entered into a Share Sales Agreement to acquire 80% of the ownership of Promenasa, S.A., an Ecuador mining company ("Promenasa"), for $2,400,000 (U.S.) and approximately 6,818,181 shares of the restricted common stock of the Company. In addition, the Company agreed to make a $7,300,000 loan to Propmenasa. The $7,300,000 of loans to Promenasa are to be made within nine months after the closing for the purpose of upgrading the mine and mill; and for additional equipment. The loans will be secured by a mortgage and liens covering all of the assets of Promenasa and the equipment. As of June 30, 2007, the Company has paid $3,781,285 toward the Company's loan obligation and has made a deposit of $2,400,000 equal to the purchase price which is being held in escrow. As of June 30, 2007, this sale has not been finalized and the 6,818,181 shares of restricted common stock were being held in escrow pending the closing on this sale. NOTE 4 STOCKHOLDERS' EQUITY - ------ -------------------- During 2005, the Company issued 35,000,000 shares of common stock to its founders for cash of $7,000 ($0.0002 per share). During 2005, the Company issued 12,500,000 shares of common stock for cash of $50,000 ($0.004 per share). F-11 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2007 ------------------- (UNAUDITED) (EXPRESSED IN US DOLLARS) On October 9, 2006 the Company affected a 1: 5 forward stock split. All share and per share amounts have been retroactively restated. On November 6, 2006, the Company closed a private placement of 2,400,000 units for gross proceeds of $1,200,000 ($0.50 per unit). Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $0.60 for a period of twenty four months. On November 16, 2006, the former President of the Company returned 4,600,000 shares of common stock owned by him. The shares were cancelled and retired. On December 18, 2006, the Company closed a private placement of 909,090 units for gross proceeds of $2,499,997 ($2.75 per unit). Each unit consists of one common share and a purchase warrant to purchase one-half of a share of common stock at a price of $2.85 for a period of eighteen months. On February 12, 2007, the Company closed a private placement of 650,000 units for gross proceeds of $1,300,000 ($2.00 per unit). Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $2.50 for a period of eighteen months. On June 21, 2007, the Company closed a private placement of 4,180,328 units for gross proceeds of $2,550,000 ($0.61 per unit). Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant is exercisable into one common share at a price of $0.61 for a period of eighteen months. Effective March 6, 2007, two founding shareholders cancelled a total of 12,730,267 shares of common stock for no consideration. SHARE PURCHASE WARRANTS Weighted Average Number Exercise of Warrants Price --------------------------- BALANCE, SEPTEMBER 30, 2006 -- $ -- Granted November 6, 2006 2,400,000 0.60 December 18, 2006 454,545 2.85 February 12, 2007 650,000 2.50 June 21, 2007 4,180,328 0.61 --------------------------- BALANCE, JUNE 30, 2007 7,684,873 $ 0.90 =========================== F-12 DHANOA MINERALS LTD. (AN EXPLORATION STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2007 ------------------- (UNAUDITED) (EXPRESSED IN US DOLLARS) As at June 30, 2007, the Company had the following warrants outstanding: ------------------------------------------------------- Shares Exercise Price Expiration Date ------------------------------------------------------- 2,400,000 $ 0.60 November 6, 2008 454,545 $ 2.85 May 18, 2008 650,000 $ 2.50 August 12, 2008 4,180,328 $ 0.61 December 21, 2008 ------------------------------------------------------- 7,684,873 ======================================================= NOTE 5 RELATED PARTY - ------ ------------- On October 10, 2006, the Company entered into an employment agreement with the President which calls for an annual salary of $125,000, 250,000 restricted shares, and a yearly expense allowance up to a maximum of $25,000. On May 31, 2007, this President resigned. As of June 30, 2007, $77,917 of management fees was paid to the president of the Company. During the nine month period ended June 30, 2007, the Company paid $7,000 for consulting services provided by the former Chief Financial Officer of the Company. During the nine month period ended June 30, 2007, the Company paid $20,000 for consulting services provided by the former Treasurer of the Company. Mr. Lee Andrew Balak was appointed to be a Director of the Company on May 12, 2007 and was appointed Chief Executive Officer and President of the Company on May 31, 2007. The company entered into an employment agreement with Mr. Balak on August 1, 2007, which calls for a monthly salary of $20,000 and 500,000 shares of restricted common stock to be issued on August 1, 2007 and to be deemed fully earned on December 31, 2007. Mr. William E. McNerney was appointed as a director, Secretary and Treasurer of the Company on May 31, 2007. The company entered into an employment agreement with the Mr. McNerney on August 1, 2007, which calls for a monthly salary of $3,000 and 300,000 shares of restricted common stock to be issued on August 1, 2007 and to be deemed fully earned on December 31, 2007. During the nine month period ended June 30, 2007, the Company paid $55,000 of management fees to the new President for the services provided. NOTE 6 INADEQUATELY SUPPORTED EXPENDITURES IN PRIOR QUARTER - ------ ---------------------------------------------------- In May of 2007, management of the Company became aware that the assistant treasurer committed the Company to expenditures totaling $994,995 during the six months ended March 31, 2007, which lacked adequate supporting documentation and/or proper approvals from the board of directors. Management conducted an inquiry into the expenditures and further reviewed its internal control policies and procedures. Management discovered that while the identified expenses lacked supporting documentation and were not fully authorized, the former assistant treasurer was largely acting to further the legitimate business interests of the Company. Management and the former assistant treasurer reached an agreement whereby he reimbursed the Company for all such expenses plus interest in exchange for a full release of liability. During June 2007, the former treasurer reimbursed the company for $994,995 of the expenditures described above and paid $5,005 in interest for a total payment to the company of $1,000,000. The March 31, 2007 10QSB will be amended to show the reclassification of the unsupported expenditures in the amount of $775,040 to a receivable from the former treasurer. During the quarter ended June 30, 2007, with board of directors approval, the Company agreed to pay additional consulting fees of $226,743 to the former treasurer for services performed. NOTE 7 COMMITMENTS - ------ ----------- On May 3, 2007, the Company entered into a consulting agreement with Princeton Research, Inc., to provide public and investor relation services for the Company. Under the terms of the agreement, the Company paid $12,500 for initiating a publicity campaign and will pay a monthly fee in the amount of $2,500 for the twelve-month term. NOTE 8 SUBSEQUENT EVENTS - ------ ----------------- On August 1, 2007, the Company completed the acquisition of 80% of the ownership of Promenansa by issuing 6,818,181 shares of the Company's common stock. F-13 EX-10.1 2 dhanoa_10qsbex10-1.txt EXECUTIVE EMPLOYMENT AGREEMENT - LEE A. BALAK EXHIBIT 10.1 EXECUTIVE EMPLOYMENT AGREEMENT ------------------------------ This employment agreement (the "Agreement") is made and entered into as of August 1, 2007 by and between DHANOA MINERALS LTD., a Nevada corporation, (the "Corporation" or "Employer"), and LEE A. BALAK, an individual ("Executive"). This Agreement shall become enforceable upon execution. RECITALS -------- A. The Employer desires Executive's employment with Employer and Executive desires to accept such employment on the terms and conditions in this Agreement. AGREEMENT --------- For the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereby intend to be and agree to be legally bound as follows: 1. TITLE(S) and DUTIES. Executive shall have the title "Treasurer and Director" of the Corporation. Executive shall have the duties, responsibilities and authority normally performed and enjoyed of a Treasurer and Director of similar company within the mineral and mining industry, including but not limited to corporate leadership, marketing, investor relations, structuring of company liabilities and assets, oversight of company assets, preparing and filing of financial forms, and other duties as may be assigned by Employer from time to time. Executive shall have other duties vested in him by the Employer from time to time with his consent and subject to the control and direction of the Board of Directors of the Corporation. 2. COMPENSATION. 2.1 Salary. In consideration for the services Executive provides as under this Agreement, Employer shall cause to be paid to Executive a salary of Twenty Thousand Dollars ($20,000), per month. (a) Benefit Packages. Executive shall be eligible to participate in Employer's retirement, savings, vacation and life and disability insurance plans, to the extent provided by the terms and conditions of each such plan or program, if any. (c) Stock Ownership. Executive shall receive Five Hundred Thousand (500,000) Shares of restricted common stock, to be issued upon effective date of this agreement and to be deemed fully earned on December 31, 2007. Should Executive's employment agreement be terminated prior to December 31, 2007, for any reason other than fraud, the Executive's stock compensation shall be deemed earned pro rata up and until date of termination. 1 2.2 Expenses. Employer shall reimburse Executive for customary and reasonable expenses incurred in the normal course of business as determined in Employer's reasonable discretion. Reimbursement shall be handled in accordance with Employer's normal practices and policies. 3. TERM; TERMINATION. 3.1 Term. The term of this Agreement (the "Term") shall begin on June 1, 2007 and continue to June 1, 2008. Thereafter, this Agreement shall remain in effect on a month-to-month basis with a thirty (30) day notice requirement, of either party, of termination. 3.2 Termination. Executive may not be terminated by Employer during the term of this Agreement unless such termination is for cause. Termination for cause shall be only for the following reasons: (a) Executive's breach of his duty of undivided loyalty in the execution of his fiduciary duties to Employer, including, but not limited to, the use of his position of trust to further his private interests, or depriving Employer of any opportunity to which it is entitled; (b) Dishonesty of Executive with respect to Employer or any of its affiliates or subsidiaries; (c) Willful misfeasance or nonfeasance of duty intended to injure or having the effect of injuring the reputation, business, or business relationship of Employer or of any of its subsidiaries or any of their respective officers, directors or executives; (d) Conviction of Executive upon a charge of any crime which involves moral turpitude or which could reflect unfavorably upon Employer or any of its subsidiaries; or (e) Material breach by Executive of any of the covenants contained in this Agreement. 4. NON-COMPETITION AGREEMENT; CONFIDENTIAL INFORMATION; TRADE SECRETS. (a) Executive, in the course of his employment with Employer, will frequently come into contact with certain customers, to such an extent he is likely to be able to control or influence, in whole or in part, the business and relationships between the Employer and such customers, and might, if allowed to do so, take with him or otherwise appropriate such business and relationships to his own benefit or to the benefit of Employer's competitors and potential competitors. But for his association with Employer, Executive would not have access or entree to said customers and suppliers of Employer. 2 (b) Executive, during the course of his employment, will have frequent and often close contact with Employer's personnel, and will also make frequent and often close contacts with prospective customers and perspective executives. Solely as a result of Executive's position, he will gain detailed confidential information concerning the aforesaid corporate personnel and of perspective customers and executives, which information is kept strictly confidential by Employer and is not generally available to Employer's competitors, or potential competitors. (c) Further the Executive may engage in civic and non-profit activities which do not conflict with or interfere with Executive's duties as an executive of the Employer. (d) Executive acknowledges that during the course of his employment, he will have access to certain proprietary and confidential matters belonging to Employer, none of which Executive would have had access to but for his employment by Employer. Executive acknowledges that in aggregate, the confidential matters to which he will have or has had access will give him a detailed and intimate understanding of the overall methods of operation of Employer's business and such understanding constitutes confidential knowledge unavailable to any of Employer's competitors. (e) Employer has developed the proprietary and confidential information at great effort and expense. The safeguarding of such information, is necessary for the continued successful operation of Employer's business and Employer must be protected from the unauthorized use or divulgence by Executive either directly or indirectly of any such information. Divulgence of any of such information would constitute an irrevocable injury to the Employer and its customers. The parties further acknowledge that the aforesaid information, in the hands of a competitor, would give such competitor unfair advantage and could cause irrevocable damage to the Employer's ongoing relationship with its customers, suppliers, executives, and that the Employer has a protectible proprietary interest in its relationship with its customers. (f) Independent of any obligation under any other paragraph of this Agreement, during the term of Executive's employment with Employer and for a period of two (2) years following the termination of his employment with Employer, Executive shall not, directly or indirectly, whether as an individual for his own account or with any other person, firm, corporation, partnership, joint venture or entity whatsoever, solicit or endeavor to entice away from Employer, any person who is employed or had applied for employment with Employer at any time during Executive's employment by Employer, in order to accept employment or association with another person, firm, corporation or entity whatsoever; and Executive shall not, directly or indirectly approach any such person for any such purpose or authorize or knowingly cooperate with the taking of any such action by any individual, person or entity of any kind. Notwithstanding the foregoing, nothing in this Section 4 shall prohibit Executive from being a passive investor in any publicly traded corporation, so long as his interest in said corporation does not exceed one percent (1%) of the voting shares of the corporation. (g) The parties acknowledge that it is difficult to ascertain exactly how long the Employer's confidential information would remain accurate and useful to Employer's competitors and potential competitors subsequent to the termination of Executive's employment, and that some of Employer's confidential information may remain accurate and useful to Employer's competitors for long periods of indefinite duration. The parties further agree that a fair and reasonable balancing of Employer's interest in protecting its confidential information with Executive's interest in securing employment, dictates that a period of two (2) years after Executive's termination constitutes a reasonable 3 period for prohibiting Executive from disclosing Employer's confidential information. Therefore, the parties agree, that independent of any obligation under any other paragraph of this Agreement, the Executive shall not, at any time during his employment with Employer and for a period of two (2) years after termination of Executive's employment, regardless of who initiated such termination, communicate, divulge, or disclose for use by himself or others, any information or knowledge, disclosed or otherwise obtained by him during his employment by Employer (including but not limited to information and knowledge conceived, discovered or developed by whatsoever the information contained in the foregoing materials); and Executive shall turn over to Employer at the time of Executive's termination or upon demand by Employer any copies or recordings of any kind whatsoever containing information derived directly or indirectly from the aforesaid materials which is not generally known in the Employer's industry or any other industry which Employer shall be engaged during the term of Executive's employment, and which relates to the business of the Employer or the business of the Employer's customers or is in the nature of confidential information or a trade or business secret of Employer, or Employer's customers. (h) Executive represents and acknowledges that the restrictions contained in this Section 4 will not prevent him from obtaining gainful employment in his business, occupation or field or expertise or cause him undue hardship; and that there are numerous other employment opportunities available to him, for which he is qualified, that are not affected by the foregoing restrictions. Executive further acknowledges that the foregoing restrictions are reasonable and necessary in order to protect Employer's legitimate interest, and that any violation thereof would result in irreparable injury to Employer. (i) Executive shall make the terms and conditions of this Agreement known to any business, entity or persons engaged in activities competitive with Employer's business, with which he becomes associated subsequent to his termination of his employment with Employer. Employer shall have the right to make the terms of this Agreement known to third parties. (j) At the time of Executive's termination, or upon demand by Employer (whichever is sooner) Executive shall promptly turn over to Employer all marketing information and plans and strategies, market surveys and analyses, files, documents, business records, list of customers and potential customers, invoices, purchase orders, promotion materials, executive and potential executive names and addresses, customer strategy information, executive manuals, personnel policy manuals, pricing information and strategies, contracts with customers, subcontractors and others, customer correspondence, resume's of existing and potential executives, customer bids and proposals, executive books and records, other confidential and sensitive information, and any other records, document writing of any kind whatsoever, all assets of any kind whatsoever that belong to Employer or Employer's customers. Further, Executive shall not copy or record in any manner whatsoever the information contained in the foregoing materials; and Executive shall turn over to Employer any copies or recordings of any kind whatsoever containing information derived directly or indirectly from the aforesaid materials. 4 5. REMEDIES. In the event of any violation of Section 4 above, Employer shall be authorized and entitled to obtain from any Court of competent jurisdiction preliminary and permanent injunctive relief as well as equitable accounting of all profits or benefits arising out of such violation, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which Employer may be entitled, including but not limited to, the right to damages directly, indirectly, or consequentially sustained by Employer. Said damages shall also include, but shall not be limited to the consequential economic damages suffered by Employer and future lost profits and business resulting from the damage to Employer's long term business relationships with its executives and customers are proximately resulting from Executive's violation of the aforesaid covenants. Executive further agrees to pay the reasonable attorney's fees and court costs and litigation expenses incurred by Employer in enforcing any provisions of this Agreement. The parties agree that if the covenants contained in Section 4 above are found to be unenforceable by a Court of any competent jurisdiction, it is the intention of the parties that the covenants of such paragraphs be reformed by such Court in such manner that the executive is restricted from competing with the aforesaid business of the Employer from the date of execution of this Agreement to the maximum time permissible (but not exceeding the limits set forth in said paragraphs) under the laws of the State of Nevada. If in any judicial proceeding a Court shall refuse to enforce these covenants because the time limit is to long or if other restrictions were more extensive (whether as to geographic area, scope of business or otherwise) then necessary to protect the business of Employer, it is expressly understood and agreed between the parties hereto for purposes of such proceeding, such time limit or other restrictions shall be deemed reduced to the extent necessary to permit the enforcement of these covenants. 6. ASSIGNMENT. The parties agree that this Agreement and the rights, interests, and benefits hereunder are personal and shall not be assigned, transferred, pledged or hypothecated in any way by Executive. Employer may assign this Agreement. 7. GENERAL PROVISIONS. 7.1 Other Rules and Policies. Executive agrees to abide by any other rules, policies or procedures as communicated by Employer that are generally applicable to executives of Employer. 7.2 Return of Property. Upon termination of employment, Executive shall return to Employer all drawings, documents, and other tangible manifestations of Confidential Information (and all copies and reproductions thereof). In addition, Executive shall return any other property belonging to Employer including without limitation: computers, office supplies, money and documents. 7.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, and it is the intention of the parties that this Agreement and any dispute arising out of this agreement be governed and construed, by any Court or judicial body, under the laws of Nevada. Furthermore the parties recognize and declare that Nevada has the most significant relationship to this Agreement and any dispute that may arise from it and that any other venue or claimed jurisdiction has no legitimate interest in this Agreement or any dispute arising from. 5 7.4 Notices. All notices, demands, requests, consents, approvals or other communications required or permitted hereunder to any party shall be in writing and shall be delivered by hand, registered or certified mail with return receipt requested or by a nationally recognized overnight delivery service, in each case with all postage or other delivery charge prepaid, and to the address of the party to whom it is directed as indicated below, or to such other address as such party may specify by giving notice to the other in accordance with the terms hereof. Any such notice shall be deemed to be received (i) when delivered, if by hand, (ii) on the next business day following timely deposit with a nationally recognized overnight delivery service, or (iii) on the date shown on the return receipt as received or refused or on the date the postal authorities state that delivery cannot be accomplished, if sent by registered or certified mail, return receipt requested. If to Employer: Dhanoa Minerals Ltd. Attention: Lee A. Balak 15 Oceanview Road Lions Bay, BC V0N 2E0 Canada If to Executive: Lee A. Balak 15 Oceanview Road Lions Bay, B.C. V0N 2E0 Canada With a copy to: Stephen A. Zrenda, Jr., P.C. 5700 N.W. 132nd Street Oklahoma City, OK 73142-4430 7.5 Entire Agreement; Amendment; Waiver. This Agreement constitutes the entire Agreement between the parties and contains all of the agreements among the parties with respect to the subject matter hereof, and this Agreement supersedes any and all other agreements, either oral or in writing, among the parties hereto with respect to the subject hereof. No change or modification of this Agreement shall be valid unless the same be in writing and signed by both parties hereto. No waiver of any provisions of this Agreement shall be valid unless in writing and signed by the person or party to be charged. 7.6 Counterparts; Headings; Exhibits. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall together constitute one and the same instrument. The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. All exhibits and attachments to this Agreement are incorporated by reference as though set forth herein. 7.7 Binding Effect. All of the terms and provisions of this Agreement, whether so expressed or not, shall be binding upon, inure to the benefit of, and be enforceable by the parties and their respective administrators, executors, legal representatives, heirs, successors and permitted assigns. 6 7.8 Severability. If any part of this Agreement or any other Agreement entered into pursuant hereto is contrary to, prohibited by or deemed invalid under applicable law or regulation, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given full force and effect so far as possible. If any provision of this Agreement may be construed in two or more ways, one of which would render the provision invalid or otherwise voidable or unenforceable and another of which would render the provision valid and enforceable, such provision shall have the meaning which renders it valid and enforceable. 7.9 Modification. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. IN WITNESS WHEREOF, Employer and Executive have executed this Agreement as of the day and year first above written. EMPLOYER: Dhanoa Minerals Ltd. By: /s/ Lee A. Balak ------------------------------------- Lee A. Balak Chief Executive Officer and President EXECUTIVE: /s/ Lee A. Balak ------------------------------------- Lee A. Balak 7 EX-10.2 3 dhanoa_10qsbex10-2.txt EXEC. EMPLOYMENT AGMT - WILLIAM E. MCNERNEY EXHIBIT 10.2 EXECUTIVE EMPLOYMENT AGREEMENT ------------------------------ This employment agreement (the "Agreement") is made and entered into as of August 1, 2007 by and between DHANOA MINERALS LTD., a Nevada corporation, (the "Corporation" or "Employer"), and WILLIAM E. MCNERNEY, an individual ("Executive"). This Agreement shall become enforceable upon execution. RECITALS -------- A. The Employer desires Executive's employment with Employer and Executive desires to accept such employment on the terms and conditions in this Agreement. AGREEMENT --------- For the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereby intend to be and agree to be legally bound as follows: 1. TITLE(S) and DUTIES. Executive shall have the title "Treasurer and Director" of the Corporation. Executive shall have the duties, responsibilities and authority normally performed and enjoyed of a Treasurer and Director of similar company within the mineral and mining industry, including but not limited to corporate leadership, marketing, investor relations, structuring of company liabilities and assets, oversight of company assets, preparing and filing of financial forms, and other duties as may be assigned by Employer from time to time. Executive shall have other duties vested in him by the Employer from time to time with his consent and subject to the control and direction of the Board of Directors of the Corporation. 2. COMPENSATION. 2.1 Salary. In consideration for the services Executive provides as under this Agreement, Employer shall cause to be paid to Executive a salary of Three Thousand Dollars ($3,000), payable monthly. (a) Benefit Packages. Executive shall be eligible to participate in Employer's retirement, savings, vacation and life and disability insurance plans, to the extent provided by the terms and conditions of each such plan or program, if any. (c) Stock Ownership. Executive's shall receive three hundred thousand (300,000) shares of restricted common stock, to be issued upon effective date of this agreement and to be deemed fully earned on December 31, 2007. Should Executive's employment agreement be terminated prior to December 31, 2007, for any reason other than fraud, the Executive's stock compensation shall be deemed earned pro rata up and until date of termination. 1 2.2 Expenses. Employer shall reimburse Executive for customary and reasonable expenses incurred in the normal course of business as determined in Employer's reasonable discretion. Reimbursement shall be handled in accordance with Employer's normal practices and policies. 3. TERM; TERMINATION. 3.1 Term. The term of this Agreement (the "Term") shall begin on June 1, 2007 and continue to December 31, 2007. Thereafter, this Agreement shall remain in effect on a month-to-month basis with a thirty (30) day notice requirement, of either party, of termination. 3.2 Termination. Executive may not be terminated by Employer during the term of this Agreement unless such termination is for cause. Termination for cause shall be only for the following reasons: (a) Executive's breach of his duty of undivided loyalty in the execution of his fiduciary duties to Employer, including, but not limited to, the use of his position of trust to further his private interests, or depriving Employer of any opportunity to which it is entitled; (b) Dishonesty of Executive with respect to Employer or any of its affiliates or subsidiaries; (c) Willful misfeasance or nonfeasance of duty intended to injure or having the effect of injuring the reputation, business, or business relationship of Employer or of any of its subsidiaries or any of their respective officers, directors or executives; (d) Conviction of Executive upon a charge of any crime which involves moral turpitude or which could reflect unfavorably upon Employer or any of its subsidiaries; or (e) Material breach by Executive of any of the covenants contained in this Agreement. 4. NON-COMPETITION AGREEMENT; CONFIDENTIAL INFORMATION; TRADE SECRETS. (a) Executive, in the course of his employment with Employer, will frequently come into contact with certain customers, to such an extent he is likely to be able to control or influence, in whole or in part, the business and relationships between the Employer and such customers, and might, if allowed to do so, take with him or otherwise appropriate such business and relationships to his own benefit or to the benefit of Employer's competitors and potential competitors. But for his association with Employer, Executive would not have access or entree to said customers and suppliers of Employer. 2 (b) Executive, during the course of his employment, will have frequent and often close contact with Employer's personnel, and will also make frequent and often close contacts with prospective customers and perspective executives. Solely as a result of Executive's position, he will gain detailed confidential information concerning the aforesaid corporate personnel and of perspective customers and executives, which information is kept strictly confidential by Employer and is not generally available to Employer's competitors, or potential competitors. (c) Executive, during the course of his employment, will frequently encounter other employment opportunities. As such, Executive shall not engage in any other employment opportunities or business ventures without the express written consent of the Employer. Employer hereby consents to Executive working with Emco, S.A. and Match Capital, Inc.. Further the Executive may engage in civic and non-profit activities which do not conflict with or interfere with Executive's duties as an executive of Employer. (d) Executive acknowledges that during the course of his employment, he will have access to certain proprietary and confidential matters belonging to Employer, none of which Executive would have had access to but for his employment by Employer. Executive acknowledges that in aggregate, the confidential matters to which he will have or has had access will give him a detailed and intimate understanding of the overall methods of operation of Employer's business and such understanding constitutes confidential knowledge unavailable to any of Employer's competitors. (e) Employer has developed the proprietary and confidential information at great effort and expense. The safeguarding of such information, is necessary for the continued successful operation of Employer's business and Employer must be protected from the unauthorized use or divulgence by Executive either directly or indirectly of any such information. Divulgence of any of such information would constitute an irrevocable injury to the Employer and its customers. The parties further acknowledge that the aforesaid information, in the hands of a competitor, would give such competitor unfair advantage and could cause irrevocable damage to the Employer's ongoing relationship with its customers, suppliers, executives, and that the Employer has a protectible proprietary interest in its relationship with its customers. (f) Executive acknowledges that he has received additional consideration and benefits in return for entry into this Agreement; and that he has voluntarily accepted such consideration and has freely chosen to enter into the terms of this Agreement because of his desire to take advantage of the specific and unique employment opportunities available with Employer, including but not limited to gaining or having continued access to Employer's confidential information, customers, executives, and other special career opportunities presented by employment with Employer. Executive acknowledges that his position is one of great trust and confidence requiring on his part a high degree of loyalty, trust, honesty and integrity. The parties further agree that the acknowledgments herein contained shall be deemed to be true; and that such acknowledgments are an integral part of this Agreement; and such acknowledgments form part of the mutual considerations exchanged by the parties hereto for the respective covenants contained herein. 3 (g) Independent of any obligation under any other paragraph of this Agreement, during the term of Executive's employment with Employer, and for a period of two (2) years following the termination of his employment with Employer, regardless of who initiated the termination, Executive shall not, in any market where Employer has business indirectly or directly, invest in (other than a non-controlling ownership of securities issued by a publicly held corporation), own, manage, operate, control, participate in, or be connected with as an officer, partner, agent, consultant, executive or principal, for or with any person or enterprises which is or intends to be engaged in the business of Employer, or in such other business as Employer will hereinafter become involved during Executive's employment; nor shall he solicit business from, interfere with, or endeavor to entice away from Employer any person, or entity of any kind whatsoever which was or is a customer or supplier of Employer and with whom Executive had contact during the one (1) year period immediately prior to his termination of employment; and the Executive shall not, knowingly cooperate with the taking of any such action by any other individual person or entity. This provision is expressly waived for the narrow exception of Emco, S.A. and Match Capital, Inc. as referenced in subsection (c) above. (h) Independent of any obligation under any other paragraph of this Agreement, during the term of Executive's employment with Employer and for a period of two (2) years following the termination of his employment with Employer, Executive shall not, directly or indirectly, whether as an individual for his own account or with any other person, firm, corporation, partnership, joint venture or entity whatsoever, solicit or endeavor to entice away from Employer, any person who is employed or had applied for employment with Employer at any time during Executive's employment by Employer, in order to accept employment or association with another person, firm, corporation or entity whatsoever; and Executive shall not, directly or indirectly approach any such person for any such purpose or authorize or knowingly cooperate with the taking of any such action by any individual, person or entity of any kind. Notwithstanding the foregoing, nothing in this Section 4 shall prohibit Executive from being a passive investor in any publicly traded corporation, so long as his interest in said corporation does not exceed one percent (1%) of the voting shares of the corporation. (i) The parties acknowledge that it is difficult to ascertain exactly how long the Employer's confidential information would remain accurate and useful to Employer's competitors and potential competitors subsequent to the termination of Executive's employment, and that some of Employer's confidential information may remain accurate and useful to Employer's competitors for long periods of indefinite duration. The parties further agree that a fair and reasonable balancing of Employer's interest in protecting its confidential information with Executive's interest in securing employment, dictates that a period of two (2) years after Executive's termination constitutes a reasonable period for prohibiting Executive from disclosing Employer's confidential information. Therefore, the parties agree, that independent of any obligation under any other paragraph of this Agreement, the Executive shall not, at any time during his employment with Employer and for a period of two (2) years after termination of Executive's employment, regardless of who initiated such termination, communicate, divulge, or disclose for use by himself or others, any information or knowledge, disclosed or otherwise obtained by him during his employment by Employer (including but not limited to information and knowledge conceived, discovered or developed by whatsoever the information contained in the foregoing materials); and Executive shall turn over to Employer at the time of Executive's termination or upon demand by Employer any copies or recordings of any kind whatsoever containing information derived directly or indirectly from the aforesaid materials which is not generally known in the Employer's industry or any other industry which Employer shall be engaged during the term of Executive's employment, and which relates to the business of the Employer or the business of the Employer's customers or is in the nature of confidential information or a trade or business secret of Employer, or Employer's customers. 4 (j) Executive represents and acknowledges that the restrictions contained in this Section 4 will not prevent him from obtaining gainful employment in his business, occupation or field or expertise or cause him undue hardship; and that there are numerous other employment opportunities available to him, for which he is qualified, that are not affected by the foregoing restrictions. Executive further acknowledges that the foregoing restrictions are reasonable and necessary in order to protect Employer's legitimate interest, and that any violation thereof would result in irreparable injury to Employer. (k) Executive shall make the terms and conditions of this Agreement known to any business, entity or persons engaged in activities competitive with Employer's business, with which he becomes associated subsequent to his termination of his employment with Employer. Employer shall have the right to make the terms of this Agreement known to third parties. (l) At the time of Executive's termination, or upon demand by Employer (whichever is sooner) Executive shall promptly turn over to Employer all marketing information and plans and strategies, market surveys and analyses, files, documents, business records, list of customers and potential customers, invoices, purchase orders, promotion materials, executive and potential executive names and addresses, customer strategy information, executive manuals, personnel policy manuals, pricing information and strategies, contracts with customers, subcontractors and others, customer correspondence, resume's of existing and potential executives, customer bids and proposals, executive books and records, other confidential and sensitive information, and any other records, document writing of any kind whatsoever, all assets of any kind whatsoever that belong to Employer or Employer's customers. Further, Executive shall not copy or record in any manner whatsoever the information contained in the foregoing materials; and Executive shall turn over to Employer any copies or recordings of any kind whatsoever containing information derived directly or indirectly from the aforesaid materials. 5. REMEDIES. In the event of any violation of Section 4 above, Employer shall be authorized and entitled to obtain from any Court of competent jurisdiction preliminary and permanent injunctive relief as well as equitable accounting of all profits or benefits arising out of such violation, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which Employer may be entitled, including but not limited to, the right to damages directly, indirectly, or consequentially sustained by Employer. Said damages shall also include, but shall not be limited to the consequential economic damages suffered by Employer and future lost profits and business resulting from the damage to Employer's long term business relationships with its executives and customers are proximately resulting from Executive's violation of the aforesaid covenants. Executive further agrees to pay the reasonable attorney's fees and court costs and litigation expenses incurred by Employer in enforcing any provisions of this Agreement. 5 The parties agree that if the covenants contained in Section 4 above are found to be unenforceable by a Court of any competent jurisdiction, it is the intention of the parties that the covenants of such paragraphs be reformed by such Court in such manner that the executive is restricted from competing with the aforesaid business of the Employer from the date of execution of this Agreement to the maximum time permissible (but not exceeding the limits set forth in said paragraphs) under the laws of the State of Nevada. If in any judicial proceeding a Court shall refuse to enforce these covenants because the time limit is to long or if other restrictions were more extensive (whether as to geographic area, scope of business or otherwise) then necessary to protect the business of Employer, it is expressly understood and agreed between the parties hereto for purposes of such proceeding, such time limit or other restrictions shall be deemed reduced to the extent necessary to permit the enforcement of these covenants. 6. ASSIGNMENT. The parties agree that this Agreement and the rights, interests, and benefits hereunder are personal and shall not be assigned, transferred, pledged or hypothecated in any way by Executive. Employer may assign this Agreement. 7. GENERAL PROVISIONS. 7.1 Other Rules and Policies. Executive agrees to abide by any other rules, policies or procedures as communicated by Employer that are generally applicable to executives of Employer. 7.2 Return of Property. Upon termination of employment, Executive shall return to Employer all drawings, documents, and other tangible manifestations of Confidential Information (and all copies and reproductions thereof). In addition, Executive shall return any other property belonging to Employer including without limitation: computers, office supplies, money and documents. 7.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, and it is the intention of the parties that this Agreement and any dispute arising out of this agreement be governed and construed, by any Court or judicial body, under the laws of Nevada. Furthermore the parties recognize and declare that Nevada has the most significant relationship to this Agreement and any dispute that may arise from it and that any other venue or claimed jurisdiction has no legitimate interest in this Agreement or any dispute arising from. 7.4 Notices. All notices, demands, requests, consents, approvals or other communications required or permitted hereunder to any party shall be in writing and shall be delivered by hand, registered or certified mail with return receipt requested or by a nationally recognized overnight delivery service, in each case with all postage or other delivery charge prepaid, and to the address of the party to whom it is directed as indicated below, or to such other address as such party may specify by giving notice to the other in accordance with the terms hereof. Any such notice shall be deemed to be received (i) when delivered, if by hand, (ii) on the next business day following timely deposit with a nationally recognized overnight delivery service, or (iii) on the date shown on the return receipt as received or refused or on the date the postal authorities state that delivery cannot be accomplished, if sent by registered or certified mail, return receipt requested. 6 If to Employer: Dhanoa Minerals Ltd. Attention: Lee A. Balak 15 Oceanview Road Lions Bay, BC V0N 2E0 Canada If to Executive: William McNerney 806 Buchanan Blvd, #115 Boulder City, NV 89005 With a copy to: Stephen A. Zrenda, Jr., P.C. 5700 N.W. 132nd Street Oklahoma City, OK 73142-4430 7.5 Entire Agreement; Amendment; Waiver. This Agreement constitutes the entire Agreement between the parties and contains all of the agreements among the parties with respect to the subject matter hereof, and this Agreement supersedes any and all other agreements, either oral or in writing, among the parties hereto with respect to the subject hereof. No change or modification of this Agreement shall be valid unless the same be in writing and signed by both parties hereto. No waiver of any provisions of this Agreement shall be valid unless in writing and signed by the person or party to be charged. 7.6 Counterparts; Headings; Exhibits. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall together constitute one and the same instrument. The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. All exhibits and attachments to this Agreement are incorporated by reference as though set forth herein. 7.7 Binding Effect. All of the terms and provisions of this Agreement, whether so expressed or not, shall be binding upon, inure to the benefit of, and be enforceable by the parties and their respective administrators, executors, legal representatives, heirs, successors and permitted assigns. 7.8 Severability. If any part of this Agreement or any other Agreement entered into pursuant hereto is contrary to, prohibited by or deemed invalid under applicable law or regulation, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given full force and effect so far as possible. If any provision of this Agreement may be construed in two or more ways, one of which would render the provision invalid or otherwise voidable or unenforceable and another of which would render the provision valid and enforceable, such provision shall have the meaning which renders it valid and enforceable. 7 7.9 Modification. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. IN WITNESS WHEREOF, Employer and Executive have executed this Agreement as of the day and year first above written. EMPLOYER: Dhanoa Minerals Ltd. By: /s/ Lee A. Balak ------------------------------------- Lee A. Balak Chief Executive Officer and President EXECUTIVE: /s/ William McNerney ------------------------------------- William McNerney 8 EX-10.3 4 dhanoa_10qsbex10-3.txt REGULATION S. PURCHASE AGREEMENT OF LEE A. BALAK EXHIBIT 10.3 "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION PROVIDED BY REGULATION S UNDER THE ACT. UNTIL ONE YEAR AFTER THE DATE OF PURCHASE, NO AMOUNT OF THE SHARES MAY BE OFFERED, SOLD OR TRANSFERRED TO ANY U.S. PERSON. OFFERS, SALES OR TRANSFERS IN THE U.S. OR TO A U.S. PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) OR FOR THE ACCOUNT AND BENEFIT OF A U.S. PERSON ARE NOT PERMITTED, EXCEPT AS PROVIDED IN SAID REGULATION S, UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION UNDER THE ACT IS APPLICABLE." REGULATION "S" STOCK PURCHASE AGREEMENT --------------------------------------- This Stock Purchase Agreement is made as of June 21, 2007, by and between MR. LEE A. BALAK, a Canadian citizen, ("BUYER"), and Dhanoa Minerals Ltd.,15 Oceanview Road, Lions Bay, B.C. V0N 2E0, Canada ("SELLER"). WHEREAS, the SELLER desires to sell Two Million Ninety Thousand One Hundred Sixty Four (2,090,164) Shares of Regulation "S" Common Stock of the SELLER, at the Purchase Price (as hereinafter defined), to the BUYER; WHEREAS, the BUYER will also receive, at no extra cost, one warrant for the purchase of Two Million Ninety Thousand One Hundred Sixty Four (2,090,164) Shares of Regulation "S" Common Stock of the SELLER at the exercise price of $.61(U.S.) per share exercisable for a period of two (2) years from the date hereof, (the "Warrant"). The Warrant may be exercised in whole or in part on a pro rata basis, based upon the price referenced above. WHEREAS, the BUYER desires to purchase the Regulation "S" Shares from the SELLER in accordance with the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements of the parties contained herein, the parties, intending to be legally bound hereby, agree as follows: 1. SALE OF SHARES. The SELLER shall sell and deliver to the BUYER, at the Purchase Price, the Shares of the SELLER and the BUYER shall purchase and receive the Shares from the SELLER, at such Purchase Price. 2. CLOSING DATE. This transaction shall be closed pursuant to the terms and conditions of this Agreement on June 21, 2007, 1:00 PM (local time) at the offices of the SELLER, or its designee. The date of closing of this transaction is herein called the "Closing Date". The actions outlined in Sections 3 and 10, which are to take place on the Closing Date, are herein called the "Closing". 3. CLOSING. At Closing, the parties shall take the following actions: 1 3.1 TRANSFER OF SHARES. The SELLER shall sell, transfer, assign, and deliver to the BUYER, the Shares, all of which shall be issued and outstanding as of the Closing Date, upon the terms and subject to the conditions set forth in this Agreement. The SELLER shall deliver to the BUYER, free and clear of all claims and encumbrances, certificate(s) for the Shares which the SELLER is selling in accordance with Section 3.3 hereof, registered in the name of the BUYER or, if not so registered, then in fully negotiable form. 3.2 PURCHASE PRICE. BUYER does agree to purchase and SELLER does hereby agree to sell Two Million Ninety Thousand One Hundred Sixty Four (2,090,164) Shares of Regulation "S" Common Stock of the SELLER at the price of $1,275,000 (U.S.) at $.61 per share, payment as follows: a.) The purchase price shall be evidenced by a wire transfer, in favor of SELLER in the amount of $1,275,000 (U.S.); For the Account of: Dhanoa Minerals Ltd. 15 Oceanview Road Lions Bay, B.C. V0N 2E0 Canada The parties hereto agree that the purchase price has been adjusted to reflect a discount of 15% of the closing bid price of the Common Stock of the SELLER on the day of the sale. 4. SECURITIES ACT OF 1933 AND HOLDING PERIOD. The BUYER covenants and agrees as follows: 4.1 The BUYER understands that the Shares acquired pursuant to this Agreement have not been registered under the United States ("US") Securities Act of 1933 ("1933 Act") with the Securities and Exchange Commission in reliance upon the exemption from such registration requirements afforded by Regulation "S" under the 1933 Act, governing the offer and sale of securities that occur outside the U.S., nor with any state securities commission. The BUYER agrees and acknowledges that the SELLER shall have cause to issue Stop Transfer instructions to its registrar or transfer agent prohibiting the transfer of the Shares delivered under this Agreement for a period of 12 months after the date of Closing and as set forth herein below. 4.2 The BUYER hereby represents and warrants that: it is a Sociedad Anonima Corporation constituted according to the laws of the Republic of Panama, with principal executive and administrative offices located outside the US within the meaning of Rule 902(o) of Regulation "S". 4.3 The BUYER agrees that the Shares acquired by the BUYER pursuant to this Agreement shall not be voluntarily sold, transferred or otherwise disposed of for a minimum period of 12 months from the date of Closing. 2 4.4 The BUYER understands that any disposition of the Shares in violation of this Agreement, as well as Sections 4.1, 4.3, or this Section 4.4, shall be null and void. No transfer of the Shares shall be made by the SELLER'S registrar or transfer agent upon the SELLER'S stock transfer books or records unless there has been compliance with the terms of this Agreement, including Sections 4.1, 4.3, and this Section 4.4. The SELLER shall have cause to issue Stop Transfer instructions to its registrar, or transfer agent, to the effect that the certificate(s) evidencing the Shares may not be transferred for a period of 12 months after the date of Closing and thereafter may be transferred immediately thereafter except as provided in Sections 2 and 3.1 hereof. The BUYER agrees to indemnify and hold the SELLER harmless from and against all Material Damages, as defined in Section 10, that result from or arise out of any disposition of the Shares in violation of this Agreement. 5. CONDITIONS OF BUYER'S AND SELLER'S OBLIGATION TO CLOSE. The following shall be conditions of the BUYER'S and the SELLER'S obligation to close hereunder, which either the BUYER or the SELLER, in each's sole discretion, may waive in whole or in part: 5.1 REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE SELLERS. Representations and Warranties made by the BUYER, and the SELLER, in this Agreement shall be true and correct as of the Closing Date as fully made at this time. 5.2 NO DEFAULT - COVENANTS AND AGREEMENTS. Neither the BUYER nor the SELLER shall be in material default with respect to any obligation under this Agreement and it shall have performed or compiled with all covenants, agreements and conditions to be performed or compiled with by it prior to or at the Closing. 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The SELLER represent and warrant to the BUYER that the statement contained in Sections 6.1 through 6.9 are true and correct on the date hereof and will be true and correct on and as of the Closing Date as follows: 6.1 CORPORATE STANDING. The SELLER is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, and it has full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The SELLER has full power and authority to carry on its business as it is now being conducted and to own its assets. The SELLER is duly qualified to transact business in each jurisdiction where the nature of its business requires it to be so qualified and where the failure so to qualify would have a material adverse effect on the business of the SELLER. The execution and delivery of this Agreement by the SELLER does not, and the consummation of the transactions contemplated hereby will not, violate or result in a breach of any provisions of SELLER'S Charter or Bylaws. 6.2 CAPITAL STOCK. The authorized capital stock of the SELLER consists of One Hundred Fifteen Million (115,000,000) shares of authorized common stock, $.001 par value per share, of which approximately Forty Million (40,000,000) shares of Common Stock (excluding treasury Shares), have been validly issued and are outstanding, fully paid and non-assessable as of June 21, 2007. 3 6.3 AUTHORITY. The SELLER has full power and authority to enter into this Agreement and have taken all action or will use their best efforts to take all action necessary to authorize the execution, delivery and performance of this Agreement, the completion of the transactions contemplated hereby and the execution and delivery on behalf of the SELLER of any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of this Agreement. Upon delivery of the Shares and payment of the purchase price, good and clear title to the Shares will pass, free and clear of all restrictions on transfer, liens, encumbrances, security interest and claims whatsoever, to the BUYER, subject, however, to the provisions of Section 2, 3, and 4 inclusive. No consent or approval of any court, governmental agency or other public authority, or of any other person, corporation or entity with any actual or alleged interest in the SELLER is required as a condition to (a) the validity or enforceability of this Agreement or any other instruments to be executed by the SELLER to effectuate this Agreement, or (b) the completion or validity of any of the transactions contemplated by this Agreement. This Agreement has been properly executed and delivered by the SELLER, and constitutes the valid and legally binding agreement of the SELLER and is enforceable against the SELLER in accordance with its terms. 6.4 FINANCIAL STATEMENTS. The SELLER shall furnish, or make available to the BUYER, financial statements contained in the SELLER'S annual report on Form 10-KSB for the year ended April 30, 2007, and its most recent quarterly report on Form 10-QSB ("Financial Statements"). There has been no material adverse change in, material loss or destruction of, or material amount of damage to the financial condition or business of the SELLER since the filing of the most recent Form 10-QSB, whether or not arising from transactions in the ordinary course of business. The regular books of account of the SELLER fairly and accurately reflect all transactions since the filing of the most recent Form 10-QSB, are true, correct and complete, and are maintained and kept in accordance with generally accepted accounting principles consistently applied. The SELLER has no liabilities or obligations, whether accrued, absolute, contingent or otherwise, which would materially and adversely affect the condition (financial and otherwise) of the SELLER, except and to the extent reflected or reserved against in the balance sheets included in the Financial Statements. No dividends are due or unpaid by the SELLER. 6.5 LAWSUITS AND PROCEEDINGS. There are no actions at law or in equity, proceeding, governmental proceedings or investigations pending or threatened against the SELLER, or against or with respect to the business or assets of the SELLER, and the SELLER is not in material default with respect to any decree, injunction or other order of any court or government authority. The SELLER is in substantial compliance with all (and has not received any notice of any claimed violation of any) applicable, federal, state, county or municipal laws, ordinances, and regulations. There is no action at law or in equity, arbitration proceeding, governmental proceeding or investigation, or motion or request to any court, pending or threatened, against, or with respect to the SELLER, with respect to this Agreement or any of the transactions contemplated hereby. 6.6 TAXES. The SELLER knows of no outstanding claims against it for taxes which constitute a lien on the Shares being sold hereunder. 6.7 EXTRAORDINARY TRANSACTIONS. Since the filing of the SELLER'S most recent Form 10-QSB, the SELLER has not (i) mortgaged, pledged or subjected to lien, charge or any other encumbrance any of its assets; (ii) canceled any claim of or debts owed to it, or, except in each case in the ordinary course of business, sold or transferred any of its assets; (iii) made any management decisions involving any material change in its policies with regard to the provision of services, sales, purchasing or other business, financial, accounting (including reserves and the amounts thereof) or tax policies or practices; or (iv) declared or paid any dividends on, or made any distributions in respect of any outstanding Shares of capital stock of the SELLER. 4 6.8 ADVERSE CIRCUMSTANCES. To the best knowledge of the SELLER, there are no facts, developments or circumstances, existing or threatened, of a special or unusual nature that may be materially adverse to the assets, business, financial condition or future prospects of the SELLER. 6.9 LIABILITIES. The SELLER has no material liabilities of any nature, whether accrued, absolute, contingent or otherwise, existing, or which may hereafter arise out of any transaction entered into prior to the Closing Date or out of any act or failure to act on the part of the SELLER, or any of its employees, or agents, prior to the Closing Date, except (i) as and to the extent and in the amounts reflected or reserved against in the Financial Statements, and (ii) current liabilities incurred in the ordinary course of business since its filing of the SELLER'S most recent Form 10-QSB. 7. COVENANTS AND AGREEMENTS OF THE BUYER. The BUYER hereby covenants and agrees as follows: 7.1 CORPORATION ACTION. The BUYER shall duly take all action, corporate or otherwise, necessary or appropriate to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. 7.2 IMPAIRMENT - REPRESENTATIONS AND WARRANTIES. The BUYER shall not take any action or fail to take any action without the prior written approval of the SELLER, which would or might cause any representation or warranty of the SELLER made herein not to be true on the Closing Date, or impair the SELLER'S ability to carry out their obligations under this Agreement. 7.3 DUE DILIGENCE. The BUYER or its agents, have had a full opportunity to conduct its due diligence of the SELLER in connection with this Agreement to its complete satisfaction. The BUYER is familiar with the SELLER, its financial condition, business and prospects, has been provided with such information concerning the SELLER'S financial and other affairs as the BUYER deems necessary to enter into and perform this Agreement, has had sufficient opportunity to ask questions and receive answers to verify the accuracy of such information, and is not in any way relying upon any information, representation or warranty (without implying that the supplying of any such information or the making of any such representation or warranty has occurred) that the SELLER, or its officers, directors, employees, agents and attorneys have provided, or have failed to provide, to the BUYER in entering into or performing this Agreement. 8. CONDITIONS OF THE SELLER'S OBLIGATION TO CLOSE. The obligations of the SELLER to close this transaction and transfer and deliver to the BUYER the Shares, as set forth in Section 4.1 hereof, and to perform his obligations pursuant to the terms and conditions of this Agreement, are subject to the fulfillment as of the Closing Date of each of the following conditions precedent, any or all of which may be waived in writing by the SELLER; 8.1 PAYMENT OF PURCHASE PRICE. The BUYER has paid the Purchase Price; 5 9. DELIVERY OF DOCUMENTS BY THE SELLER. At the Closing, and in addition to all other documents and instruments, which the SELLER is required to deliver, pursuant to this Agreement, the SELLER shall deliver to the BUYER the following documents duly executed by the SELLER, or the directors, officers, or employees of or counsel to the SELLER, or appropriate governmental officials, in form and substance satisfactory to the BUYER and its counsel. 10. INDEMNIFICATION. 10.1 INDEMNIFICATION. The SELLER and the BUYER agree to jointly and severally indemnify each other and hold each other harmless from and against all material damages, losses, costs, liabilities, expenses and deficiencies, including, without limitation, additional taxes, and interest expenses, attorneys fees and expenses and accountant and expert witness fees and expenses (collectively "Material Damages") that result from or arise out of any misrepresentation, breach of warranty, or non-fulfillment of any agreement, covenant or obligation on the part of the other under this Agreement. Upon written demand, the indemnifying person(s) shall reimburse the indemnified person(s) immediately for all Material Damages for and against which indemnified person(s) is(are) to be indemnified and held harmless pursuant to this Section. The obligation of the SELLER and the BUYER to indemnify each other, under this Section, shall terminate on the Third (3rd) anniversary of the Closing Date except as to matters to which the indemnified person(s) had(have) made a claim for indemnification or given written notice of a possible claim for indemnification on or prior to such date. 11. BROKERAGE FEES. The BUYER and the SELLER each represent and warrant that no broker, finder or intermediary is entitled to receive any brokerage or similar type of commission or payment payable by any other and each will hold the others harmless against and in respect of any claim for brokerage or similar type of commission or payment. 12. TERMINATION OF AGREEMENT. This Agreement and the transaction contemplated hereby may be terminated by the BUYER or the SELLER without liability of any kind to the BUYER or the SELLER by written instrument, signed by the BUYER or the SELLERS and delivered at any time on or prior to the Closing Date, giving notice of termination, if: (a) There has been a material misrepresentation or material breach of warranty on the part of the BUYER, or the SELLERS, in the representations and warranties set forth herein or in any Exhibit hereto or in any certificate delivered pursuant hereto, or the BUYER, the SELLERS shall have failed to perform or comply with in any material respect any covenant, agreement or condition to be performed or complied with by either of them prior to, or at Closing, due to the non-fulfillment of any condition set forth herein; (b) In the reasonable judgment of the BUYER or the SELLER the transactions contemplated by this Agreement have become inadvisable or impracticable by reasons of (i) the enactment of new federal, state or local legislation since the date of this Agreement, or (ii) the announcement or the institution by federal, state or local authorities of an investigation of or litigation or proceedings against the SELLER, which may have a material and adverse effect on the SELLER, or the transactions contemplated hereby, or (iii) the institution since the date of this Agreement by any other person, corporation or entity of litigation or proceedings against or in regard to the SELLER, which may have a material and adverse effect upon the authority, or ability, of the SELLER to consummate the transactions contemplated hereby; or, 6 (c) The business, assets, result of operations, financial condition or future prospects of the SELLER have been significantly and adversely affected by reason of changes or developments in operations, other than in the ordinary course of business, since the filing of the SELLER'S most recent Form 10-QSB. 13. AFFECT OF TERMINATION. In the event that this Agreement shall be terminated in accordance with the provisions of the Agreement, then all further obligations of the BUYER, and the SELLER under this Agreement shall terminate without further liability of any one party to the others. 14. EXPENSES. All legal, accounting and other costs and fees incurred by the BUYER, or the SELLER, in connection with the transactions contemplated by this Agreement shall be borne and paid for by that party. 15. MISCELLANEOUS PROVISIONS. 15.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The respective representations, warranties, covenants and agreements made in this Agreement by the BUYER, the SELLER shall survive the Closing. The respective representations and warranties of each contained herein or in any certificates delivered pursuant hereto shall not be deemed to be waived or otherwise affected by an investigation or audit made by any other or by any action taken by any other at the request of any other hereto. 15.2 ASSIGNMENT. Neither this Agreement nor any rights or obligations hereunder may be assigned by the BUYER, or the SELLER, in whole or in part, without the prior written consent of the others. 15.3 NOTICES. Any notice, request, instruction or other document or communication required or permitted to be given upon delivery in person or upon being deposited in the mail, postage prepaid, for mailing by certified or registered mail, as follows: If to the SELLER, delivered and mailed to: Dhanoa Minerals Ltd. 15 Oceanview Road, Lions Bay, B.C. V0N 2E0 Canada If to the BUYER, delivered or mailed to: Mr. Lee A. Balak 15 Oceanview Road Lions Bay, B.C. V0N 2E0 Canada 7 15.4 SECTION HEADINGS. Section headings are for convenience only and shall not limit or otherwise affect any of the provisions of this Agreement. 15.5 ENTIRE AGREEMENT. This Agreement and any Exhibits hereto constitute the entire agreement and understanding of the parties hereto with respect to the matters herein set forth, and all prior negotiations, writings and understandings relating to the subject matter of this Agreement are merged herein and are superseded and canceled by this Agreement. 15.6 WAIVERS - AMENDMENTS. Any of the terms or conditions of this Agreement may be waived, but only in writing by the party which is entitled to the benefit thereof, and this Agreement may be amended, or modified in whole, or in part only by an agreement in writing, executed by all the parties to this Agreement. 15.7 BINDING NATURE OF AGREEMENT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns. As used herein, any reference to the masculine, feminine or neuter gender shall include all genders, the plural shall include the singular, and the singular shall include the plural. 15.8 GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada without regard to conflicts of law. 15.9 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. AGREED TO AND ACCEPTED JUNE 21, 2007 BUYER: SELLER: DHANOA MINERALS LTD. /s/ Lee A. Balak By: /s/ Lee A. Balak - --------------------------- ------------------------------------- Lee A. Balak, an individual Lee A. Balak Chief Executive Officer and President 8 EX-10.4 5 dhanoa_10qsbex10-4.txt WARRANT OF LEE A. BALAK EXHIBIT 10.4 "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION PROVIDED BY REGULATION S UNDER THE ACT. UNTIL ONE YEAR AFTER THE DATE OF PURCHASE, NO AMOUNT OF THE SHARES MAY BE OFFERED, SOLD OR TRANSFERRED TO ANY U.S. PERSON. OFFERS, SALES OR TRANSFERS IN THE U.S. OR TO A U.S. PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) OR FOR THE ACCOUNT AND BENEFIT OF A U.S. PERSON ARE NOT PERMITTED, EXCEPT AS PROVIDED IN SAID REGULATION S, UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION UNDER THE ACT IS APPLICABLE." COMMON STOCK PURCHASE WARRANT ----------------------------- Void After June 20, 2009 Dhanoa Minerals Ltd. (the "Company"), a Nevada corporation, hereby certifies that, for value received, Mr. Lee A. Balak, or registered assigns (hereinafter referred to as the "Warrantholder"), is entitled, subject to the terms and conditions set forth in this Warrant (said Warrant and any warrants issued in exchange or transfer or replacements hereof being hereinafter collectively referred to as the "Warrants"), to purchase from the Company, for cash, Two Million Ninety Thousand One Hundred Sixty Four (2,090,164) fully paid and assessable shares of Common Stock of the Company, $.001 par value (the "Common Stock," which term is further defined in Paragraph IV C. hereof), at any time or from time to time until 5 p.m. local Toronto time on June 20, 2009, at an exercise price of Sixty One Cents ($.61 (U.S.) per share (the "Exercise Price"), the number of such shares of Common Stock and the Exercise Price being subject to adjustment as provided herein. This warrant is redeemable by the Company for no consideration upon providing the Warrandholder a 30 day written notice of redemption. I. EXERCISE OF WARRANT. The rights represented by this Warrant may be exercised by the Warrantholder, in whole or in part (but not as to a fractional share of Common Stock), by the presentation and surrender of this Warrant with written notice of Warrantholder' election to purchase, at the principal executive office of the Company, or at such other address as the Company may designate by notice in writing to the Warrantholder at the address of such Warrantholder appearing on the books of the Company, and upon payment to the Company of the Exercise Price for such shares of Common Stock. Such payment shall be made by certified or cashier's check payable to the order of the Company. The Company agrees that the shares so purchased (the "Warrant Shares") shall be deemed to have been issued to the Warrantholder as the record owner of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered together with the aforementioned written notice of election to purchase, and payment for such Warrant Shares shall have been made as aforesaid. Certificates for the Warrant Shares so purchased shall be delivered to the Warrantholder within a reasonable time, not exceeding five (5) business days, after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the number of shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Warrantholder within such time. 1 II. EXERCISE PRICE. Warrant Shares shall be purchased at the Exercise Price set forth above, subject to adjustment as provided herein. III. WARRANTHOLDER NOT DEEMED STOCKHOLDERS. Subject to the provisions of the Company's Articles of Incorporation, as amended, and By-Laws, copies of which will be delivered to the Warrantholder upon request, the Warrantholder shall not be entitled to vote or receive dividends or be deemed the holders of Common Stock, nor shall anything contained herein be construed to confer upon the Warrantholder, as holders of Warrants, any of the rights of a stockholder of the Company or any right to vote upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends, except as otherwise provided herein, until this Warrant shall have been duly exercised and the Warrant Shares receivable upon the exercise hereof shall have become deliverable as provided in Paragraph I above. IV. ADJUSTMENT OF NUMBER OF SHARES, EXERCISE PRICE AND NATURE OF SECURITIES ISSUABLE UPON EXERCISE OF WARRANTS. A. STOCK DIVIDEND, RECAPITALIZATION, MERGER, ETC. If and whenever after the date hereof (i) any change occurs in the outstanding shares of any class or series of Common Stock by reason of any stock dividend, stock split, recapitalization, consolidation or merger; or (ii) the Company pays any distribution or dividend in cash or property of the Company, the holder of this Warrant shall thereafter, upon exercise of this Warrant, be entitled to receive the number of shares of stock or other securities or the cash or property of the Company (or of the successor corporation resulting from any consolidation or merger) to which the shares of Common Stock (and any other securities) deliverable upon the exercise of this Warrant would have been entitled if this Warrant had been exercised immediately prior to the earlier of (i) such event, and (ii) the record date, if any, set for determining the holders entitled to participate in such event and the Exercise Price shall be adjusted appropriately so that the aggregate amount payable by the holder hereof upon the full exercise of this Warrant remains the same. The Company shall not effect any recapitalization, consolidation or merger unless, upon the consummation thereof, the successor corporation shall assume by written instrument the obligation to deliver to the holder hereof such shares of stock, securities, cash or property as such holder shall be entitled to purchase in accordance with the foregoing provisions. If pursuant to the provisions of this Paragraph IV A. the holder of this Warrant would be entitled to receive shares of stock or other securities upon the exercise of this Warrant in addition to the shares of Common Stock issuable upon exercise of this Warrant, the Company shall at all times reserve and keep available sufficient shares or other securities to permit the Company to issue such additional shares or other securities upon the exercise of 2 this Warrant. If pursuant to the provisions of this Paragraph I A. the holder of this Warrant would be entitled to receive cash or property upon the exercise of this Warrant, the Company shall set aside and hold in trust as the property of the holder of this Warrant a sufficient amount of such cash or property to permit payment in full of all such cash or property that would be payable upon the exercise of this Warrant. B. ACCOUNTANTS' CERTIFICATE. In each case of an adjustment in the number of shares of Common Stock or other stock, securities or property receivable on the exercise of the Warrants, the Company at its expense shall cause independent public accountants of recognized standing selected by the Company and acceptable to the Warrantholder to compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based, including a statement of (a) the consideration received or to be received by the Company for any additional shares of Common Stock, rights, options or convertible securities issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock of each class and/or series outstanding or deemed to be outstanding, (c) the adjusted Exercise Price and (d) the number of shares issuable upon exercise of this Warrant. The Company will forthwith mail a copy of each such certificate to each Warrantholder. C. DEFINITION OF COMMON STOCK. As used herein, the term "Common Stock" shall mean and include the Company's authorized common stock of any class, classes or series, and shall also include any capital stock of any class or series of the Company hereafter authorized which shall not be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends and in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company, and shall include any common stock of any class, classes or series resulting from any reclassification or reclassifications thereof. V. SPECIAL AGREEMENTS OF THE COMPANY. A. RESERVATION OF SHARES. The Company covenants and agrees that all Warrant Shares will, upon issuance, be validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder, and from all taxes, liens and charges with respect to the issue thereof (other than taxes in respect to any transfer occurring contemporaneously with such issue). The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. B. AVOIDANCE OF CERTAIN ACTIONS. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, issue or sale of securities or otherwise, avoid or take any action which would have the effect of avoiding the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in carrying out all of the provisions of this Warrant and in taking all of such action as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution as provided herein or other impairment of their rights hereunder. 3 C. COMMUNICATION TO SHAREHOLDERS. Any notice, document or other communication given or made by the Company to holders of Common Stock as such shall at the same time be provided to the Warrantholder. D. COMPLIANCE WITH LAW. The Company shall comply with all applicable laws, rules and regulations of the United States and of all states, municipalities and agencies and of any other jurisdiction applicable to the Company and shall do all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate existence and authority necessary to continue its business. VI. FRACTIONAL SHARES. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon exercise hereof, the Company shall pay to the Warrantholder an amount in cash equal to such fraction multiplied by the current fair value of one share of Common Stock. VII. NOTICES OF STOCK DIVIDENDS, SUBSCRIPTIONS, RECLASSIFICATIONS, CONSOLIDATIONS, MERGERS, ETC. If at any time: (i) the Company shall declare a cash dividend (or an increase in the then existing dividend rate), or declare a dividend on Common Stock payable otherwise than in cash out of its net earnings after taxes for the prior fiscal year; or (ii) the Company shall authorize the granting to the holders of Common Stock of rights to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (iii) there shall be any capital reorganization, or reclassification, or redemption of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or firm; or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company, then the Company shall give to the Warrantholder at the addresses of such Warrantholder as shown on the books of the Company, at least twenty (20) days prior to the applicable record date hereinafter specified, a written notice summarizing such action or event and stating the record date for any such dividend or rights (or, if a record date is not to be selected, the date as of which the holders of Common Stock of record entitled to such dividend or rights are to be determined), the date on which any such reorganization, reclassification, consolidation, merger, sale of assets, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected the holders of Common Stock of record shall be entitled to effect any exchange of their shares of Common Stock for cash (or cash equivalent) securities or other property deliverable upon any such reorganization, reclassification, consolidation, merger, sale of assets, dissolution, liquidation or winding up. 4 VIII. REGISTERED HOLDER; TRANSFER OF WARRANTS OR WARRANT SHARES. A. MAINTENANCE OF REGISTRATION BOOKS; OWNERSHIP OF THIS WARRANT. The Company shall keep at its principal office a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration, transfer and exchange of this Warrant. The Company shall not at any time, except upon the dissolution, liquidation or winding-up of the Company, close such register so as to result in preventing or delaying the exercise or transfer of this Warrant. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration or transfer as provided in this Paragraph VIII. B. EXCHANGE AND REPLACEMENT. This Warrant is exchangeable upon surrender hereof by the registered holder to the Company at its principal office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of shares as shall be designated by said registered holder at the time of surrender. Subject to compliance with the provisions of Paragraphs VIII and IX, this Warrant and all rights hereunder are transferable in whole or in part upon the books of the Company by the registered holder hereof in person or by duly authorized attorney, and a new Warrant shall be made and delivered by the Company, of the same tenor and date as this Warrant but registered in the name of the transferee, upon surrender of this Warrant, duly endorsed, to said office of the Company. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant, upon the delivery of an appropriate bond if required by the Company. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange, transfer or replacement. The Company shall pay all expenses, taxes and other charges payable in connection with the preparation, execution and delivery of Warrants pursuant to this Paragraph VIII. C. WARRANTS AND WARRANT SHARES NOT REGISTERED. The holder of this Warrant, by accepting this Warrant, represents and acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as amended, or any state securities laws. IX. MISCELLANEOUS PROVISIONS. 5 GOVERNING LAW AND VENUE. This Warrant shall be deemed to have been made in the State of Nevada and the validity of this Warrant, the construction, interpretation, and enforcement thereof, and the rights of the parties thereto shall be determined under, governed by, and construed in accordance with the internal laws of the State of Nevada, without regard to principles of conflicts of law. The parties agree that all actions or proceedings arising in connection with this Warrant shall be tried and litigated only in the state or federal courts located in Clark County in the State of Nevada or, at the sole option of a Warrantholder, in any other court in which a Warrantholder shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the matter in controversy. The Warrantholder and the Company each waive the right to a trial by jury and any right each may have to assert the doctrine of FORUM NON CONVENIENS or to object to venue to the extent any proceeding is brought in accordance with this Paragraph IX(a). Service of process, sufficient for personal jurisdiction in any action against the Company, may be made by registered or certified mail, return receipt requested, to its address indicated in Paragraph IX A. A. NOTICES. All notices hereunder shall be in writing and shall be deemed to have been given one (1) business day after being sent by facsimile or five (5) days after being mailed by certified mail, addressed to the address below stated of the party to which notice is given, or to such changed address as such party may have fixed by notice: To the Company: Dhanoa Minerals Ltd. Attention: Mr. Lee A. Balak 15 Oceanview Road Lions Bay, B.C. V0N 2E0 Canada With copy to: Stephen A. Zrenda, Jr., P.C. 5700 N.W. 132nd Street Oklahoma City, OK 73142 To the Warrantholder: Mr. Lee A. Balak 15 Oceanview Road Lions Bay, B.C. V0N 2E0 Canada provided, however, that any notice of change of address shall be effective only upon receipt. B. ASSIGNMENT. This Warrant shall be binding upon and inure to the benefit of the Company, the Warrantholder and the holders of Warrant Shares and the successors, assigns and transferees of the Company, the Warrantholder and the holders of Warrant Shares. C. ATTORNEYS' FEES. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Warrant, the successful or prevailing party or parties shall be entitled to recover such reasonable attorneys' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled, as may be ordered in connection with such proceeding. 6 D. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Warrant sets forth the entire understanding of the parties with respect to the transactions contemplated hereby. The failure of any party to seek redress for the violation or to insist upon the strict performance of any term of this Warrant shall not constitute a waiver of such term and such party shall be entitled to enforce such term without regard to such forbearance. This Warrant may be amended, the Company may take any action herein prohibited or omit to take action herein required to be performed by it, and any breach of or compliance with any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or written waiver of the majority in interest of the Warrantholder, and then such consent or waiver shall be effective only in the specific instance and for the specific purpose for which given. E. SEVERABILITY. If any term of this Warrant as applied to any person or to any circumstance is prohibited, void, invalid or unenforceable in any jurisdiction, such term shall, as to such jurisdiction, be ineffective to the extent of such prohibition or invalidity without in any way affecting any other term of this Warrant or affecting the validity or enforceability of this Warrant or of such provision in any other jurisdiction. F. HEADINGS. The headings in this Warrant are inserted only for convenience of reference and shall not be used in the construction of any of its terms. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer on the date first written above. Dhanoa Minerals Ltd. a Nevada corporation By: /s/ Lee A. Balak ------------------------------------- Lee A. Balak Chief Executive Officer and President 7 EX-10.5 6 dhanoa_10qsbex10-5.txt REGULATION S PURCHASE AGMT - ARCOBEL INVESTMENTS EXHIBIT 10.5 "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION PROVIDED BY REGULATION S UNDER THE ACT. UNTIL ONE YEAR AFTER THE DATE OF PURCHASE, NO AMOUNT OF THE SHARES MAY BE OFFERED, SOLD OR TRANSFERRED TO ANY U.S. PERSON. OFFERS, SALES OR TRANSFERS IN THE U.S. OR TO A U.S. PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) OR FOR THE ACCOUNT AND BENEFIT OF A U.S. PERSON ARE NOT PERMITTED, EXCEPT AS PROVIDED IN SAID REGULATION S, UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION UNDER THE ACT IS APPLICABLE." REGULATION "S" STOCK PURCHASE AGREEMENT --------------------------------------- This Stock Purchase Agreement is made as of June 21, 2007, by and between ARCOBEL INVESTMENT, INC., S.A., a Sociedad Anonima Corporation constituted according to the laws of the Republic of Panama, inscribed at File N(degree) 37836, Roll N(degree) 2045, Image N(degree) 163, of the Mercantile Microfilms Section of the Public Registry of the Republic of Panama, since April the 6th, 1979, domiciled at the Republic of Panama, Panama City ("BUYER"), and Dhanoa Minerals Ltd.,15 Oceanview Road, Lions Bay, B.C. V0N 2E0 Canada ("SELLER"). WHEREAS, the SELLER desires to sell Two Million Ninety Thousand One Hundred Sixty Four (2,090,164) Shares of Regulation "S" Common Stock of the SELLER, at the Purchase Price (as hereinafter defined), to the BUYER; WHEREAS, the BUYER will also receive, at no extra cost, one warrant for the purchase of Two Million Ninety Thousand One Hundred Sixty Four (2,090,164) Shares of Regulation "S" Common Stock of the SELLER at the exercise price of $.61(U.S.) per share exercisable for a period of two (2) years from the date hereof, (the "Warrant"). The Warrant may be exercised in whole or in part on a pro rata basis, based upon the price referenced above. WHEREAS, the BUYER desires to purchase the Regulation "S" Shares from the SELLER in accordance with the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements of the parties contained herein, the parties, intending to be legally bound hereby, agree as follows: 1. SALE OF SHARES. The SELLER shall sell and deliver to the BUYER, at the Purchase Price, the Shares of the SELLER and the BUYER shall purchase and receive the Shares from the SELLER, at such Purchase Price. 2. CLOSING DATE. This transaction shall be closed pursuant to the terms and conditions of this Agreement on June 21, 2007, 1:00 PM (local time) at the offices of the SELLER, or its designee. The date of closing of this transaction is herein called the "Closing Date". The actions outlined in Sections 3 and 10, which are to take place on the Closing Date, are herein called the "Closing". 1 3. CLOSING. At Closing, the parties shall take the following actions: 3.1 TRANSFER OF SHARES. The SELLER shall sell, transfer, assign, and deliver to the BUYER, the Shares, all of which shall be issued and outstanding as of the Closing Date, upon the terms and subject to the conditions set forth in this Agreement. The SELLER shall deliver to the BUYER, free and clear of all claims and encumbrances, certificate(s) for the Shares which the SELLER is selling in accordance with Section 3.3 hereof, registered in the name of the BUYER or, if not so registered, then in fully negotiable form. 3.2 PURCHASE PRICE. BUYER does agree to purchase and SELLER does hereby agree to sell Two Million Ninety Thousand One Hundred Sixty Four (2,090,164) Shares of Regulation "S" Common Stock of the SELLER at the price of $1,275,000 (U.S.) at $.61 per share, payment as follows: a.) The purchase price shall be evidenced by a wire transfer, in favor of SELLER in the amount of $1,275,000 (U.S.); For the Account of: Dhanoa Minerals Ltd. 15 Oceanview Road Lions Bay, B.C. V0N 2E0 Canada The parties hereto agree that the purchase price has been adjusted to reflect a discount of 15% of the closing bid price of the Common Stock of the SELLER on the day of the sale. 4. SECURITIES ACT OF 1933 AND HOLDING PERIOD. The BUYER covenants and agrees as follows: 4.1 The BUYER understands that the Shares acquired pursuant to this Agreement have not been registered under the United States ("US") Securities Act of 1933 ("1933 Act") with the Securities and Exchange Commission in reliance upon the exemption from such registration requirements afforded by Regulation "S" under the 1933 Act, governing the offer and sale of securities that occur outside the U.S., nor with any state securities commission. The BUYER agrees and acknowledges that the SELLER shall have cause to issue Stop Transfer instructions to its registrar or transfer agent prohibiting the transfer of the Shares delivered under this Agreement for a period of 12 months after the date of Closing and as set forth herein below. 4.2 The BUYER hereby represents and warrants that: it is a Sociedad Anonima Corporation constituted according to the laws of the Republic of Panama, with principal executive and administrative offices located outside the US within the meaning of Rule 902(o) of Regulation "S". 4.3 The BUYER agrees that the Shares acquired by the BUYER pursuant to this Agreement shall not be voluntarily sold, transferred or otherwise disposed of for a minimum period of 12 months from the date of Closing. 2 4.4 The BUYER understands that any disposition of the Shares in violation of this Agreement, as well as Sections 4.1, 4.3, or this Section 4.4, shall be null and void. No transfer of the Shares shall be made by the SELLER'S registrar or transfer agent upon the SELLER'S stock transfer books or records unless there has been compliance with the terms of this Agreement, including Sections 4.1, 4.3, and this Section 4.4. The SELLER shall have cause to issue Stop Transfer instructions to its registrar, or transfer agent, to the effect that the certificate(s) evidencing the Shares may not be transferred for a period of 12 months after the date of Closing and thereafter may be transferred immediately thereafter except as provided in Sections 2 and 3.1 hereof. The BUYER agrees to indemnify and hold the SELLER harmless from and against all Material Damages, as defined in Section 10, that result from or arise out of any disposition of the Shares in violation of this Agreement. 5. CONDITIONS OF BUYER'S AND SELLER'S OBLIGATION TO CLOSE. The following shall be conditions of the BUYER'S and the SELLER'S obligation to close hereunder, which either the BUYER or the SELLER, in each's sole discretion, may waive in whole or in part: 5.1 REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE SELLERS. Representations and Warranties made by the BUYER, and the SELLER, in this Agreement shall be true and correct as of the Closing Date as fully made at this time. 5.2 NO DEFAULT - COVENANTS AND AGREEMENTS. Neither the BUYER nor the SELLER shall be in material default with respect to any obligation under this Agreement and it shall have performed or compiled with all covenants, agreements and conditions to be performed or compiled with by it prior to or at the Closing. 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The SELLER represent and warrant to the BUYER that the statement contained in Sections 6.1 through 6.9 are true and correct on the date hereof and will be true and correct on and as of the Closing Date as follows: 6.1 CORPORATE STANDING. The SELLER is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, and it has full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The SELLER has full power and authority to carry on its business as it is now being conducted and to own its assets. The SELLER is duly qualified to transact business in each jurisdiction where the nature of its business requires it to be so qualified and where the failure so to qualify would have a material adverse effect on the business of the SELLER. The execution and delivery of this Agreement by the SELLER does not, and the consummation of the transactions contemplated hereby will not, violate or result in a breach of any provisions of SELLER'S Charter or Bylaws. 6.2 CAPITAL STOCK. The authorized capital stock of the SELLER consists of One Hundred Fifteen Million (115,000,000) shares of authorized common stock, $.001 par value per share, of which approximately Forty Million (40,000,000) shares of Common Stock (excluding treasury Shares), have been validly issued and are outstanding, fully paid and non-assessable as of June 21, 2007. 3 6.3 AUTHORITY. The SELLER has full power and authority to enter into this Agreement and have taken all action or will use their best efforts to take all action necessary to authorize the execution, delivery and performance of this Agreement, the completion of the transactions contemplated hereby and the execution and delivery on behalf of the SELLER of any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of this Agreement. Upon delivery of the Shares and payment of the purchase price, good and clear title to the Shares will pass, free and clear of all restrictions on transfer, liens, encumbrances, security interest and claims whatsoever, to the BUYER, subject, however, to the provisions of Section 2, 3, and 4 inclusive. No consent or approval of any court, governmental agency or other public authority, or of any other person, corporation or entity with any actual or alleged interest in the SELLER is required as a condition to (a) the validity or enforceability of this Agreement or any other instruments to be executed by the SELLER to effectuate this Agreement, or (b) the completion or validity of any of the transactions contemplated by this Agreement. This Agreement has been properly executed and delivered by the SELLER, and constitutes the valid and legally binding agreement of the SELLER and is enforceable against the SELLER in accordance with its terms. 6.4 FINANCIAL STATEMENTS. The SELLER shall furnish, or make available to the BUYER, financial statements contained in the SELLER'S annual report on Form 10-KSB for the year ended April 30, 2007, and its most recent quarterly report on Form 10-QSB ("Financial Statements"). There has been no material adverse change in, material loss or destruction of, or material amount of damage to the financial condition or business of the SELLER since the filing of the most recent Form 10-QSB, whether or not arising from transactions in the ordinary course of business. The regular books of account of the SELLER fairly and accurately reflect all transactions since the filing of the most recent Form 10-QSB, are true, correct and complete, and are maintained and kept in accordance with generally accepted accounting principles consistently applied. The SELLER has no liabilities or obligations, whether accrued, absolute, contingent or otherwise, which would materially and adversely affect the condition (financial and otherwise) of the SELLER, except and to the extent reflected or reserved against in the balance sheets included in the Financial Statements. No dividends are due or unpaid by the SELLER. 6.5 LAWSUITS AND PROCEEDINGS. There are no actions at law or in equity, proceeding, governmental proceedings or investigations pending or threatened against the SELLER, or against or with respect to the business or assets of the SELLER, and the SELLER is not in material default with respect to any decree, injunction or other order of any court or government authority. The SELLER is in substantial compliance with all (and has not received any notice of any claimed violation of any) applicable, federal, state, county or municipal laws, ordinances, and regulations. There is no action at law or in equity, arbitration proceeding, governmental proceeding or investigation, or motion or request to any court, pending or threatened, against, or with respect to the SELLER, with respect to this Agreement or any of the transactions contemplated hereby. 6.6 TAXES. The SELLER knows of no outstanding claims against it for taxes which constitute a lien on the Shares being sold hereunder. 4 6.7 EXTRAORDINARY TRANSACTIONS. Since the filing of the SELLER'S most recent Form 10-QSB, the SELLER has not (i) mortgaged, pledged or subjected to lien, charge or any other encumbrance any of its assets; (ii) canceled any claim of or debts owed to it, or, except in each case in the ordinary course of business, sold or transferred any of its assets; (iii) made any management decisions involving any material change in its policies with regard to the provision of services, sales, purchasing or other business, financial, accounting (including reserves and the amounts thereof) or tax policies or practices; or (iv) declared or paid any dividends on, or made any distributions in respect of any outstanding Shares of capital stock of the SELLER. 6.8 ADVERSE CIRCUMSTANCES. To the best knowledge of the SELLER, there are no facts, developments or circumstances, existing or threatened, of a special or unusual nature that may be materially adverse to the assets, business, financial condition or future prospects of the SELLER. 6.9 LIABILITIES. The SELLER has no material liabilities of any nature, whether accrued, absolute, contingent or otherwise, existing, or which may hereafter arise out of any transaction entered into prior to the Closing Date or out of any act or failure to act on the part of the SELLER, or any of its employees, or agents, prior to the Closing Date, except (i) as and to the extent and in the amounts reflected or reserved against in the Financial Statements, and (ii) current liabilties incurred in the ordinary course of business since its filing of the SELLER'S most recent Form 10-QSB. 7. COVENANTS AND AGREEMENTS OF THE BUYER. The BUYER hereby covenants and agrees as follows: 7.1 CORPORATION ACTION. The BUYER shall duly take all action, corporate or otherwise, necessary or appropriate to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. 7.2 IMPAIRMENT - REPRESENTATIONS AND WARRANTIES. The BUYER shall not take any action or fail to take any action without the prior written approval of the SELLER, which would or might cause any representation or warranty of the SELLER made herein not to be true on the Closing Date, or impair the SELLER'S ability to carry out their obligations under this Agreement. 7.3 DUE DILIGENCE. The BUYER or its agents, have had a full opportunity to conduct its due diligence of the SELLER in connection with this Agreement to its complete satisfaction. The BUYER is familiar with the SELLER, its financial condition, business and prospects, has been provided with such information concerning the SELLER'S financial and other affairs as the BUYER deems necessary to enter into and perform this Agreement, has had sufficient opportunity to ask questions and receive answers to verify the accuracy of such information, and is not in any way relying upon any information, representation or warranty (without implying that the supplying of any such information or the making of any such representation or warranty has occurred) that the SELLER, or its officers, directors, employees, agents and attorneys have provided, or have failed to provide, to the BUYER in entering into or performing this Agreement. 5 8. CONDITIONS OF THE SELLER'S OBLIGATION TO CLOSE. The obligations of the SELLER to close this transaction and transfer and deliver to the BUYER the Shares, as set forth in Section 4.1 hereof, and to perform his obligations pursuant to the terms and conditions of this Agreement, are subject to the fulfillment as of the Closing Date of each of the following conditions precedent, any or all of which may be waived in writing by the SELLER; 8.1 PAYMENT OF PURCHASE PRICE. The BUYER has paid the Purchase Price; 9. DELIVERY OF DOCUMENTS BY THE SELLER. At the Closing, and in addition to all other documents and instruments, which the SELLER is required to deliver, pursuant to this Agreement, the SELLER shall deliver to the BUYER the following documents duly executed by the SELLER, or the directors, officers, or employees of or counsel to the SELLER, or appropriate governmental officials, in form and substance satisfactory to the BUYER and its counsel. 10. INDEMNIFICATION. 10.1 INDEMNIFICATION. The SELLER and the BUYER agree to jointly and severally indemnify each other and hold each other harmless from and against all material damages, losses, costs, liabilities, expenses and deficiencies, including, without limitation, additional taxes, and interest expenses, attorneys fees and expenses and accountant and expert witness fees and expenses (collectively "Material Damages") that result from or arise out of any misrepresentation, breach of warranty, or non-fulfillment of any agreement, covenant or obligation on the part of the other under this Agreement. Upon written demand, the indemnifying person(s) shall reimburse the indemnified person(s) immediately for all Material Damages for and against which indemnified person(s) is(are) to be indemnified and held harmless pursuant to this Section. The obligation of the SELLER and the BUYER to indemnify each other, under this Section, shall terminate on the Third (3rd) anniversary of the Closing Date except as to matters to which the indemnified person(s) had(have) made a claim for indemnification or given written notice of a possible claim for indemnification on or prior to such date. 11. BROKERAGE FEES. The BUYER and the SELLER each represent and warrant that no broker, finder or intermediary is entitled to receive any brokerage or similar type of commission or payment payable by any other and each will hold the others harmless against and in respect of any claim for brokerage or similar type of commission or payment. 12. TERMINATION OF AGREEMENT. This Agreement and the transaction contemplated hereby may be terminated by the BUYER or the SELLER without liability of any kind to the BUYER or the SELLER by written instrument, signed by the BUYER or the SELLERS and delivered at any time on or prior to the Closing Date, giving notice of termination, if: (a) There has been a material misrepresentation or material breach of warranty on the part of the BUYER, or the SELLERS, in the representations and warranties set forth herein or in any Exhibit hereto or in any certificate delivered pursuant hereto, or the BUYER, the SELLERS shall have failed to perform or comply with in any material respect any covenant, agreement or condition to be performed or complied with by either of them prior to, or at Closing, due to the non-fulfillment of any condition set forth herein; 6 (b) In the reasonable judgment of the BUYER or the SELLER the transactions contemplated by this Agreement have become inadvisable or impracticable by reasons of (i) the enactment of new federal, state or local legislation since the date of this Agreement, or (ii) the announcement or the institution by federal, state or local authorities of an investigation of or litigation or proceedings against the SELLER, which may have a material and adverse effect on the SELLER, or the transactions contemplated hereby, or (iii) the institution since the date of this Agreement by any other person, corporation or entity of litigation or proceedings against or in regard to the SELLER, which may have a material and adverse effect upon the authority, or ability, of the SELLER to consummate the transactions contemplated hereby; or, (c) The business, assets, result of operations, financial condition or future prospects of the SELLER have been significantly and adversely affected by reason of changes or developments in operations, other than in the ordinary course of business, since the filing of the SELLER'S most recent Form 10-QSB. 13. AFFECT OF TERMINATION. In the event that this Agreement shall be terminated in accordance with the provisions of the Agreement, then all further obligations of the BUYER, and the SELLER under this Agreement shall terminate without further liability of any one party to the others. 14. EXPENSES. All legal, accounting and other costs and fees incurred by the BUYER, or the SELLER, in connection with the transactions contemplated by this Agreement shall be borne and paid for by that party. 15. MISCELLANEOUS PROVISIONS. 15.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The respective representations, warranties, covenants and agreements made in this Agreement by the BUYER, the SELLER shall survive the Closing. The respective representations and warranties of each contained herein or in any certificates delivered pursuant hereto shall not be deemed to be waived or otherwise affected by an investigation or audit made by any other or by any action taken by any other at the request of any other hereto. 15.2 ASSIGNMENT. Neither this Agreement nor any rights or obligations hereunder may be assigned by the BUYER, or the SELLER, in whole or in part, without the prior written consent of the others. 15.3 NOTICES. Any notice, request, instruction or other document or communication required or permitted to be given upon delivery in person or upon being deposited in the mail, postage prepaid, for mailing by certified or registered mail, as follows: If to the SELLER, delivered and mailed to: Dhanoa Minerals Ltd. 15 Oceanview Road, Lions Bay, B.C. V0N 2E0 Canada 7 If to the BUYER, delivered or mailed to: ARCOBEL INVESTMENT, INC., S.A., %Lcdo. Jaime E. Vega G. CAMARENA, MORALES Y VEGA Calle Ricardo Arias, Campo Alegre, Edificio Proconsa II, Segundo Piso Oficina No 2-A Apartado 0823-01308 Panama City, Panama 15.4 SECTION HEADINGS. Section headings are for convenience only and shall not limit or otherwise affect any of the provisions of this Agreement. 15.5 ENTIRE AGREEMENT. This Agreement and any Exhibits hereto constitute the entire agreement and understanding of the parties hereto with respect to the matters herein set forth, and all prior negotiations, writings and understandings relating to the subject matter of this Agreement are merged herein and are superseded and canceled by this Agreement. 15.6 WAIVERS - AMENDMENTS. Any of the terms or conditions of this Agreement may be waived, but only in writing by the party which is entitled to the benefit thereof, and this Agreement may be amended, or modified in whole, or in part only by an agreement in writing, executed by all the parties to this Agreement. 15.7 BINDING NATURE OF AGREEMENT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns. As used herein, any reference to the masculine, feminine or neuter gender shall include all genders, the plural shall include the singular, and the singular shall include the plural. 15.8 GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada without regard to conflicts of law. 15.9 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. AGREED TO AND ACCEPTED JUNE 21, 2007 BUYER: SELLER: ARCOBEL INVESTMENT, INC., S.A. DHANOA MINERALS LTD. By: /s/ Licimaco Herrera Soto By: /s/ Lee A. Balak ------------------------- ------------------------------------- Licimaco Herrera Soto Lee A. Balak President Chief Executive Officer and President 8 EX-10.6 7 dhanoa_10qsbex10-6.txt WARRANT OF ARCOBEL INVESTMENTS INC. EXHIBIT 10.6 "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION PROVIDED BY REGULATION S UNDER THE ACT. UNTIL ONE YEAR AFTER THE DATE OF PURCHASE, NO AMOUNT OF THE SHARES MAY BE OFFERED, SOLD OR TRANSFERRED TO ANY U.S. PERSON. OFFERS, SALES OR TRANSFERS IN THE U.S. OR TO A U.S. PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) OR FOR THE ACCOUNT AND BENEFIT OF A U.S. PERSON ARE NOT PERMITTED, EXCEPT AS PROVIDED IN SAID REGULATION S, UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION UNDER THE ACT IS APPLICABLE." COMMON STOCK PURCHASE WARRANT ----------------------------- Void After June 20, 2009 Dhanoa Minerals Ltd. (the "Company"), a Nevada corporation, hereby certifies that, for value received, Arcobel Investment, Inc., S.A. or registered assigns (hereinafter referred to as the "Warrantholder"), is entitled, subject to the terms and conditions set forth in this Warrant (said Warrant and any warrants issued in exchange or transfer or replacements hereof being hereinafter collectively referred to as the "Warrants"), to purchase from the Company, for cash, Two Million Ninety Thousand One Hundred Sixty Four (2,090,164) fully paid and assessable shares of Common Stock of the Company, $.001 par value (the "Common Stock," which term is further defined in Paragraph IV C. hereof), at any time or from time to time until 5 p.m. local Toronto time on June 20, 2009, at an exercise price of Sixty One Cents ($.61 (U.S.) per share (the "Exercise Price"), the number of such shares of Common Stock and the Exercise Price being subject to adjustment as provided herein. This warrant is redeemable by the Company for no consideration upon providing the Warrandholder a 30 day written notice of redemption. I. EXERCISE OF WARRANT. The rights represented by this Warrant may be exercised by the Warrantholder, in whole or in part (but not as to a fractional share of Common Stock), by the presentation and surrender of this Warrant with written notice of Warrantholder' election to purchase, at the principal executive office of the Company, or at such other address as the Company may designate by notice in writing to the Warrantholder at the address of such Warrantholder appearing on the books of the Company, and upon payment to the Company of the Exercise Price for such shares of Common Stock. Such payment shall be made by certified or cashier's check payable to the order of the Company. The Company agrees that the shares so purchased (the "Warrant Shares") shall be deemed to have been issued to the Warrantholder as the record owner of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered together with the aforementioned written notice of election to purchase, and payment for such Warrant Shares shall have been made as aforesaid. Certificates for the Warrant Shares so purchased shall be delivered to the Warrantholder within a reasonable time, not exceeding five (5) business days, after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the number of shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Warrantholder within such time. 1 II. EXERCISE PRICE. Warrant Shares shall be purchased at the Exercise Price set forth above, subject to adjustment as provided herein. III. WARRANTHOLDER NOT DEEMED STOCKHOLDERS. Subject to the provisions of the Company's Articles of Incorporation, as amended, and By-Laws, copies of which will be delivered to the Warrantholder upon request, the Warrantholder shall not be entitled to vote or receive dividends or be deemed the holders of Common Stock, nor shall anything contained herein be construed to confer upon the Warrantholder, as holders of Warrants, any of the rights of a stockholder of the Company or any right to vote upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends, except as otherwise provided herein, until this Warrant shall have been duly exercised and the Warrant Shares receivable upon the exercise hereof shall have become deliverable as provided in Paragraph I above. IV. ADJUSTMENT OF NUMBER OF SHARES, EXERCISE PRICE AND NATURE OF SECURITIES ISSUABLE UPON EXERCISE OF WARRANTS. A. STOCK DIVIDEND, RECAPITALIZATION, MERGER, ETC. If and whenever after the date hereof (i) any change occurs in the outstanding shares of any class or series of Common Stock by reason of any stock dividend, stock split, recapitalization, consolidation or merger; or (ii) the Company pays any distribution or dividend in cash or property of the Company, the holder of this Warrant shall thereafter, upon exercise of this Warrant, be entitled to receive the number of shares of stock or other securities or the cash or property of the Company (or of the successor corporation resulting from any consolidation or merger) to which the shares of Common Stock (and any other securities) deliverable upon the exercise of this Warrant would have been entitled if this Warrant had been exercised immediately prior to the earlier of (i) such event, and (ii) the record date, if any, set for determining the holders entitled to participate in such event and the Exercise Price shall be adjusted appropriately so that the aggregate amount payable by the holder hereof upon the full exercise of this Warrant remains the same. The Company shall not effect any recapitalization, consolidation or merger unless, upon the consummation thereof, the successor corporation shall assume by written instrument the obligation to deliver to the holder hereof such shares of stock, securities, cash or property as such holder shall be entitled to purchase in accordance with the foregoing provisions. 2 If pursuant to the provisions of this Paragraph IV A. the holder of this Warrant would be entitled to receive shares of stock or other securities upon the exercise of this Warrant in addition to the shares of Common Stock issuable upon exercise of this Warrant, the Company shall at all times reserve and keep available sufficient shares or other securities to permit the Company to issue such additional shares or other securities upon the exercise of this Warrant. If pursuant to the provisions of this Paragraph I A. the holder of this Warrant would be entitled to receive cash or property upon the exercise of this Warrant, the Company shall set aside and hold in trust as the property of the holder of this Warrant a sufficient amount of such cash or property to permit payment in full of all such cash or property that would be payable upon the exercise of this Warrant. B. ACCOUNTANTS' CERTIFICATE. In each case of an adjustment in the number of shares of Common Stock or other stock, securities or property receivable on the exercise of the Warrants, the Company at its expense shall cause independent public accountants of recognized standing selected by the Company and acceptable to the Warrantholder to compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based, including a statement of (a) the consideration received or to be received by the Company for any additional shares of Common Stock, rights, options or convertible securities issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock of each class and/or series outstanding or deemed to be outstanding, (c) the adjusted Exercise Price and (d) the number of shares issuable upon exercise of this Warrant. The Company will forthwith mail a copy of each such certificate to each Warrantholder. C. DEFINITION OF COMMON STOCK. As used herein, the term "Common Stock" shall mean and include the Company's authorized common stock of any class, classes or series, and shall also include any capital stock of any class or series of the Company hereafter authorized which shall not be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends and in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company, and shall include any common stock of any class, classes or series resulting from any reclassification or reclassifications thereof. V. SPECIAL AGREEMENTS OF THE COMPANY. A. RESERVATION OF SHARES. The Company covenants and agrees that all Warrant Shares will, upon issuance, be validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder, and from all taxes, liens and charges with respect to the issue thereof (other than taxes in respect to any transfer occurring contemporaneously with such issue). The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. 3 B. AVOIDANCE OF CERTAIN ACTIONS. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, issue or sale of securities or otherwise, avoid or take any action which would have the effect of avoiding the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in carrying out all of the provisions of this Warrant and in taking all of such action as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution as provided herein or other impairment of their rights hereunder. C. COMMUNICATION TO SHAREHOLDERS. Any notice, document or other communication given or made by the Company to holders of Common Stock as such shall at the same time be provided to the Warrantholder. D. COMPLIANCE WITH LAW. The Company shall comply with all applicable laws, rules and regulations of the United States and of all states, municipalities and agencies and of any other jurisdiction applicable to the Company and shall do all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate existence and authority necessary to continue its business. VI. FRACTIONAL SHARES. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon exercise hereof, the Company shall pay to the Warrantholder an amount in cash equal to such fraction multiplied by the current fair value of one share of Common Stock. VII. NOTICES OF STOCK DIVIDENDS, SUBSCRIPTIONS, RECLASSIFICATIONS, CONSOLIDATIONS, MERGERS, ETC. If at any time: (i) the Company shall declare a cash dividend (or an increase in the then existing dividend rate), or declare a dividend on Common Stock payable otherwise than in cash out of its net earnings after taxes for the prior fiscal year; or (ii) the Company shall authorize the granting to the holders of Common Stock of rights to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (iii) there shall be any capital reorganization, or reclassification, or redemption of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or firm; or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company, then the Company shall give to the Warrantholder at the addresses of such Warrantholder as shown on the books of the Company, at least twenty (20) days prior to the applicable record date hereinafter specified, a written notice summarizing such action or event and stating the record date for any such dividend or rights (or, if a record date is not to be selected, the date as of which the holders of Common Stock of record entitled to such dividend or rights are to be determined), the date on which any such reorganization, reclassification, consolidation, merger, sale of assets, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected the holders of Common Stock of record shall be entitled to effect any exchange of their shares of Common Stock for cash (or cash equivalent) securities or other property deliverable upon any such reorganization, reclassification, consolidation, merger, sale of assets, dissolution, liquidation or winding up. 4 VIII. REGISTERED HOLDER; TRANSFER OF WARRANTS OR WARRANT SHARES. A. MAINTENANCE OF REGISTRATION BOOKS; OWNERSHIP OF THIS WARRANT. The Company shall keep at its principal office a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration, transfer and exchange of this Warrant. The Company shall not at any time, except upon the dissolution, liquidation or winding-up of the Company, close such register so as to result in preventing or delaying the exercise or transfer of this Warrant. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration or transfer as provided in this Paragraph VIII. B. EXCHANGE AND REPLACEMENT. This Warrant is exchangeable upon surrender hereof by the registered holder to the Company at its principal office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of shares as shall be designated by said registered holder at the time of surrender. Subject to compliance with the provisions of Paragraphs VIII and IX, this Warrant and all rights hereunder are transferable in whole or in part upon the books of the Company by the registered holder hereof in person or by duly authorized attorney, and a new Warrant shall be made and delivered by the Company, of the same tenor and date as this Warrant but registered in the name of the transferee, upon surrender of this Warrant, duly endorsed, to said office of the Company. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant, upon the delivery of an appropriate bond if required by the Company. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange, transfer or replacement. The Company shall pay all expenses, taxes and other charges payable in connection with the preparation, execution and delivery of Warrants pursuant to this Paragraph VIII. C. WARRANTS AND WARRANT SHARES NOT REGISTERED. The holder of this Warrant, by accepting this Warrant, represents and acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as amended, or any state securities laws. IX. MISCELLANEOUS PROVISIONS. 5 GOVERNING LAW AND VENUE. This Warrant shall be deemed to have been made in the State of Nevada and the validity of this Warrant, the construction, interpretation, and enforcement thereof, and the rights of the parties thereto shall be determined under, governed by, and construed in accordance with the internal laws of the State of Nevada, without regard to principles of conflicts of law. The parties agree that all actions or proceedings arising in connection with this Warrant shall be tried and litigated only in the state or federal courts located in Clark County in the State of Nevada or, at the sole option of a Warrantholder, in any other court in which a Warrantholder shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the matter in controversy. The Warrantholder and the Company each waive the right to a trial by jury and any right each may have to assert the doctrine of FORUM NON CONVENIENS or to object to venue to the extent any proceeding is brought in accordance with this Paragraph IX(a). Service of process, sufficient for personal jurisdiction in any action against the Company, may be made by registered or certified mail, return receipt requested, to its address indicated in Paragraph IX A. A. NOTICES. All notices hereunder shall be in writing and shall be deemed to have been given one (1) business day after being sent by facsimile or five (5) days after being mailed by certified mail, addressed to the address below stated of the party to which notice is given, or to such changed address as such party may have fixed by notice: To the Company: Dhanoa Minerals Ltd. Attention: Mr. Lee A. Balak 15 Oceanview Road Lions Bay, B.C. V0N 2E0 Canada With copy to: Stephen A. Zrenda, Jr., P.C. 5700 N.W. 132nd Street Oklahoma City, OK 73142 To the Warrantholder: Arcobel Investment, Inc., S.A. c/o Lcdo. Jaime E. Vega G. CAMARENA, MORALES Y VEGA Calle Ricardo Arias, Campo Alegre, Edificio Proconsa II, Segundo Piso Oficina No 2-A Apartado 0823-01308 Panama City, Panama provided, however, that any notice of change of address shall be effective only upon receipt. B. ASSIGNMENT. This Warrant shall be binding upon and inure to the benefit of the Company, the Warrantholder and the holders of Warrant Shares and the successors, assigns and transferees of the Company, the Warrantholder and the holders of Warrant Shares. 6 C. ATTORNEYS' FEES. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Warrant, the successful or prevailing party or parties shall be entitled to recover such reasonable attorneys' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled, as may be ordered in connection with such proceeding. D. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Warrant sets forth the entire understanding of the parties with respect to the transactions contemplated hereby. The failure of any party to seek redress for the violation or to insist upon the strict performance of any term of this Warrant shall not constitute a waiver of such term and such party shall be entitled to enforce such term without regard to such forbearance. This Warrant may be amended, the Company may take any action herein prohibited or omit to take action herein required to be performed by it, and any breach of or compliance with any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or written waiver of the majority in interest of the Warrantholder, and then such consent or waiver shall be effective only in the specific instance and for the specific purpose for which given. E. SEVERABILITY. If any term of this Warrant as applied to any person or to any circumstance is prohibited, void, invalid or unenforceable in any jurisdiction, such term shall, as to such jurisdiction, be ineffective to the extent of such prohibition or invalidity without in any way affecting any other term of this Warrant or affecting the validity or enforceability of this Warrant or of such provision in any other jurisdiction. F. HEADINGS. The headings in this Warrant are inserted only for convenience of reference and shall not be used in the construction of any of its terms. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer on the date first written above. Dhanoa Minerals Ltd. a Nevada corporation By: /s/ Lee A. Balak ------------------------------------- Lee A. Balak Chief Executive Officer and President 7 EX-10.7 8 dhanoa_10qsbex10-7.txt RELEASE & INDEMNIFICATION AGMT - JUNE 11, 2007 EXHIBIT 10.7 Page 1 of 4 RELEASE AND INDEMNIFICATION AGREEMENT This AGREEMENT, RELEASE and INDEMNIFICATION (herein "AGREEMENT") is entered into this 11th day of June, 2007 between Dhanoa Minerals Ltd. ("Dhanoa" or "the corporation"), and Vare Grewal ("GREWAL"), and Pacific Imperial Capital ("Pacific") (GREWAL's consulting company) and Balwant Grewal ("Balwant") (collectively "the parties"). WHEREAS, GREWAL has previously served as DHANOA'S assistant treasurer, and his consulting company, PACIFIC has provided extensive valuable consulting services to DHANOA, including but not limited to administrative services, locating and negotiating acquisitions, hiring and managing key personnel, executives and professionals, and providing investor relation services. GREWAL has resigned from all positions within the corporation and PACIFIC has terminated its relationship providing consulting services for DHANOA. Further, BALWANT has previously served DHANOA as a Director, its President and Chief Executive Officer. WHEREAS, GREWAL, while serving as the assistant treasurer of the company, committed the company to certain expenses that the previous Board of Directors did not authorize. Additionally, GREWAL, on behalf of DHANOA, made certain expenditures that lacked adequate supporting documents. Those total unauthorized and undocumented expenditures total $994,995. WHEREAS, DHANOA recognizes and agrees that GREWAL, while serving as the assistant treasurer, acted in the best interest of DHANOA and acknowledges that, although the expenses were undocumented and/or unauthorized, they were never-the-less made in the interests of DHANOA and in the furtherance in the business of DHANOA. Moreover, DHANOA recognizes that GREWAL never intended to cause harm to DHANOA nor did GREWAL violate any law. Moreover, the incoming president has reviewed all the company's books, records, cheques, contracts, and press releases and is satisfied with the accuracy of the content of the same to the date of this agreement. WHEREAS, GREWAL wishes to reimburse DHANOA for the amount of the unauthorized and/or undocumented expenses in the amount of $994,995 plus agreed upon interest of $5,005. ("consideration"). The consideration totaling $1,000,000 is being held in ESCROW in the CLIENT TRUST ACCOUNT of Stephen A. Zrenda, Jr. P.C. until this Agreement and Release is executed by all parties. WHEREAS, DHANOA, and its Officers and Directors, wish to release GREWAL, PACIFIC and BALWANT from any and all potential or actual claims, past, present or future, that it may have against GREWAL, PACIFIC and BALWANT. Page 2 of 4 WHEREAS, DHANOA wishes to fully INDEMNIFY and hold harmless GREWAL, PACIFIC and/or BALWANT should any past or present officer, past or present director, subsidiary (Promenasa, S.A.) affiliate (Overseas Mining, S.A) and/or subcontractor (Invictacorp, S.A.) of the corporation ever assert(s) any cause of action or claim relating to GREWAL's service to the corporation as the assistant treasurer and/or consultant to the corporation and/or BALWANT's service to the corporation as a director, President and Chief Executive Officer. NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties agree as follows: RELEASES: For good and valuable consideration, the receipt of which is hereby acknowledged, DHANOA the corporation, DHANOA's past, present and future executives, DHANOA's past, present and future board members, hereby releases, cancels, forgives and forever discharges GREWAL, PACIFIC and BALWANT from all actions, claims, demands, damages, obligations, liabilities, controversies and executions, of any kind or nature whatsoever, whether known or unknown, whether suspected or not, which have arisen, or may have arisen, or shall arise by reason of the incident described above does specifically waive any claim or right to assert any cause of action or alleged case of action or claim or demand which has, through oversight or error intentionally or unintentionally or through a mutual mistake, been omitted from this AGREEMENT and RELEASE. Moreover, Dhanoa and its respective affiliates agree to never participate, in any forum, as an opposing party against GREWAL, PACIFIC, and/or BALWANT for actions relating to or arising from their respective past professional relationship. GREWAL, PACIFIC and BALWANT also hereby releases, cancels, forgives and forever discharges DHANOA, its officers, directors, (past, present and future), its affiliates, subsidiaries, and/or subcontractors from all actions, claims, demands, damages, obligations, liabilities, controversies and executions, of any kind or nature whatsoever, whether known or unknown, whether suspected or not, which have arisen, or may have arisen, or shall arise by reason of the incident described above does specifically waive any claim or right to assert any cause of action or alleged case of action or claim or demand which has, through oversight or error intentionally or unintentionally or through a mutual mistake, been omitted from this AGREEMENT and RELEASE. INDEMNIFICATION: DHANOA agrees to INDEMNIFY and hold harmless GREWAL, PACIFIC and BALWANT should any past or present officer, director, subsidiary (Promenasa, S.A.) affiliate (Overseas Mining, S.A) and/or subcontractor (Invictacorp, S.A.) of the corporation ever assert(s) any cause of action or claim relating to GREWAL's service to the corporation as the assistant treasurer and/or consultant to the corporation and/or BALWANT's service to the corporation as a director, President and Chief Executive officer. Page 3 of 4 VOLUNARY CONSENT: The parties to this AGREEMENT acknowledge that this AGREEMENT is made by their respective voluntary choices without being induced to do so by any statement to that party (or his, her or its attorney) by anyone acting on behalf of another party, other than the representations and agreements contained in this written AGREEMENT. Each party represents and warrants that it is authorized to execute this document on its own behalf. EQUAL PARTICIAPTION IN CREATION OF AGREEMENT: All parties acknowledge and agree that they have had equal participation and opportunity to participate in the preparation, review, and approval of this AGREEMENT and that this AGREEMENT shall not be construed for or against any particular party under the rules of construction. ENTIRE AGREEMENT: This AGREEMENT embodies the entire agreement between the parties with respect to the matters contained herein and supercedes any previous notice, negotiations, or agreements between the parties with respect to such matters. MODIFICATION: This AGREEMENT may not be modified except by a subsequent agreement in writing signed by all parties. No amendment or modification of this AGREEMENT shall be effective unless executed in writing and signed by the parties hereto. INTERPRETATION AND DISPUTE RESOLUTION: This AGREEMENT shall be governed by, construed and applied in accordance to the laws of British Columbia, Canada. Should there be any dispute concerning the interpretation, breech or execution of this AGREEMENT, the parties agree to resolve that dispute by binding arbitration. The prevailing party will be entitled to collect their costs and expenses, including but not limited to attorneys fees, from the losing party. CONFIDENTIALTY: The parties agree to hold the terms of this AGREEMENT in CONFIDENCE and not to reveal the terms herein, including the amount of payment to anyone other than their attorneys, accountants, or other tax preparers as may be necessary to comply with the law. To the extent that a party is required to reveal any term of this AGREEMENT to any other person, such party is also required, prior to such revelation, to advise that person of the confidentiality of this AGREEMENT and requirement that such confidential information not be shared with any other person or entity. Page 4 of 4 SEVERABILITY AND ADMISSIONS: The provisions of this AGREEMENT must be read as a whole and are not severable and/or separately enforceable by either party hereto. Each party acknowledges and agrees that this AGREEMENT, or any consideration provided pursuant to this AGREEMENT, shall be taken or construed to be an admission or concession by DHANOA, GREWAL, PACIFIC or BALWANT of any kind with respect to any fact, liability or fault. ESCROWED FUNDS: Upon the execution of this document, GREWAL and PACIFIC authorize Stephen A. Zrenda, Jr., P.C. to release or disburse the escrowed funds as directed by DHANOA. IN WITNESS WHEREOF, the undersigned have executed this AGREEMENT and RELEASE in duplicate originals as of the date first set forth above. /s/ Vare Grewal June 11, 2007 ---------------------------------------- VARE GREWAL (an individual) DATE /s/ Vare Grewal June 11, 2007 ---------------------------------------- PACIFIC IMPERIAL CAPITAL DATE (by Vare Grewal, Principal) /s/ Balwant Grewal June 11, 2007 ---------------------------------------- BALWANT GREWAL DATE /s/ Lee A. Balak June 11, 2007 ---------------------------------------- LEE A. BALAK, President DATE Dhanoa Minerals Ltd. EX-31.1 9 dhanoa_10qsbex31-1.txt CERTIFICATION OF LEE A. BALAK EXHIBIT 31.1 CERTIFICATION I, Lee A. Balak certify that: 1. I have reviewed this Form 10-QSB quarterly report for the period ended June 30, 2007, of Dhanoa Minerals, Ltd. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such internal control over financial reporting to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) any deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 21, 2007 /s/ Lee A. Balak ------------------------------------- Lee A. Balak, Chief Executive Officer and President EX-31.2 10 dhanoa_10qsbex31-2.txt CERTIFICATION OF WILLIAM E. MCNERNEY EXHIBIT 31.2 CERTIFICATION I, William E. McNerney, certify that: 1. I have reviewed this Form 10-QSB quarterly report for the period ended June 30, 2007, of Dhanoa Minerals, Ltd. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such internal control over financial reporting to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) any deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 21, 2007 /s/ William E. McNerney ------------------------------ William E. McNerney, Treasurer EX-32 11 dhanoa_10qsbex32.txt SARBANES OXLEY CERTIFICATION EXHIBIT 32 CERTIFICATION PURSUANT TO 18 U.S.C., ss.1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report on Form 10-QSBof Dhanoa Minerals, Ltd. (the "Company") for the quarter ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Executive Officer and President and the Treasurer, and the principal financial officer of the Company, hereby certifies pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents in all material respects the financial condition and results of operations of Dhanoa Minerals, Ltd. Date: August 21, 2007 /s/ Lee A. Balak ------------------------------------- Lee A. Balak, Chief Executive Officer and President Date: August 21, 2007 /s/ William E. McNerney ------------------------------------- William E. McNerney, Treasurer -----END PRIVACY-ENHANCED MESSAGE-----