OPTION AGREEMENT - MANCHESTER SOUTH
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THIS AGREEMENT is dated for reference the 6th day of March, 2002.
BETWEEN:
KLONDIKE BAY RESOURCES INC.
an Ontario company with an address at
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(the "Optionor")
OF THE FIRST PART
AND:
PATRIARCH INC.
a Delaware corporation with its registered
address at
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("Patriarch")
OF THE SECOND PART
WHEREAS:
A. The Optionor is the owner of an undivided 100% right, title and
interest in and to mineral claims described in this Agreement;
B. Patriarch wishes to acquire the option to acquire a 90% interest
in the Optionor's property on the terms and subject to the
conditions contained in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the mutual covenants and agreements hereinafter contained,
the parties hereto agree as follows:
1. DEFINITIONS
1.1 In this Agreement, the following terms will have the meaning set
forth below:
(A) "Exploration and Development" means any and all activities
comprising or undertaken in connection with the exploration and
development of the Property, the construction of a mine and mining
facilities on or in proximity to the Property and placing the
Property into commercial production;
(B) "Property" means and includes:
(i) the mining claims in the Sudbury Mining District of Ontario
listed in Schedule A to this Agreement; and
(ii) all rights and appurtenances pertaining to the mining claims
listed in Schedule A, including all water and water rights,
rights of way, and easements, both recorded and unrecorded,
to which the Optionor is entitled;
(C) "Property Expenditures" means all reasonable and necessary monies
expended on or in connection with Exploration and Development as
determined in accordance with generally accepted accounting
principles including, without limiting the generality of the
foregoing:
(i) the cost of entering upon, surveying, prospecting and drilling
on the Property;
(ii) the cost of any geophysical, geochemical and geological
reports or surveys relating to the Property;
(iii) all filing and other fees and charges necessary or advisable
to keep the Property in good standing with any regulatory
authorities having jurisdiction;
(iv) all rentals, royalties, taxes (exclusive of all income taxes
and mining taxes based on income and which are or may be
assessed against any of the parties hereto) and any assessments
whatsoever, whether the same constitute charges on the Property
or arise as a result of the operation thereon;
(v) the cost, including rent and finance charges, of all buildings,
machinery, tools, appliances and equipment and related capital
items that may be erected, installed and used from time to time
in connection with Exploration and Development;
(vi) the cost of construction and maintenance of camps required for
Exploration and Development;
(vii) the cost of transporting persons, supplies, machinery and
equipment in connection with Exploration and Development;
(viii) all wages and salaries of persons engaged in Exploration and
Development and any assessments or levies made under the
authority of any regulatory body having jurisdiction with
respect to such persons or supplying food, lodging and other
reasonable needs for such persons;
(ix) all costs of consulting and other engineering services including
report preparation;
(x) the cost of compliance with all statutes, orders and regulations
respecting environmental reclamation, restoration and other like
work required as a result of conducting Exploration and
Development; and
(xi) all costs of searching for, digging, working, sampling,
transporting, mining and procuring diamonds, other minerals, ores,
and metals from and out of the Property;
2. OPTION
2.1 The Optionor hereby grants to Patriarch the exclusive right and
option to acquire an undivided 90% right, title and interest in and to
the Property (the "Option") for total consideration consisting of a 1%
Net Smelter Return attached as schedule "C" hereto, cash payments to the
Optionor totalling $7,500 US and the incurrence of Property Expenditures
totalling $195,000 US to be made as follows:
(A) upon execution of this Agreement, the payment to the Optionor
of the sum of $7,500 US;
(B) by December 31, 2002, the incurrence of Property Expenditures
in the amount of $25,000 US;
(C) by December 31, 2003, the incurrence of Property Expenditures
in the further amount of $175,000 US for total aggregate
Property Expenditures of $200,000 by December 31, 2003,
provided that any Property Expenditures incurred prior to
December 31, 2002 which are in excess of $25,000 will be
applied to the further required amount of $175,000.
2.2 Upon making the cash payments and Property Expenditures as specified
in Paragraph 2.1, Patriarch shall have acquired an undivided 90% right,
title and interest in and to the Property.
2.3 This Agreement is an option only and the doing of any act or the
making of any
payment by Patriarch shall not obligate Patriarch to do any further acts
or make any further payments.
3. TRANSFER OF TITLE
3.1 Upon execution of this Agreement, Patriarch shall be entitled to
record this Agreement against title to the Property.
3.2 Upon making the cash payments and Property Expenditures as specified
in Paragraph 2.1, the Optionor shall deliver to Patriarch a duly executed
▇▇▇▇ of sale or quit claim deed and such other executed documents of
transfer as required, in the opinion of Patriarch's lawyers, for the
transfer of an undivided 90% interest in the Property to Patriarch.
4. JOINT VENTURE
4.1 Upon Patriarch acquiring an interest in the Property pursuant to
paragraph 2.1, the Optionor and Patriarch agree to join and participate in
a single purpose joint venture ( the "Joint Venture") for the purpose of
further exploring and developing and, if economically and politically
feasible, constructing and operating a mine on the Property. The Joint
Venture shall be governed by an agreement which shall be in the form of
joint venture agreement attached as Schedule B hereto.
5. RIGHT OF ENTRY
5.1 During the currency of this Agreement, Patriarch, its servants,
agents and workmen and any persons duly authorised by Patriarch, shall have
the right of access to and from and to enter upon and take possession of
and prospect, explore and develop the Property in such manner as Patriarch
in its sole discretion may deem advisable for the purpose of incurring
Property Expenditures as contemplated by Section 2, and shall have the
right to remove and ship therefrom ores, minerals, metals, or other
products recovered in any manner therefrom.
6. COVENANTS OF PATRIARCH
6.1 Patriarch covenants and agrees that:
(A) during the term of this Agreement, Patriarch shall keep the
Property clear of all liens, encumbrances and other charges
and shall keep the Optionor indemnified in respect thereof;
(B) Patriarch shall carry on all operations on the Property in a
good and workmanlike manner and in compliance with all
applicable governmental regulations and restrictions including
but not limited to the posting of any reclamation bonds as may
be required by any governmental regulations or regulatory
authorities;
(C) during the term of the option herein, Patriarch shall pay or
cause to be paid any rates, taxes, duties, royalties, workers'
compensation or other assessments or fees levied with respect
to its operations thereon and in particular Patriarch shall pay
the yearly claim maintenance payments necessary to maintain the
claims in good standing;
(D) Patriarch shall maintain books of account in respect of its
expenditures and operations on the Property and, upon reasonable
notice, shall make such books available for inspection by
representatives of the Optionor;
(E) Patriarch shall allow any duly authorised agent or representative
of the Optionor to inspect the Property at reasonable times and
intervals and upon reasonable notice given to Patriarch, provided
however, that it is agreed and understood that any such agent or
representative shall be at his own risk in respect of, and
Patriarch shall not be liable for, any injury incurred while on
the Property, howsoever caused;
(F) Patriarch shall allow the Optionor access at reasonable times to
all maps, reports, sample results and other technical data
prepared or obtained by Patriarch in connection with its
operations on the Property;
(G) Patriarch shall indemnify and save the Optionor harmless of and
from any and all costs, claims, loss and damages whatsoever
incidental to or arising out of any work or operations carried
out by or on behalf of Patriarch on the Property, including any
liability of an environmental nature.
7. REPRESENTATIONS AND WARRANTIES
7.1 The Optionor hereby represents and warrants that:
(A) the Property is in good standing with all regulatory authorities
having jurisdictions and all required claim maintenance payments
have been made;
(B) it has not done anything whereby the mineral claims comprising
the Property may be in any way encumbered;
(C) it has full corporate power and authority to enter into this
Agreement and the entering into of this Agreement does not
conflict with any applicable laws or with its charter documents
or any contract or other commitment to which it is party; and
(D) the execution of this Agreement and the performance of its terms
have been duly authorised by all necessary corporate actions
including the resolution of its Board of Directors.
7.2 Patriarch hereby represents and warrants that:
(A) it has full corporate power and authority to enter into this
Agreement and the entering into of this Agreement does not
conflict with any applicable laws or with its charter documents
or any contract or other commitment to which it is party; and
(B) the execution of this Agreement and the performance of its terms
have been duly authorised by all necessary corporate actions
including the resolution of its Board of Directors.
8. ASSIGNMENT
8.1 With the consent of the other party, which consent shall not be
unreasonably withheld, Patriarch and the Optionor has the right to
assign all or any part of its interest in this Agreement and or in the
Property, subject to the terms and conditions of this Agreement. It
shall be a condition precedent to any such assignment that the assignee
of the interest being transferred agrees to be bound by the terms of this
Agreement, insofar as they are applicable.
9. CONFIDENTIALITY OF INFORMATION
9.1 Each of Patriarch and the Optionor shall treat all data, reports,
records and other information of any nature whatsoever relating to this
Agreement and the Property as confidential, except where such information
must be disclosed for public disclosure requirements of a public company.
10. TERMINATION
10.1 Until such time as Patriarch has acquired an undivided 90% interest
in the Property pursuant to Section 2, this Agreement shall terminate upon
any of the following events:
(A) upon the failure of Patriarch to make a payment or incur Property
Expenditures required by and within the time limits prescribed by
Paragraph 2.1;
(B) in the event that Patriarch, not being at the time in default
under any provision of this Agreement, gives 30 day's written
notice to the Optionor of the termination of this Agreement;
(C) in the event that Patriarch shall fail to comply with any of its
obligations hereunder, other than the obligations contained in
Paragraph 2.1, and subject to Paragraph 11.1, and within 30 days
of receipt by Patriarch of written notice from the Optionor of
such default, Patriarch has not:
(i) cured such default, or commenced proceedings to cure such
default and prosecuted same to completion without undue delay;
or
(ii) given the Optionor notice that it denies that such default
has occurred.
(D) delivery of notice of termination by Patriarch pursuant to
Paragraph 2.1 in the event the Geological Report is not acceptable;
In the event that Patriarch gives notice that it denies that a default
has occurred, Patriarch shall not be deemed in default until the matter
shall have been determined finally through such means of dispute
resolution as such matter has been subjected to by either party.
10.2 Upon termination of this Agreement under Paragraph 10.1, Patriarch
shall:
(A) transfer any interest in title to the Property, in good standing
to the Optionor free and clear of all liens, charges, and
encumbrances;
(B) turn over to the Optionor copies of all maps, reports, sample
results, contracts and other data and documentation in the
possession of Patriarch or, to the extent within Patriarch's
control, in the possession of its agents, employees or
independent contractors, in connection with its operations on
the Property; and
(C) ensure that the Property is in a safe condition and complies
with all environmental and safety standards imposed by any duly
authorised
regulatory authority.
10.3 Upon the termination of this Agreement under Paragraph 10.1,
Patriarch shall cease to be liable to the Optionor in debt, damages or
otherwise save for the performance of those of its obligations which
theretofore should have been performed, including those obligations in
Paragraph 10.2.
10.4 Upon termination of this Agreement, Patriarch shall vacate the
Property within a reasonable time after such termination, but shall
have the right of access to the Property for a period of six months
thereafter for the purpose of removing its chattels, machinery, equipment
and fixtures.
11. FORCE MAJEURE
11.1 The time for performance of any act or making any payment or any
expenditure required under this Agreement shall be extended by the period
of any delay or inability to perform due to fire, strikes, labour
disturbances, riots, civil commotion, wars, acts of God, any present or
future law or governmental regulation, any shortages of labour, equipment
or materials, or any other cause not reasonably within the control of the
party in default, other than lack of finances.
12. REGULATORY APPROVAL
12.1 If this Agreement is subject to the prior approval of any
securities regulatory bodies, then the parties shall use their best
efforts to obtain such regulatory approvals.
13. NOTICES
13.1 Any notice, election, consent or other writing required or
permitted to be given hereunder shall be deemed to be sufficiently
given if delivered or mailed postage prepaid or if given by telegram,
telex or telecopier, addressed as follows:
In the case of the Optionor: KLONDIKE BAY RESOURCES
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Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of Patriarch : PATRIARCH INC.
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Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and any such notice given as aforesaid shall be deemed to have been
given to the parties hereto if delivered, when delivered, or if mailed,
on the third business day following the date of mailing, or, if
telegraphed, telexed or telecopied, on the same day as the telegraphing,
telexing or telecopying thereof PROVIDED HOWEVER that during the period
of any postal interruption in Canada any notice given hereunder by mail
shall be deemed to have been given only as of the date of actual
delivery of the same. Any party may from time to time by notice in
writing change its address for the purposes of this Paragraph 13.1.
14. GENERAL TERMS AND CONDITIONS
14.1 The parties hereto hereby covenant and agree that they will execute
such further agreements, conveyances and assurances as may be requisite,
or which counsel for the parties may deem necessary to effectually carry
out the intent of this Agreement.
14.2 This Agreement shall constitute the entire agreement between the
parties with respect to the Property. No representations or inducements
have been made save as herein set forth. No changes, alterations or
modifications of this Agreement shall be binding upon either party until
and unless a memorandum in writing to such effect shall have been signed
by all parties hereto. This Agreement shall supersede all previous
written, oral or implied understandings between the parties with respect
to the matters covered hereby.
14.3 Time shall be of the essence of this Agreement.
14.4 The titles to the sections in this Agreement shall not be deemed to
form part of this Agreement but shall be regarded as having been used for
convenience of reference only.
14.5 Unless otherwise noted, all currency references contained in this
Agreement shall be deemed to be references to United States funds.
14.6 Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision shall be prohibited by or be invalid under
applicable law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
14.7 The Schedules to this Agreement shall be construed with and as an
integral part of this Agreement to the same extent as if they were set
forth verbatim herein.
14.8 Defined terms contained in this Agreement shall have the same
meanings where used in the Schedules.
14.9 This Agreement shall be governed by and interpreted in accordance
with the laws of British Columbia and the laws of Canada applicable therein.
14.10 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors and assigns.
WITNESS WHEREOF this Agreement has been executed by the parties hereto as
of the day and year first above written.
KLONDIKE BAY RESOURCES INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
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Signature of Authorised Signatory
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Name of Authorised Signatory
President
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Position of Authorised Signatory
PATRIARCH INC.
by its authorised signatory:
/s/ Strato Malamas
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Signature of Authorised Signatory
Strato Malamas
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Name of Authorised Signatory
President
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Position of Authorised Signatory
SCHEDULE "A"
PROPERTY DESCRIPTION
Latitude 46( 33' North, Longitude 80( 44' ▇▇▇▇
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List of Claims
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CLAIM NUMBERS TOWNSHIP/AREA CURRENT EXPIRY DATE
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S 1246249 - 1246253 DRYDEN & FALCONBRIDGE NOVEMBER 8, 2002
( G-4048 )
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SCHEDULE "B"
EXPLORATION JOINT VENTURE AGREEMENT
THIS AGREEMENT made as of the _day of _, 200_
BETWEEN:
KLONDIKE BAY RESOURCES INC.
an Ontario company with an address at
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(the "Optionor")
OF THE FIRST PART
AND:
PATRIARCH, INC.
a Delaware corporation with its registered
address at
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("Patriarch")
OF SECOND PART
WHEREAS:
A. Patriarch owns a 90% and the KLONDIKE BAY RESOURCES owns a 10%
undivided right, title and interest in and to the Property;
B. The parties wish to create a joint venture to carry out the
continued exploration of the Property on the terms and subject to the
conditions hereinafter set forth;
C. The parties have agreed that, if following the completion of
such exploration a Feasibility Report is prepared which recommends
placing the Property into commercial production, they will negotiate
and settle a further joint venture agreement for the development and
placing of the Property into commercial production;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises, and of the mutual covenants and agreements herein contained,
the parties hereto have agreed and do hereby agree as follows:
1. DEFINITIONS
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1.1 In this Agreement, including the Recitals and Schedules hereto
the following words and expressions shall have the following meanings:
(a) "Affiliate" shall have the same meaning as under the Company Act
(British Columbia) as at the date hereof;
(b) "Agreement" means this Joint Venture Agreement as amended from
time to time;
(c) "Costs" means all items of outlay and expense whatsoever, both
direct and indirect incurred by or on behalf of the parties,
in connection with the Property, the exploration and development
thereof and expenses in respect of the Feasibility Report;
(d) "Feasibility Report" means a detailed written report of the
results of a comprehensive study on the economic feasibility of
placing the Property or a portion thereof into commercial
production and shall include a reasonable assessment of the
mineral ore reserves and their amenability to metallurgical
treatment, a description of the work, equipment and supplies
required to bring the Property or a portion thereof into
commercial production and the estimated cost thereof, a
description of the mining methods to be employed and a financial
appraisal of the proposed operations supported by an explanation
of the data used therein;
(e) "Interest" means the undivided beneficial percentage interest
from time to time of a party in the Joint Venture, the Property,
and Mineral Products, as set out hereunder;
(f) "Joint Venture" means the joint venture created pursuant to this
Agreement;
(g) "Management Committee" means the committee of representatives of
the parties to this Agreement constituted in accordance with the
provisions of article 5 to manage or supervise the management of
the business and affairs of the Joint Venture;
(h) "Mineral Products" means the end products derived from operating
the Property as a mine;
(i) "Net Profits" shall mean net profits calculated in accordance
with Schedule "B" hereto;
(j) "Operator" means the operator appointed pursuant to article 6;
(k) "Other Tenements" means all surface rights of and to any lands
within or outside the Property including surface held in fee or
under lease, licence, easement, right of way or other rights of
any kind (and all renewals, extensions and amendments thereof or
substitutions therefor) acquired by or on behalf of the parties
with respect to the Property;
(l) "Program" means a plan, including budgets, for the Project or
any part thereof as approved by the Management Committee pursuant
to this Agreement;
(m) "Project" means the exploration and development of the Property
and preparation and delivery of a Feasibility Report;
(n) "Property" means those certain mining claims and related rights
and interests set out and more particularly described in Schedule
"A" hereto and Other Tenements and shall include any renewal
thereof and any form of substitute or successor title thereto; and
(o) "Royalty" shall mean a royalty on the Net Profits calculated and
paid in accordance with Schedule "B" hereto.
2. REPRESENTATIONS AND WARRANTIES
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2.1 Patriarch represents to KLONDIKE BAY RESOURCES that:
(a) it is the legal and beneficial owner of a 90% Interest free and
clear of all liens, charges and encumbrances; and
(b) save and except as set out herein, there is no adverse claim or
challenge against or to the ownership of or title to Patriarch's
Interest or any portion thereof, nor is there any basis therefor,
and there are no outstanding agreements or options to acquire or
purchase Patriarch's Interest or any portion thereof.
2.2 KLONDIKE BAY RESOURCES represents to Patriarch that:
(a) it is the legal and beneficial owner of a 10% Interest free and
clear of all liens, charges and encumbrances; and
(b) save and except as set out herein, there is no adverse claim or
challenge against or to the ownership of or title to KLONDIKE BAY
RESOURCES's Interest or any portion thereof, nor is there any
basis therefor, and there are no outstanding agreements or
options to acquire or purchase KLONDIKE BAY RESOURCES's Interest
or any portion thereof.
2.3 Each of the parties represents to the other that:
(a) it is a company duly incorporated, organized and validly
subsisting under the laws of its incorporating jurisdiction;
(b) it has full power and authority to carry on its business and
enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement and to carry out
and perform all of its obligations hereunder;
(c) it has duly obtained all corporate authorizations for the
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated, and the
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with or result in any breach of any covenants or
agreements contained in, or constitute a default under, or
result in the creation of any encumbrance, lien or charge under
the provisions of its constating documents or any indenture,
agreement or other instrument whatsoever to which it is a party
or by which it is bound or to which it may be subject and will
not contravene any applicable laws.
2.4 The representations and warranties hereinbefore set out are
conditions on which the parties have relied in entering into this
Agreement, are to be construed as both conditions and warranties and
shall, regardless of any investigation which may have been made by or on
behalf of any party as to the accuracy of such representations and
warranties, survive the closing of the transactions contemplated hereby
and each of the parties will indemnify and save the other harmless from
all loss, damage, costs, actions and suits arising out of or in connection
with any breach of any representation or warranty contained in this
Agreement and each party shall be entitled, in addition to any other
remedy to which it may be entitled, to set off any such loss, damage or
costs suffered by it as a result of any such breach against any payment
required to be made by it to the other party hereunder.
3. PURPOSE AND CREATION OF THE JOINT VENTURE
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3.1 The parties agree each with the other to use their best efforts
to explore and develop the Property with the goal of eventually putting
the Property into commercial production should a Feasibility Report
recommending commercial production be obtained and a decision to commence
commercial production be made, which Feasibility Report and decision have
not, at the date of this Agreement, been obtained or made and for this
purpose hereby agree to associate and participate in a single purpose
joint venture to carry out all such acts which are necessary or
appropriate, directly or indirectly, to carry out the Project.
3.2 The parties have not created a partnership and nothing contained
in this Agreement shall in any manner whatsoever constitute a party the
partner, agent or legal representative of any other party or create any
fiduciary relationship between them for any purpose whatsoever. No
party shall have any authority to act for or to assume any obligations
or responsibility on behalf of any other party except as may be, from
time to time, agreed upon in writing between the parties or as otherwise
expressly provided.
3.3 The rights and obligations of each party shall be in every case
several and not joint or joint and several.
3.4 Beneficial ownership of the Property shall remain in each party
in proportion to its respective Interest and any legal title to the
Property held by any party shall be subject to this Agreement. All
property held, acquired or contributed by or on behalf of the parties
under or pursuant to this Agreement shall be beneficially owned by the
parties as tenants in common in proportion to their respective Interests.
3.5 Each party shall make available its Interest exclusively for the
purposes of the Project and, in particular, each party agrees to grant a
mortgage, charge, lien or other encumbrance on, or any security interest
in, its Interest to and in favour of any lender to facilitate financing
of the Project or any portion thereof.
3.6 The rights and obligations of the parties created under this
Agreement shall be strictly limited to the Project and shall not be
extended by implication or otherwise, except with the unanimous written
consent of the parties.
3.7 Except as may be otherwise expressly provided in this Agreement,
nothing herein shall restrict in any way the freedom of any party, except
with respect to its Interest, to conduct as it sees fit any business or
activity whatsoever, including the development or application of any
process, and the exploration for, development, mining, extraction,
production, handling, processing or any treatment, transportation or
marketing of any ore, mineral or other product for any other purpose,
without any accountability to any other party.
3.8 Each party shall do all things and execute all documents necessary
in order to maintain the Property and the Project in good standing provided
that all Costs need only be met by each party in proportion to its Interest.
3.9 Except as may be otherwise expressly specified in this Agreement,
each party, in proportion to its Interest, shall indemnify and hold harmless
each other party and each director, officer, employee, agent and
representative of each other party, from and against any claim of or
liability to any third person asserted on the ground that action taken
under this Agreement has resulted in or will result in any loss or damage
to such third person to the extent, but only to the extent,that such claim
or liability is paid by such other party in the amount in excess of that
amount payable by reason of such other party's Interest, but the
foregoing shall not prejudice any claim of any party against the Operator.
3.10 Each party covenants and agrees with the other:
(a) to perform or cause to be performed its obligations and
commitments under this Agreement and, without limiting the
generality of the foregoing, to pay Costs in proportion to its
Interest except as may be otherwise provided in article 4 hereof;
(b) not to engage either alone or in association with others in any
activity in respect of the Property or the Project except as
provided or authorized by this Agreement.
4. DILUTION
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4.1 Upon formation of the Joint Venture, Patriarch shall be deemed to
have incurred Costs of $207,500 and KLONDIKE BAY RESOURCES to have
incurred Costs of $20,750.
4.2 The respective Interests of the parties shall be subject to
variation from time to time in the event:
(a) of failure by a party to pay its proportionate share of Costs;
(b) subject to section 8.6 hereof, of the election by a party not
to participate in a Program; or
(c) subject to section 8.6 hereof, of the election by a party to
pay less than its proportionate share of Costs in respect of a
Program adopted by the Management Committee.
4.3 Upon the happening of any of the events set forth in subsection
4.2 hereof, each party's Interest shall be varied to equal the product
obtained by multiplying 100% by a fraction of which the numerator shall
be the amount of Costs paid by such party and of which the denominator
shall be the total amount of Costs paid by all parties. For the purposes
of this section, the amount of Costs paid by a party shall include the
amount of Costs deemed to have been paid by that party as set forth in
section 4.1.
4.4 In the event that a party's Interest is reduced to 5% or less by
the operation of section 4.3 hereof, such party shall forfeit its Interest
to the other party and shall receive as consideration therefor a Royalty
equal to 2% of Net Profits payable within 60 days after the end of each
calendar quarter. If, as a result of such forfeiture, one party has an
Interest equal to 100% the Joint Venture shall terminate.
5. MANAGEMENT COMMITTEE
--------------------
5.1A Management Committee, consisting of one representative of each
party, and one or more alternate representatives, shall be constituted
and appointed forthwith after the formation of the Joint Venture. The
Management Committee shall manage, or supervise the management of, the
business and affairs of the Joint Venture and shall exercise all such
powers and do all such acts as the Joint Venture may exercise and do.
The Management Committee shall meet within 15 days of its constitution
and may otherwise meet at such places as it thinks fit for the dispatch
of business, adjourn and otherwise regulate its meetings and proceedings
as the members thereof deem fit. The Chairman of all meetings shall be
a representative of the Operator. Matters decided at any meeting of the
Management Committee shall be decided by a simple majority of votes with
each party's representatives being entitled to cast that number of votes
which is equal to that party's Interest, and, in the case of an equality
of votes, the dispute shall be referred to arbitration pursuant to
article 20. Unless agreed to in writing by the parties hereto, all
meetings of the Management Committee shall be held in Vancouver, British
Columbia. Any meetings may, if both parties so consent, be held by
conference telephone.
5.2 A quorum for any meeting of the Management Committee shall
consist of a representative or representatives of a party or parties
whose Interests aggregate equal to or in excess of 95%. No business
other than the election of a chairman, if any, and the adjournment or
termination of the meeting shall be dealt with if a quorum is not present
at the commencement of the meeting but the quorum need not be present
throughout the meeting. A meeting at which a quorum is not present
shall be adjourned to the same time and place one week later at which
adjourned meeting a quorum shall be one representative of a party.
5.3 A meeting of the Management Committee at which a quorum is
present shall be competent to exercise all or any of the authorities,
powers and discretion bestowed upon the Management Committee in this
Agreement.
5.4 No questions submitted to the Management Committee need be
seconded and the chairman, if any, of the meeting shall be entitled to
submit the questions.
5.5 The decision on any matter evidenced by the consent in writing
of the representatives of all parties shall be as valid as if it had
been decided at a duly called and held meeting of the Management
Committee. Each written consent may be signed in counterparts each
consented to in writing by one or more representatives which together
shall be deemed to constitute one consent.
5.6 At the time of any decision by the Management Committee to adopt
a Program, the parties shall, subject to the provisions of article 8
hereof, pay their proportionate share of the estimated Costs of such
Program by depositing the same into the interest bearing bank account
opened and maintained pursuant to section 5.7 hereof.
5.7 The Operator shall open and maintain an interest bearing bank
account with a Canadian Chartered bank in the name of the Joint Venture
and shall use the funds on deposit therein for the purposes of the
Joint Venture. The Operator shall appoint signing officers on the said
account as shall be required and shall advise the parties of the
particulars of the said account.
5.8 Each of the parties hereby agree that any interest earned on any
sums deposited in the bank account opened and maintained pursuant to
section 5.7 hereof shall be shared in proportion to their respective
Interests.
5.9 If the Operator fails to do so, any party (the "Paying Party")
may pay any reasonable Costs due to maintain the Property in good
standing and the other party shall, in proportion to its Interest
and within 15 days of being given notice of such payment, reimburse
the Paying Party for such payment, failing such reimbursement the party
not paying shall forfeit its Interest to the Paying Party and this
Agreement shall terminate.
5.10 At any time during the currency of this Agreement the Management
Committee may cause a Feasibility Report to be prepared by a substantial
and well recognized Canadian engineering firm in such form as the
Management Committee may require. The Management Committee shall,
forthwith upon receipt of a Feasibility Report, provide each of the
parties with a copy thereof. Upon request of any party and
at reasonable intervals and times the parties shall meet in order to
discuss the Feasibility Report.
6. OPERATOR
--------
6.1 The initial Operator shall be KLONDIKE BAY RESOURCES, which
shall continue as operator until changed pursuant to section 8.2 or
by a decision of the Management Committee with parties representing
Interests of 75% or more voting in favour. If the Operator has failed
to perform in a manner that is consistent with good mineral exploration
and development practice or is in default of its duties and
responsibilities under this Agreement, and the Management Committee or
the other party has given to the Operator written notice setting forth
particulars of the Operator's default and the Operator has not within
30 days of such notice commenced to remedy the default and thereafter
to proceed continuously and diligently to complete all required remedial
action the other party shall become the Operator.
6.2 The Operator may at any time on 60 days' notice to the Management
Committee resign as Operator, in which event the Management Committee
shall select another party or person to be Operator upon the 30th day
after receipt of the Operator's notice of resignation or such sooner
date as the Management Committee may establish and give notice of to
the resigning Operator. The resigning Operator shall thereupon be
released and discharged from all its duties and obligations as Operator
on the earlier of those dates save only as to those duties and
obligations that it theretofore should have performed.
6.3 Upon the Operator making a voluntary or involuntary assignment
into bankruptcy or taking advantage of any legislation for the winding-up
or liquidation of the affairs of insolvent or bankrupt companies the
Operator shall automatically cease to be the Operator and the other
party or its nominee appointed as Operator.
6.4 The new Operator shall assume all of the rights, duties,
obligations and status of the Operator as provided in this Agreement,
other than the previous Operator's Interest, if any, without obligation
to retain or hire any of the employees of the former Operator or to
indemnify the former Operator for any costs or expenses which the
previous Operator will incur as a result of the termination of employment
of any of its employees resulting from this change of Operator, and shall
continue to act as Operator until its replacement or resignation.
6.5 The Operator shall be paid by the Joint Venture, as compensation
for general overhead expenses which the Operator may incur, an amount
equal to 10% of all Costs in each year but only 5% of Costs paid by the
Operator under any contract involving payments by it in excess of
$100,000 in one year.
7. POWERS, DUTIES AND OBLIGATIONS OF OPERATOR
------------------------------------------
7.1 Subject to the control and direction of the Management Committee,
the Operator shall have full right, power and authority to do everything
necessary or desirable to carry out a Program and the Project and to
determine the manner of exploration and development of the Property and,
without limiting the generality of the foregoing, the right, power and
authority to:
(a) regulate access to the Property subject only to the right of
representatives of the parties to have access to the Property at
all reasonable times for the purpose of inspecting work being
done thereon but at their own risk and expense;
(b) employ and engage such employees, agents and independent
contractors as it may consider necessary or advisable to carry
out its duties and obligations hereunder and in this connection
to delegate any of its powers and rights to perform its duties
and obligations hereunder, but the Operator shall not enter
into contractual relationships with a party except on terms
which are commercially competitive;
(c) execute all documents, deeds and instruments, do or cause to be
done all such acts and things and give all such assurances as
may be necessary to maintain good and valid title to the Property
and each party hereby irrevocably constitutes the Operator its
true and lawful attorney to give effect to the foregoing and
hereby agrees to indemnify and save the Operator harmless from
any and all costs, loss or damage sustained or incurred without
gross negligence or bad faith by the Operator directly or
indirectly as a result of its exercise of its powers pursuant
to this subsection;
(d) conduct such title examination and cure such title defects as may
be advisable in the reasonable judgment of the Operator.
7.2 The Operator shall have the following duties and obligations
during the term hereof:
(a) to diligently manage, direct and control all exploration and
development operations in and under the Property in a prudent
and workmanlike manner and in compliance with all applicable
laws, rules, orders and regulations;
(b) to prepare and deliver to each of the parties during the periods
of active field work, quarterly progress reports of the work in
progress, on or before
the day which is 45 days following each
calendar quarter with respect to work done in such quarter and
on or before March 31st of every year comprehensive annual
reports covering the activities hereunder and the results
obtained during the 12 month period ending on December 31
immediately preceding;
(c) to prepare and deliver to each of the parties copies of all
assays, maps and drill logs immediately upon their preparation
or receipt;
(d) subject to the terms and conditions of this Agreement, to keep
the Property in good standing, free and clear of all liens,
charges and encumbrances of every character arising from
operations (except for those which are in effect on the date
of this Agreement or are created pursuant to this Agreement,
liens for taxes not yet due, other inchoate liens and liens
contested in good faith by the Operator) and to proceed with
all diligence to contest or discharge any lien that is filed
by reason of the Operator's failure to perform its obligations
hereunder;
(e) to maintain true and correct books, accounts and records of
operations hereunder separate and apart from any other books,
accounts and records maintained by the Operator;
(f) to permit one representative of the parties, appointed in
writing, at all reasonable times and at their expense to
inspect, audit and copy the Operator's accounts and records
relating to the Project for any fiscal year of the Operator
within nine months following the end of such fiscal year;
(g) to obtain and maintain and cause any contractor engaged
hereunder to obtain and maintain during any period in which
active work is carried out hereunder such insurance coverage
as the Management Committee deems advisable;
(h) to permit the parties or their representatives, appointed in
writing, at all reasonable times, at their own expense and
risk, reasonable access to the Property and all data derived
from carrying out a Program;
(i) to open and maintain on behalf of the Joint Venture such bank
account or bank accounts as the Management Committee may direct
with a Canadian chartered bank;
(j) to prosecute and defend, but not to initiate without the consent
of the Management Committee, all litigation or administrative
proceedings arising out of the Property, or Project;
(k) to transact, undertake and perform all transactions, contracts,
employments, purchases, operations, negotiations with third
parties and any other matter or thing undertaken by or on behalf
of the Joint Venture hereunder in the Operator's name and to
promptly pay all expenditures incurred in connection therewith
when due; and
(l) to maintain in good standing those mineral claims comprised in
the Property by the doing and filing of all assessment work or
the making of payments in lieu thereof and by the payment of all
taxes and other like charges and payments.
7.3 Subject to any specific provisions of this Agreement, the
Operator, in carrying out its duties and obligations hereunder, shall
at all times be subject to the direction and control of the Management
Committee and shall perform its duties hereunder in accordance with the
instructions and directions as from time to time communicated to it by
the Management Committee and shall make all reports to the Management
Committee except where otherwise specifically provided herein.
7.4 The Operator shall commence and diligently complete the Project
and without limiting the generality of the foregoing, may retain an
independent consulting geologist acceptable to all parties to prepare
a report in respect of the Project, the results thereof, the conclusions
derived therefrom and the recommendation as to whether or not further
work should be conducted on the Property.
8. PROGRAMS
--------
8.1 Costs shall only be incurred under and pursuant to Programs
prepared by the Operator, approved by the Management Committee and
delivered to the parties as provided in this article. Any Feasibility
Report shall be prepared pursuant to a separate Program.
8.2 The Operator shall prepare and submit to the parties a Program
within 180 days of the completion of the previous Program. If the
Operator does not prepare a Program within the time limited, then the
other party shall have the right to prepare a Program for submission to
the other party at which time the party submitting the Program shall
become the Operator.
8.3 Within 30 days of the receipt by the parties of a Program, each
party shall give written notice to the Operator stating whether or not
they elect to contribute their proportionate share of Costs of such
Program or requesting the Operator to revise the Program provided that
each party may only make such requests once in respect of each Program.
Subject to subsection 8.6, failure by either of the parties to give
notice
pursuant to this subsection within such 30 day period shall be
deemed an election by that party not to contribute to such Program.
8.4 If a party elects or is deemed to have elected not to contribute
its proportionate share of the Costs of a Program, the other party may
give notice in writing to the Operator stating that it will contribute
all expenditures under or pursuant to such Program and the Operator
will proceed with such Program and thereafter the Interests of the
parties shall be adjusted in accordance with article 4. The Operator
will not proceed with any Program which is not fully subscribed.
8.5 If the parties elect to contribute their proportionate share
of the Costs of a Program, the Operator will then proceed with the Program.
8.6 If either party elects or is deemed to have elected not to
contribute to a Program its Interest will not be subject to adjustment
thereunder if, within 60 days of such election or deemed election, it
elects to pay to the contributing party 150% of what would otherwise
have been its contribution to the Costs of such Program, but any amount
so paid in excess of what would otherwise have been its contribution
to such Program shall be deemed not to be a contribution to Costs by
the party making it.
8.7 An election by a party to contribute to the Costs of a Program
shall make that party liable to pay its proportionate share of the Costs
actually incurred under or pursuant to the Program including Program
Overruns, as hereinafter defined, of up to but not exceeding 10%.
8.8 After having elected to contribute its proportionate share of
the Costs of a Program which is proceeded with, a party shall, within
15 days after being requested in writing to do so by the Operator, pay
such portion of its share of Costs as the Operator may require but the
Operator shall not require payment of any funds in advance if the party
provides the Operator with reasonable assurance and evidence that it
has secured financing by way of the issuance of "flow-through" shares
sufficient to pay its proportionate share of the Costs of a Program and
such financing requires that party to incur the Costs before funds are
advanced to the party. At any other time the Operator shall not require
payment of funds more than one month in advance.
8.9 If it appears that Costs will exceed by greater than 10% those
estimated under a Program the Operator shall immediately give written
notice to the party or parties contributing to that Program outlining
the nature and extent of the additional costs and expenses ("Program
Overruns"). If Program Overruns are approved by the party or parties
contributing to that Program, then within 15 days after the receipt of
a written request from the Operator, the party or parties contributing
to that Program shall provide the Operator with their respective shares
of such Program Overruns. If Program Overruns are not approved by the
party or parties contributing to that
Program, the Operator shall have the right to curtail or abandon the
portion of such Program relating to the Program Overruns.
8.10 If either party at any time fails to pay its proportionate share
of Costs in accordance with subsections 8.8 or 8.9, the Operator may
give written notice to that party demanding payment, and if the party
has not paid such amount within 15 days of the receipt of such notice,
that party shall:
(a) be deemed to be in default under subsection 8.8 or 8.9 as
applicable; and
(b) forfeit its Interest to the other party and shall receive as
consideration therefore a Royalty equal to 2% of Net Profits
payable within 60 days after the end of each calendar quarter.
If, as a result of such forfeiture, one party has an Interest
equal to 100% the Joint Venture shall terminate.
9. INFORMATION AND DATA
--------------------
9.1 At all times during the subsistence of this Agreement the duly
authorized representatives of each party shall have access to the
Property and the Project at its and their sole risk and expense and at
reasonable intervals and times, and shall further have access at all
reasonable times to all technical records and other factual engineering
data and information relating to the Property and the Project in the
possession of the Management Committee or the Operator. In exercising
the right of access to the Property or the Project the representatives
of a party shall abide by the rules and regulations laid down by the
Management Committee and by the Operator relating to matters of safety
and efficiency. If any representative of a party is not a director,
senior officer or employee of a party, the party shall so advise the
Operator so that the Operator may require the representative, before
giving him access to the Property or the Project or to data or
information relating thereto, to sign an undertaking in favour of the
Joint Venture, in form and substance satisfactory to the Operator, to
maintain confidentiality to the same extent as each party is required
to do under section 9.2 hereof.
9.2 All records, reports, accounts and other documents referred to
herein with respect to the Property and the Project and all information
and data concerning or derived from the Property and the Project shall
be kept confidential and each party shall take or cause to be taken such
reasonable precautions as may be necessary to prevent the disclosure
thereof to any person other than each party, the Operator, an Affiliate,
their respective legal, accounting and financial or other professional
advisors, and any financial institution or other person having made,
making or negotiating loans to one or more of the foregoing or any
trustee for any such person, or as may be required by securities or
corporate laws and regulations or by the policies of any securities
commission or stock exchange, or in connection with the filing of an
offering memorandum, rights offering circular, prospectus or statement
of material facts by a party, an Affiliate or the Operator or to a
prospective assignee as permitted hereunder, or as may be required
in the performance of obligations under this Agreement without prior
consent of all parties, which consent shall not be unreasonably withheld.
10. PARTITION
---------
10.1 No party shall, during the term of this Agreement, exercise any
right to apply for any partition of the Property or for sale thereof in
lieu of partition.
11. TAXATION
--------
11.1 Each party on whose behalf any Costs have been incurred shall
be entitled to claim all tax benefits, write-offs and deductions with
respect thereto.
12. RIGHT OF FIRST REFUSAL
----------------------
12.1 Save and except as provided in section 3.5 and article 4 hereof,
neither party shall transfer, convey, assign, mortgage or grant an option
in respect of or grant a right to purchase or in any manner transfer or
alienate all or any portion of its Interest or rights under this
Agreement otherwise than in accordance with this article.
12.2 Nothing in this article shall prevent:
(a) a sale by a party of all of its Interest or an assignment of all
its rights under this Agreement to an Affiliate provided that
such Affiliate first complies with the provisions of section
12.10 and agrees with the other party in writing to retransfer
such Interest to the originally assigning party before ceasing
to be an Affiliate of such party;
(b) a variation pursuant to section 4.3; or
(c) a disposition pursuant to an amalgamation or corporate
reorganization which will have the effect in law of the
amalgamated or surviving company possessing all the property,
rights and interests and being subject to all the debts,
liabilities and obligations of each amalgamating or predecessor
company.
12.3 Should a party (the "transferring party") intend to dispose of
all or any portion of its Interest or rights under this Agreement it
shall first give notice in writing to the other parties (the "other
parties") of such intention together with the terms and conditions on
which the transferring party intends to dispose of its Interest or a
portion thereof or rights under this Agreement.
12.4 If a party (the "transferring party") receives any offer to
dispose of all or any portion of its Interest or rights under this
Agreement which it intends to accept, the transferring party shall
not accept the same unless and until it has first offered to sell
such Interest or rights to the other parties (the "other parties")
on the same terms and conditions as in the offer received and the
same has not been accepted by the other parties in accordance with
section 12.6.
12.5 Any communication of an intention to sell pursuant to section
12.3 and 12.4 (the "Offer") shall be in writing delivered in accordance
with article 14 and shall:
(a) set out in reasonable detail all of the terms and conditions
of any intended sale;
(b) if it is made pursuant to section 12.3, include a photocopy
of the Offer; and
(c) if it is made pursuant to section 12.4, clearly identify the
offering party and include such information as is known by
the transferring party about such offering party;
and such communication will be deemed to constitute an Offer by the
transferring party to the other parties to sell the transferring party's
Interest or its rights (or a portion thereof as the case may be) under
this Agreement to the other parties on the terms and conditions set out
in such Offer. For greater certainty it is agreed and understood that
any Offer hereunder shall deal only with the disposition of the Interest
or rights of the transferring party hereunder and not with any other
interest, right or property of the transferring party and such
disposition shall be made solely for a monetary consideration.
12.6 Any Offer made as contemplated in section 12.5 shall be open
for acceptance by the other parties for a period of 60 days from the
date of receipt of the Offer by the other parties.
12.7 If the other parties accept the Offer within the period provided
for in section 12.6, such acceptance shall constitute a binding agreement
of purchase and sale between the transferring party and the other parties,
in proportion to their Interests, for the Interest or its rights (or a
portion thereof as the case may be) under this Agreement on the terms
and conditions set out in such Offer.
12.8 If the other parties do not accept the Offer within the period
provided for in section 12.6, the transferring party may complete a sale
and purchase of its Interest or a portion thereof on terms and conditions
no less favorable to the transferring party than those set out in the
Offer and, in the case of an Offer under section 12.4, only to the party
making the original offer to the transferring party and in any event such
sale and purchase shall be completed within nine months from the
expiration of the right of the other parties to accept such Offer or
the transferring party must again comply with the provisions of this
article.
12.9 If the other parties do accept the Offer within the period
provided for in section 12.6 but fail to close the transaction
contemplated thereby within 90 days following receipt of such Offer,
the transferring party may complete a sale and purchase of its Interest
or a portion thereof on any terms and conditions but in any event such
sale and purchase shall be completed within nine months from the
expiration of the right of the other parties to accept such Offer or
the transferring party must again comply with the provisions of this
article.
12.10 While any Offer is outstanding no other Offer may be made until
the first mentioned Offer is disposed of and any sale resulting therefrom
completed or abandoned in accordance with the provisions of this article.
12.11 Before the completion of any sale by the transferring party of
its Interest or rights or any portion thereof under this Agreement, the
purchasing party shall enter into an agreement with the parties agreeing
not to sell except on the same terms and conditions as set out in this
Agreement.
13. FORCE MAJEURE
-------------
13.12 No party will be liable for its failure to perform any of its
obligations under this Agreement due to a cause beyond its reasonable
control (except those caused by its own lack of funds) including, but
not limited to acts of God, fire, flood, explosion, strikes, lockouts
or other industrial disturbances, laws, rules and regulations or orders
of any duly constituted governmental authority or non-availability of
materials or transportation (each an "Intervening Event").
13.13 All time limits imposed by this Agreement will be extended by a
period equivalent to the period of delay resulting from an Intervening
Event.
13.14 A party relying on the provisions of section 13.1 will take all
reasonable steps to eliminate any Intervening Event and, if possible,
will perform its obligations under this Agreement as far as practical,
but nothing herein will require such party to settle or adjust any
labour dispute or to question or to test the validity of any law, rule,
regulation or order of any duly constituted governmental authority or
to complete its obligations under this Agreement if an Intervening Event
renders completion impossible.
14. NOTICE
------
14.15 Any notice, direction, cheque or other instrument required or
permitted to be given under this Agreement shall be in writing and may
be given by delivery or by sending by telecopier, in each case addressed
to the intended recipient at the address of the respective party set out
on the front page hereof.
14.16 Any notice, direction, cheque or other instrument aforesaid will,
if delivered, be deemed to have been given and received on the day it was
delivered, and, if sent by telecopier, be deemed to have been given or
received on the day it was so sent.
14.17 Any party may at any time give to the other notice in writing of
any change of address of the party giving such notice and from and after
the giving of such notice the address or addresses therein specified will
be deemed to be the address of such party for the purposes of giving notice
hereunder.
15. WAIVER
------
15.18 If any provision of this Agreement shall fail to be strictly
enforced or any party shall consent to any action by any other party
or shall waive any provision as set out herein, such action by such
party shall not be construed as a waiver thereof other than at the
specific time that such waiver or failure to enforce takes place and
shall at no time be construed as a consent, waiver or excuse for any
failure to perform and act in accordance with this Agreement at any
past or future occasion.
16. FURTHER ASSURANCES
------------------
16.19 Each of the parties hereto shall from time to time and at all
times do all such further acts and execute and deliver all further deeds
and documents as shall be reasonably required in order to fully
perform and carry out the terms of this Agreement. For greater certainty
this section shall not be construed as imposing any obligation on any
party to provide guarantees.
17. USE OF NAME
-----------
17.20 No party shall, except when required by this Agreement or by
any law, by-law, ordinance, rule, order or regulation, use, suffer or
permit to be used, directly or indirectly, the name of any other party
for any purpose related to the Property or the Project.
18. ENTIRE AGREEMENT
----------------
18.21 This Agreement embodies the entire agreement and understanding
among the parties hereto and supersedes all prior agreements and
undertakings, whether oral or written, relative to the subject matter
hereof.
19. AMENDMENT
---------
19.22 This Agreement may not be changed orally but only by an
agreement in writing, executed by the party or parties against which
enforcement, waiver, change, modification or discharge is sought.
20. ARBITRATION
-----------
20.23 If any question, difference or dispute shall arise between the
parties or any of them in respect of any matter arising under this
Agreement or in relation to the construction hereof the same shall be
determined by the award of three arbitrators to be named as follows:
(a) the party or parties sharing one side of this dispute shall name
an arbitrator and give notice thereof to the party or parties
sharing the other side of the dispute;
(b) the party or parties sharing the other side of the dispute shall,
within 14 days of receipt of the notice, name an arbitrator; and
(c) the two arbitrators so named shall, within 15 days of the naming
of the latter of them, select a third arbitrator.
The decision of the majority of these arbitrators shall be made
within 30 days after the selection of the latter of them. The expense of
the arbitration shall be borne by the parties to the dispute as determined
by the arbitrators. If the parties on either side of the dispute fail to
name their arbitrator within the time limited or proceed with the
arbitration, the arbitrator named may decide the question. The
arbitration shall be conducted in accordance with the provisions of the
Commercial Arbitration Act (British Columbia) and the decision of the
arbitrator or a majority of the arbitrators, as the case may be, shall
be conclusive and binding upon all the parties.
21. RIGHT TO AUDIT
--------------
21.24 Any party acquiring a Royalty pursuant to this Agreement shall
have the right to audit at its expense the books and records in respect
of such Royalty of the Operator or the other party, if it is not the
Operator in respect of such Royalty.
22. TIME
----
22.25 Unless earlier terminated by agreement of all parties or as a
result of one party acquiring a 100% Interest, the Joint Venture and
this Agreement shall remain in full force and effect for so long as
any part of the Property or Project is held in accordance with this
Agreement. Termination of the Agreement shall not, however, relieve
any party from any obligations theretofore accrued but unsatisfied.
23. RULE AGAINST PERPETUITIES
-------------------------
23.26 If any right, power or interest of any party in any Property
under this Agreement would violate the rule against perpetuities, then
such right, power or interest shall terminate at the expiration of 20
years after the death of the last survivor of all the lineal
descendants of her Majesty, Queen ▇▇▇▇▇▇▇▇▇ ▇▇ of the United Kingdom,
living on the date of this Agreement.
24. DOCUMENT RETENTION ON TERMINATION
---------------------------------
24.27 Prior to the distribution of the Property or the Project or the
net revenues received on the disposal thereof on termination of this
Agreement, the Management Committee shall meet and may approve a
procedure for the retention, maintenance and disposal of documents
maintained by the Management Committee (the "Documents") and shall
appoint such party as may consent thereto to ensure that all proper
steps are taken to implement and maintain that procedure. If a quorum
is not present at the meeting or if the Management Committee fails to
approve a procedure as aforesaid, the Operator, if a party, otherwise
the party holding the largest Interest as at the day immediately
preceding the date the Management Committee was called to meet, shall
retain, maintain and dispose of the Documents according to such procedure,
in compliance with all applicable laws, as it deems fit. The party
entrusted with the retention, and expenses incidental thereto, shall be
entitled to receive payment of those costs and expenses prior to any
distribution being made of the Property and Project or the net revenues
received on the disposal thereof.
25. ENUREMENT
---------
25.28 This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.
26. GOVERNING LAW
-------------
26.29 This Agreement shall be governed by and interpreted in accordance
with the laws of the Province of British Columbia.
27. SEVERABILITY
------------
27.30 If any one or more of the provisions contained herein should be
invalid, illegal or unenforceable in any respect in any jurisdiction,
the validity, legality and enforceability of such provision shall not
in any way be affected or impaired thereby in any other jurisdiction
and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
28. NUMBER AND GENDER
-----------------
28.31 Words used herein importing the singular number only shall
include the plural, and vice versa, and words importing the masculine
gender shall include the feminine and neuter genders, and vice versa,
and words importing persons shall include firms and corporations.
29. HEADINGS
--------
29.32 The division of this Agreement into articles and sections and
the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement.
30. TIME OF THE ESSENCE
-------------------
30.33 Time shall be of the essence in the performance of this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day, month and year first above written.
KLONDIKE BAY RESOURCES INC.
by its authorised signatory:
---------------------------------
Signature of Authorised Signatory
---------------------------------
Name of Authorised Signatory
---------------------------------
Position of Authorised Signatory
PATRIARCH, INC.
by its authorised signatory:
---------------------------------
Signature of Authorised Signatory
---------------------------------
Name of Authorised Signatory
---------------------------------
Position of Authorised Signatory
SCHEDULE "A"
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to that certain Joint Venture Agreement between Klondike Bay Resources
Inc. and Patriarch, Inc. made as of the _day of _ , 200_
THE PROPERTY
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Latitude 46( 33' North, Longitude 80( 44' ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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List of Claims
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CLAIM NUMBERS TOWNSHIP/AREA CLAIM NAME
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S 1246249 - 1246253 DRYDEN & MANCHESTER SOUTH
FALCONBRIDGE PROPERTY
( G-4048 )
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SCHEDULE "B"
------------
to that certain Joint Venture Agreement between Klondike Bay Resources
Inc. and Patriarch, Inc. made as of the _day of _, 200_
1. "Net Profits" means the aggregate of:
(a) all revenues from the sale or other disposition of ores, metals
or minerals mined or extracted from the Property or any portion
thereof and any concentrates produced therefrom;
(b) all revenues from the operation, sale or other disposition of any
Facilities the cost of which is included in the definition of
"Operating Expenses", "Capital Expenses" or "Exploration Expenses";
and
(c) Working Capital deducted in the calculation of Net Profits for the
prior period,
less (without duplication) Working Capital, Operating Expenses, Capital
Expenses and Exploration Expenses.
2. "Working Capital" means the amount reasonably necessary to provide
for the operation of the mining operation on the Property and for the
operation and maintenance of the Facilities for a period of six months.
3. "Operating Expenses" means all costs, expenses, obligations,
liabilities and charges of whatsoever nature or kind incurred or
chargeable directly or indirectly in connection with commercial production
from the Property and in connection with the maintenance and operation
of the Facilities, all in accordance with generally accepted accounting
principles, consistently applied, including, without limiting the
generality of the foregoing, all amounts payable in connection with
mining, handling, processing, refining, transporting and marketing of
ore, concentrates, metals, minerals and other products produced from
the Property, all amounts payable for the operation and maintenance of
the Facilities including the replacement of items which by their
nature require periodic replacement, all taxes (other than income taxes),
royalties and other imposts and all amounts payable or chargeable in
respect of reasonable overhead and administrative services.
4. "Capital Expenses" means all expenses, obligations and
liabilities of whatsoever kind (being of a capital nature in
accordance with generally accepted accounting principles) incurred
or chargeable, directly or indirectly, with respect to the development,
acquisition, redevelopment, modernization and expansion of the
Property and the Facilities, including, without limiting the generality
of the foregoing, interest thereon from the time so incurred or
chargeable at a rate per annum from time to time equal to the "prime rate"
of the Royal Bank of Canada plus 2% per annum, but does not include
Operating Expenses nor Exploration Expenses.
5. "Exploration Expenses" means all costs, expenses, obligations,
liabilities and charges of whatsoever nature or kind incurred or
chargeable, directly or indirectly, in connection with the exploration
and development of the Property all determined in accordance with
generally accepted accounting principles including, without limiting
the generality of the foregoing, all costs reasonably attributable, in
accordance with generally accepted accounting principles, to the design,
planning, testing, financing, administration, marketing, engineering,
legal, accounting, transportation and other incidental functions
associated with the exploration and mining operation contemplated by
this Agreement and with the Facilities, but does not include Operating
Expenses nor Capital Expenses.
6. "Facilities" means all plant, equipment, structures, roads,
rail lines, storage and transport facilities, housing and service
structures, real property or interest therein, whether on the Property
or not, acquired or constructed exclusively for the mining operation
on the Property contemplated by this Agreement.
7. Installments of the Royalty payable shall be paid by the Operator
as follows:
(a) within 45 days after the end of each of the first three calendar
quarters in each fiscal year and within 60 days of the end of the
last calendar quarter in each year, the Operator shall pay to the
royalty holder an amount equal to 25% of the estimated Royalty, if
any, for the fiscal year, adjusted if necessary after the first
quarter of any fiscal year to reflect any change during the fiscal
year in estimated Royalty; and
(b) within 120 days after the end of the calendar year, the balance,
if any, of Royalty payable in respect of the fiscal year last
completed.
Should the Operator not pay the royalty holder the installment of
the Royalty payable within the time specified then such unpaid installment
of Royalty
shall bear interest equal to the "prime rate" of the Royal Bank of Canada
plus 2% per annum calculated from the last day of the calendar quarter in
which the liability for the payment of the installment of Royalty arose.
8. The Operator shall, within 45 days after the end of each calendar
quarter, furnish to the royalty holder quarterly unaudited statements
respecting operations on the Property, together with a statement showing
the calculation of Royalty for the calendar quarter last completed.
9. Within 120 days after the end of each calendar year, the accounts of
the Operator relating to operations on the Property and the statement of
operations, which shall include the statement of calculation of Royalty for
the year last completed, shall be audited by the auditors of the Operator,
at its expense. The royalty holder shall have 45 days after receipt of such
statements to question the accuracy thereof in writing and, failing such
objection, the statements shall be deemed to be correct and unimpeachable
thereafter.
10. If the audited financial statements furnished pursuant to paragraph
9 disclose any overpayment of Royalty by the Operator during the year, the
amount of the overpayment shall be deducted from future installments of
Royalty payable hereunder.
11. If the audited financial statements furnished pursuant to
paragraph 9 disclose any underpayment of Royalty by the Operator during the
year, the amount thereof shall be paid to the royalty holder forthwith after
determination thereof.
12. The Operator agrees to maintain, for each mining operation on the
Property, up-to-date and complete records relating to the production and
sale of minerals, ore, bullion and other product from the Property,
including accounts, records, statements and returns relating to treatment
and smelting arrangements of such product, and the royalty holder or its
agents shall have the right at all reasonable times, including for a period
of 12 months following the expiration or termination of this Agreement,
to inspect such records, statements and returns and make copies thereof
at its own expense for the purpose of verifying the amount of Royalty
payments to be made by the Operator to the royalty holder pursuant hereto.
The royalty holder shall have the right, at its own expense, to have such
accounts audited by independent auditors once each year.
SCHEDULE "C"
NET SMELTER RETURNS
-------------------
For the purposes of this agreement, the term "Net Smelter Returns" shall
mean the net proceeds actually paid to Patriarch from the sale by Patriarch
of minerals mined and removed from the Property, after deduction of the
following:
(a) smelting costs, treatment charges and penalties including, but not
being limited to, metal losses, penalties for impurities and charges
for refining, selling and handling by the smelter, refinery or other
purchaser; provided, however, in the case of leaching operations or
other solution mining or beneficiation techniques, where the metal
being treated is precipitated or otherwise directly derived from such
▇▇▇▇▇ solution, all processing and recovery costs incurred by
Patriarch,beyond the point at which the metal being treated is in
solution, shall be considered as treatment charges;
(b) costs of handling, transporting and insuring ores, minerals and other
materials or concentrates from the Property or from a concentrator,
whether situated on or off the Property, to a smelter, refinery or
other place of treatment; and
(c) ad valorem taxes and taxes based upon production, but not income taxes.
In the event Patriarch commingles minerals from the Property with minerals
from other properties, Patriarch shall establish procedures, in accordance
with sound mining and metallurgical techniques, for determining the
proportional amount of the total recoverable metal content in the commingled
minerals attributable to the input from each of the properties by calculating
the same on a metallurgical basis, in accordance with sampling schedules and
mining efficiency experience, so that production royalties applicable to
minerals produced from the Property may reasonably be determined.
