EXHIBIT 10.10
Stillwater West PGM Venture Agreement, November 1, 2001 CONFIDENTIAL
STILLWATER WEST PGM VENTURE
AGREEMENT
Dated November 1, 2001
between
IDAHO CONSOLIDATED METALS CORPORATION
and
FIRST CHOICE INDUSTRIES
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TABLE OF CONTENTS
Article 1. DEFINITIONS.....................................................................................1
Article 2. REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS.................................................4
2.1. CAPACITY OF PARTICIPANTS..............................................................................4
2.2. REPRESENTATIONS AND WARRANTIES RELATING TO PROPERTY...................................................5
2.3. REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES OF TITLE TO THE PROPERTIES......................6
2.4. DISCLOSURES...........................................................................................7
2.5. RECORD TITLE..........................................................................................7
Article 3. NAME, PURPOSES AND TERM.........................................................................7
3.1. GENERAL...............................................................................................7
3.2. NAME..................................................................................................7
3.3. PURPOSES..............................................................................................8
3.4. LIMITATION ...........................................................................................8
3.5. EFFECTIVE DATE AND TERM...............................................................................8
Article 4. RELATIONSHIP OF THE PARTICIPANTS................................................................8
4.1. NO PARTNERSHIP........................................................................................8
4.2. U.S. AND STATE TAX ELECTIONS AND ALLOCATIONS .........................................................9
4.3. OTHER BUSINESS OPPORTUNITIES .........................................................................9
4.4. WAIVER OF RIGHT TO PARTITION ........................................................................10
4.5. TRANSFER OR TERMINATION OF RIGHTS TO PROPERTIES,.....................................................10
4.6. IMPLIED COVENANTS....................................................................................10
Article 5. CONTRIBUTIONS BY PARTICIPANTS..................................................................10
5.1. PARTICIPANTS' INITIAL CONTRIBUTIONS..................................................................10
5.2. OBLIGATIONS PRIOR TO EARN-IN ........................................................................10
5.3. PAYMENTS BY FSD TO IDO:..............................................................................11
5.4. TERMINATION OF FSD'S OBLIGATION TO MAKE INITIAL CONTRIBUTION.........................................12
5.5. ADDITIONAL CASH CONTRIBUTIONS........................................................................12
5.6. EARN-IN .............................................................................................12
5.7. REPORTS..............................................................................................13
Article 6. INTERESTS OF PARTICIPANTS: DEFAULTS AND REMEDIES...............................................13
6.1. PARTICIPATING INTERESTS .............................................................................13
6.2. ELECTIONS AT TIME OF EARN-IN.........................................................................13
6.3. DEEMED EXPENDITURES..................................................................................14
6.4. CHANGES IN PARTICIPATING INTERESTS...................................................................14
6.5. VOLUNTARY REDUCTION IN PARTICIPATION.................................................................14
6.6. DEFAULT IN MAKING CONTRIBUTIONS......................................................................15
6.7. CONVERSION OF INTEREST...............................................................................16
6.8. CONTINUING LIABILITIES UPON ADJUSTMENTS OF PARTICIPATING INTERESTS...................................16
Article 7. MANAGEMENT COMMITTEE...........................................................................16
7.1. ORGANIZATION AND COMPOSITION.........................................................................16
7.2. DECISIONS............................................................................................17
7.3. MEETINGS.............................................................................................17
7.4. ACTION WITHOUT MEETING...............................................................................17
7.5. MATTERS REQUIRING APPROVAL...........................................................................18
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Article 8. MANAGER........................................................................................18
8.1. APPOINTMENT..........................................................................................18
8.2. POWERS AND DUTIES OF MANAGER.........................................................................18
8.3. STANDARD OF CARE.....................................................................................21
8.4. RESIGNATION;.........................................................................................21
8.5. PAYMENTS TO MANAGER..................................................................................22
8.6. TRANSACTIONS WITH AFFILIATES.........................................................................22
8.7. ACTIVITIES DURING DEADLOCK...........................................................................23
Article 9. PROGRAMS AND BUDGETS...........................................................................23
9.1. INITIAL PROGRAM AND BUDGET...........................................................................23
9.2. OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS..........................................................23
9.3. PRESENTATION OF PROGRAMS AND BUDGETS.................................................................23
9.4. REVIEW AND APPROVAL OF PROPOSED PROGRAMS AND BUDGETS.................................................23
9.5. ELECTION TO PARTICIPATE..............................................................................24
9.6. DEADLOCK ON PROPOSED PROGRAMS AND BUDGETS............................................................24
9.7. BUDGET OVERRUNS; PROGRAM CHANGES.....................................................................24
9.8. EMERGENCY OR UNEXPECTED EXPENDITURES.................................................................24
Article 10. ACCOUNTS AND SETTLEMENTS.......................................................................25
10.1. MATTERS OF ACCOUNTS AND SETTLEMENTS..................................................................25
Article 11. DISPOSITION OF PRODUCTION......................................................................25
11.1. TAKING IN KIND.......................................................................................25
11.2. FAILURE OF PARTICIPANT TO TAKE IN KIND ..............................................................25
Article 12. WITHDRAWAL AND TERMINATION.....................................................................26
12.1. TERMINATION BY EXPIRATION OR AGREEMENT ..............................................................26
12.2. WITHDRAWAL...........................................................................................26
12.3. CONTINUING OBLIGATIONS...............................................................................26
12.4. DISPOSITION OF ASSETS ON TERMINATION ................................................................26
12.5. RIGHT TO DATA AFTER TERMINATION .....................................................................27
12.6. CONTINUING AUTHORITY.................................................................................27
12.7. NON-COMPETE COVENANTS................................................................................27
12.8. MUTUAL WITHDRAWAL....................................................................................28
12.9. RIGHTS TO DATA AFTER TERMINATION ....................................................................28
Article 13. SURRENDER OF PROPERTIES........................................................................28
13.1. SURRENDER OF PROPERTIES..............................................................................28
13.2. REACQUISITION........................................................................................28
Article 14. TRANSFER OF INTEREST...........................................................................29
14.1. GENERAL..............................................................................................29
14.2. LIMITATIONS ON FREE TRANSFERABILITY .................................................................29
14.3. RIGHT OF FIRST REFUSAL...............................................................................30
14.4. EXCEPTIONS TO RIGHT OF FIRST REFUSAL.................................................................30
Article 15. CONFIDENTIALITY AND RELEASES...................................................................31
15.1. GENERAL..............................................................................................31
15.2. EXCEPTIONS...........................................................................................31
15.3. DURATION OF CONFIDENTIALITY..........................................................................32
Article 16. AREA OF INTEREST...............................................................................32
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16.1. ACQUISITIONS IN AREA OF INTEREST.....................................................................32
Article 17. GENERAL PROVISIONS.............................................................................33
17.1. NOTICES..............................................................................................33
17.2. WAIVER...............................................................................................34
17.3. MODIFICATION.........................................................................................34
17.4. FORCE MAJEURE........................................................................................35
17.5. ECONOMIC FORCE MAJEURE...............................................................................35
17.6. GOVERNING LAW........................................................................................35
17.7. RULE AGAINST PERPETUITIES............................................................................36
17.8. FURTHER ASSURANCES...................................................................................36
17.9. SURVIVAL OF TERMS AND CONDITIONS.....................................................................36
17.10. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS.............................................................36
17.11. MEMORANDUM...........................................................................................36
17.12. FUNDS................................................................................................36
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LIST OF EXHIBITS
EXHIBIT A PROPERTIES
EXHIBIT B ACCOUNTING PROCEDURES
EXHIBIT C NET SMELTER RETURN ROYALTY
EXHIBIT D INSURANCE
EXHIBIT E AREA OF INTEREST
EXHIBIT F MINING DEED AND ASSIGNMENT
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AGREEMENT
THIS AGREEMENT, made effective as of November 1, 2001, is between IDAHO
CONSOLIDATED METALS CORPORATION ("IDO") with an address of X.X. Xxx 0000, Xxx
Xxxxx, Xxxxxxx 00000 and FIRST CHOICE INDUSTRIES, LTD ("FSD") with an address of
Suite 101 - 0000 Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0.
RECITALS
A. IDO and FSD entered into a Memorandum of Understanding dated June 27,
2001 agreeing to form a Joint Venture to explore and develop property
leased by or owned by IDO.
B. FSD wishes to participate with IDO in exploration, evaluation,
development and mining of minerals within the property and IDO is
willing to grant such right to FSD.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, IDO and FSD agree as follows:
Article 1. DEFINITIONS
"Accounting Procedure" means the procedures set forth in Exhibit B.
"Affiliate" means any person, partnership, joint venture, corporation or other
form of enterprise which directly or indirectly controls, is controlled by, or
is under common control with, a Participant. For purposes of the preceding
sentence, "control" means possession, directly or indirectly, of the power to
direct or cause direction of management and policies through ownership of voting
securities, contract, voting trust or otherwise.
"Agreement" means this Joint Venture Agreement, including all amendments and
modifications thereof, and all schedules and exhibits, which are incorporated
herein by this reference.
"Area of Interest" means the Stillwater Complex of Montana as shown in Exhibit
E.
"Assets" means the Properties, Products and all other real and personal
property, tangible and intangible, held for the benefit of the Participants
hereunder.
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"Budget" means a detailed estimate of all costs to be incurred by the
Participants with respect to a Program and a schedule of cash advances to be
made by the Participants.
"Commencement of Commercial Production" means the date upon which the production
and processing facilities developed under this Agreement achieve an ore
production and processing rate for a continuous thirty-day period equal to at
least seventy percent (70%) of the design rate established in a Feasibility
Study.
"Development" means all preparation for the removal and recovery of Products,
including the construction or installation of a mill or any other improvements
to be used for the mining, handling, milling, processing or other beneficiation
of Products, and all Exploration work conducted subsequent to a decision to
commence Development as contemplated by a Feasibility Study.
"Earn-In" means the date upon which FSD earns its interest in the Venture
pursuant to Section 5.6.
"Exploration" means all activities directed toward ascertaining the existence,
location, quantity, quality or commercial value of deposits of Products.
"Exploration Expenditures" means the cost of evaluation of the Properties,
defined as further exploring and developing the Properties, including drilling,
excavating and searching by recognized prospecting techniques, sampling,
assaying, testing and evaluating materials removed from the Properties, mapping,
plotting, surveying, constructing and maintaining camps, roads, works and
structures necessary to carry out such evaluation, sampling or testing, all
studies including but not limited to a Feasibility Study required to develop a
mine and all work that may be required in preparing a mine for operating, the
cost or payments to maintain the Properties, including costs to locate and/or
relocate the unpatented mining claims, Property acquisition costs, taxes and/or
fees to maintain Property and filings together with an allowance for overhead
and administrative expenses as described in Section 5.2.2. These expenditures
include both exploration costs as defined in Section 617 of the Internal Revenue
Service Code and development expenditures as defined in Section 616 of the
Internal Revenue Service Code.
"Feasibility Study" means a detailed study compiled by Manager or an independent
third party conducted to determine commercial feasibility and viability of
placing a prospective orebody or deposit into production and may include, but
not be limited to:
(i) such geophysical, geochemical, geological, aerial or other
survey as may be necessary to provide a reasonable estimate of
the quality and extent of the deposit;
(ii) such technical or assay reports as may be necessary to
evaluate any proposed method of extraction and processing;
(iii) the area required for optimum development of the orebody or
deposit;
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(iv) a mine construction program setting forth the descriptions of
the work, permits, equipment, facilities, supplies and mines
required to bring the prospective orebody or deposits of
Products into Commercial Production, and the estimated costs
thereof or a schedule of expenditures by year of the costs
necessary to bring the project into production;
(v) details of a proposed annual program for initial development
of the deposit;
(vi) a plan for such reclamation of the Properties as is required
by law and the estimated costs hereof;
(vii) conclusions and recommendations regarding the economic
feasibility and timing for bringing the prospective orebody or
deposits of Products into Commercial Production, taking into
account items (i) through (vi) above;
(viii) such other information as the Management Committee may deem
appropriate to allow banking or other financial institutions
familiar with the mining business to make a decision to loan
funds sufficient to construct the proposed mine with security
based solely on the reserves and mine described in a
Feasibility Study.
"Initial Contribution" means that contribution each Participant has made or
agrees to make pursuant to Section 5.1.
"Joint Account" means the account maintained in accordance with the Accounting
Procedure showing the charges and credits accruing to the Participants.
"Management Committee" means the committee established under Article 7.
"Manager" means IDO during the Earn-In phase or the person or entity appointed
under Article 8 to manage Operations, or any successor Manager.
"Mining" means the mining, extracting, producing, handling, milling or other
processing of Products.
"Operations" means the activities carried out under this Agreement after
Earn-In.
"Participant" and "Participants" means the persons or entities that have a
Participating Interest.
"Participating Interest" means the percentage interest representing the
operating ownership interest of a Participant in Assets, and all other rights
and obligations arising under this Agreement, as such interest may from time to
time be adjusted hereunder. Participating Interests shall be calculated to three
decimal places and rounded to two (e.g., 1.519% rounded to 1.52%). Decimals of
..005 or more shall be rounded up to .01, decimals of less than .005 shall be
rounded down. The initial Participating Interests of the Participants are set
forth in 6.1.
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"Prime Rate" means the prime interest rate quoted as "Prime" by the Wall Street
Journal as said rate may change from day to day (which quoted rate may not be
the lowest rate averaged on a month-to-month basis at which a financing
institution loans funds).
"Production Decision" means a decision by the Management Committee to commence
Development and put the Properties into production.
"Products" means all ores, minerals, and mineral resources produced from the
Properties prior to treatment. It also includes all concentrates, precipitates
and products produced from the Properties under this Agreement.
"Program" means a description in reasonable detail of the activities of the
Venture which are to be conducted by the Manager during a period.
"Properties" means that interest in property described in Exhibits A and all
other interests in real property acquired after November 1, 2001 and held
subject to this Agreement. "Simple Majority" means a decision by the Management
Committee by greater than 50% of the votes entitled to be cast.
"Transfer" means sell, grant, assign, encumber, pledge or otherwise commit or
dispose of.
"Venture" means the business arrangement of the Participants under this
Agreement.
Article 2. REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS
2.1. Capacity of Participants.
Each of the parties hereto represents and warrants as follows:
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2.1.1. That it is a corporation duly incorporated and in good standing in its
state or province of incorporation and that it is qualified to do
business and is in good standing in those jurisdictions where necessary
in order to carry out the purposes of this Agreement;
2.1.2. That it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein and that all corporate and other
actions required authorizing it to enter into and perform this
Agreement have been properly taken;
2.1.3. That it will not breach any other agreement or arrangement by entering
into or performing this Agreement; and
2.1.4. That this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms
2.2. Representations and Warranties Relating to Property.
IDO makes the following representations and warranties effective the date
hereof:
2.2.1. IDO has the full and exclusive right and power to act on behalf
of IDO, and on behalf of any other interested person or entities,
to enter into this Agreement and to grant the rights granted by
IDO hereunder.
2.2.2. To the best of its knowledge and belief with respect to
unpatented mining claims set forth in Exhibit A and that are
included within the Properties, subject to the paramount title of
the United States and except as disclosed in writing to IDO:
(i) the unpatented mining claims were properly laid out and
monumented;
(ii) all required location and validation work was properly
performed;
(iii) location notices and certificates were properly recorded and
filed with appropriate governmental agencies;
(iv) the claims are free and clear of defects, liens and
encumbrances arising by, through or under IDO, except those of
record, state and federal environmental and development laws,
rules and regulations, or disclosed in writing to IDO as
listed in Exhibits F and G and in this Agreement and defects,
liens, and any such encumbrances that do not materially affect
IDO's rights under this Agreement;
(v) IDO has not received notice from anyone asserting conflicting
claims; and
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(vi) The unpatented mining claims are in good standing and
compliance with all federal and state regulations in force as
of the effective date of this Agreement.
Nothing in this Section 2.2.2, however, shall be deemed to be a representation
or a warranty that any of the mining claims contains a discovery of minerals.
2.2.3. IDO knows of no violation of any applicable federal, state, regional,
or county law or regulation relating to zoning, land use, environmental
protection, or otherwise with respect to the Properties or activities
relating thereto; and,
2.2.4. With respect to the Properties, IDO knows of no pending or threatened
actions, suits, claims or proceedings.
2.2.5. IDO has granted FSD access to all information concerning title to the
Properties in IDO's possession or control, including but not limited
to, true and correct copies of all leases, other contracts and
abstracts relating to the Properties of which IDO has knowledge.
The representations and warranties set forth above shall survive the execution
and delivery of any documents of Transfer provided under this Agreement.
2.3. Remedies for Breach of Representations and Warranties of Title to the
Properties
2.3.1. Loss of Title Any failure or loss of title to the Properties, and all
costs of defending title, shall be charged to the Joint Account, except
that all costs and losses arising out of or resulting from breach of
the representations and warranties of IDO shall be charged to IDO and
all such costs and losses arising out of gross negligence by FSD shall
be charged to FSD. FSD shall have the right, but not the obligation, to
undertake to cure such defects or to defend or to initiate litigation
to defend such defects.
2.3.2. Less than 100% Interest In the event it is determined that IDO controls
less than the full undivided interest therein, IDO's interest hereunder
shall bear the same proportion to 100% as its total actual interest
bears to the full undivided whole.
2.3.3. Third Party Claims
(a) If IDO fails to satisfy and discharge any mortgage, lien, tax
levy or encumbrance (an "Encumbrance") chargeable solely or in
part to IDO on the claims listed on Exhibit A or the
underlying agreements, or suffers or permits any Encumbrance
to be imposed upon such, FSD at its option may, but shall not
be obligated to, pay for and discharge any Encumbrance and set
off such payment by withholding and retaining from any
payments due IDO any
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amounts so paid by FSD, without prejudice to any right of FSD
to recover from IDO the amount of such payment, in any manner
or by any remedy whatsoever, and FSD shall have all the rights
and remedies against IDO which the mortgagor, lienor or
creditor had immediately prior to the time of such payment.
Upon the request of FSD, IDO shall promptly make, execute,
acknowledge and deliver to FSD any and all instruments (in a
form and substance satisfactory to FSD) that FSD in its sole
judgment may deem necessary or desirable to fully effectuate
the provisions of this section 2.3.
(b) If any person or entity not a party hereto asserts to have a
claim of ownership in the claims listed on Exhibit A, or a
claim to a share in the production from the claims listed on
Exhibit A (an "Adverse Claim"), FSD at its sole discretion,
after written notice to IDO, may suspend its obligation to
make payments as provided herein, and in lieu thereof, may
deposit in an interest-bearing account payments equivalent to
payments which may otherwise become due IDO. Such deposit or
deposits shall remain in such interest-bearing account until
the claim or controversy is resolved or settled by final court
decision, by arbitration, negotiation or otherwise. When FSD
is required or elects to make any payments to such persons or
entities not a party hereto as a result of, or in settlement
of, any such Adverse Claim, either by way of contract,
settlement, compromise, final court judgment, or otherwise,
FSD may recover from, or credit against, any payments
thereafter becoming due IDO hereunder, the amount of such
payments of all other costs and expenses (including reasonable
attorneys fees) paid or incurred by FSD as a result of any
such Adverse Claim.
2.4. Disclosures.
Each of the Participants represents and warrants that it is unaware of any
material facts or circumstances which have not been disclosed in this Agreement,
which would be disclosed to the other Participant in order to prevent the
representations in this Article 2 from being materially misleading.
2.5. Record Title.
Title to the Assets shall be held by the Venture after FSD has earned its
interest.
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Article 3. NAME, PURPOSES AND TERM
3.1. General.
IDO and FSD hereby enter into this Agreement for the purposes hereinafter
stated, and they agree that all of their rights and all of the Operations on or
related to with the Properties shall be subject to and governed by this
Agreement. Name.
The name of this Venture shall be the Stillwater West PGM Venture. The Manager
shall accomplish any registration required by applicable assumed or fictitious
name statutes and similar statutes.
3.2. Purposes.
This Agreement is entered into for the following purposes and for no others, and
shall serve as the exclusive means by which the Participants, or either of them,
accomplish such purposes:
i) to conduct Exploration within the Properties,
ii) to evaluate the possible Development of the Properties,
iii) to engage in Development and Mining Operations on the Properties, if
feasible.
iv) to engage in marketing Products, but only to the extent permitted by
Article 11, and
v) to perform any other activity necessary, appropriate, or incidental to
any of the foregoing.
3.3. Limitation.
Unless the Participants otherwise agree in writing, the Operations shall be
limited to the purposes described in Section 3.2, and nothing in this Agreement
shall be construed to enlarge such purposes.
3.4. Effective Date and Term.
The effective date of this Agreement shall be the date first recited above. The
term of this Agreement shall be for 20 years from the effective date and for so
long thereafter as Products are produced from the Properties, unless the
Agreement is earlier terminated as provided herein.
Article 4. RELATIONSHIP OF THE PARTICIPANTS
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4.1. No Partnership.
Nothing contained in this Agreement shall be deemed to constitute either
Participant the partner of the other, nor, except as otherwise herein expressly
provided, to constitute either Participant the agent or legal representative of
the other, nor to create any fiduciary relationship between them. It is not the
intention of the Participants to create, nor shall this Agreement be construed
to create, any mining, commercial or other partnership. Neither Participant
shall have any authority to act for or to assume any obligation or
responsibility on behalf of the other Participant, except as otherwise expressly
provided herein. The rights, duties, obligations and liabilities of the
Participants shall be several and not joint or collective. Each Participant
shall be responsible only for its obligations as herein set out and shall be
liable only for its share of the costs and expenses as provided herein, it being
the express purpose and intention of the Participants that their ownership of
Assets and the rights acquired hereunder shall be as tenants in common. Each
Participant, its directors, officers, employees, agents and attorneys shall be
indemnified from and against any and all losses, claims, damages and liabilities
arising out of any act or any assumption of liability by the indemnifying
Participant, or any of its directors, officers, employees, agents and attorneys
done or undertaken, or apparently done or undertaken, on behalf of the other
Participant, except pursuant to the authority expressly granted herein or as
otherwise agreed in writing between the Participants.
4.2. U.S. and State Tax Elections and Allocations .
Without changing the effect of Section 4.1, the Participants agree that their
relationship shall constitute a tax partnership within the meaning of Section
761(a) of the United States Internal Revenue Code of 1986, as amended. The
parties hereto agree to execute or join in such instruments as are necessary to
make such election effective, and hereby authorize and direct Manager to take
such action as is necessary to effectuate such purpose, including filing of the
partnership tax return required by Treasury Regulation ss.1.761-2(b)(2). Each
party shall be entitled to claim all tax benefits, write-offs, and deductions
with respect to all and any costs which it has incurred.
The Participants also agree that, to the extent permissible under applicable
law, their relationship shall be treated for state income tax purposes in the
same manner as it is for federal income tax purposes.
The Manager shall be the Tax Matters Partner and shall prepare and file, after
approval of the Management Committee, any tax returns or other tax forms
required.
4.3. Other Business Opportunities .
Except as expressly provided in this Agreement, each Participant shall have the
right independently to engage in and receive full benefits from business
activities, whether or not competitive with the Operations, without consulting
the other. The doctrines of "corporate
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opportunity" or "business opportunity" shall not be applied to any other
activity, venture, or operation of either Participant. Unless otherwise agreed
in writing, no Participant shall have any obligation to mill, beneficiate or
otherwise treat any Products or any other Participant's share of Products in any
facility owned or controlled by such Participant, other than a facility
established to treat the Products of the Venture.
4.4. Waiver of Right to Partition.
The Participants hereby waive and release all rights of partition, or of sale in
lieu thereof, or other division of Assets, including any such right provided by
statute.
4.5. Transfer or Termination of Rights to Properties,
Except as otherwise provided in this Agreement, neither Participant shall
transfer all or any part of its interest in the Assets or this Agreement or
otherwise permit or cause such interest to terminate.
4.6. Implied Covenants.
There are no implied covenants contained in this Agreement other than those of
good faith and fair dealing.
Article 5. CONTRIBUTIONS BY PARTICIPANTS
5.1. Participants' Initial Contributions.
IDO, as its Initial Contribution, hereby contributes the Properties described in
Exhibit A to the purposes of this Agreement. FSD, as its Initial Contribution,
shall contribute the Exploration Expenditures and payment as hereinafter set
forth. All expenditures and payments in United States dollars.
5.2. Obligations Prior to Earn-In.
Prior to earning its interest in the Venture, and subject to the termination
provisions contained herein, FSD shall be required, but not obligated to make
the following Exploration Expenditures on or for the benefit of the Properties
to extend this Agreement into the next period.
5.2.1. Annual and Cumulative Exploration Expenditures Commitment:
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FSD shall expend, as a minimum, the following annual and cumulative Exploration
Expenditures:
Year Annual Expenditure Cumulative Expenditure
One $0 $0
Two $75,000 $75,000
Three $150,000 $225,000
Four $200,000 $425,000
Total $425,000
Year 1 for purposes of calculating annual expenditures shall end on December 31,
2002 and each subsequent year will end on December 31.
5.2.2. Overhead Charges During Earn-In. Ten percent (10%) of all Exploration
Expenditures, except property payments, taxes and/or fees to maintain
the Properties, to cover IDO's overhead and administrative costs shall
be charged by IDO and shall qualify as Exploration Expenditures This
overhead charge is the same as overhead chargeable in accordance with
the Accounting Procedure.
5.2.3. Carryforward of Excess Cumulative Exploration Expenditures. All
Exploration Expenditures shall be cumulative and any Exploration
Expenditures in excess of the minimum required in any period shall be
credited and applied toward any Exploration Expenditures required in
any subsequent period.
5.2.4. Maintenance of Properties During Earn-In. During the Earn-in period FSD
shall be responsible for maintaining the underlying agreements in good
standing and for maintaining the unpatented lode claims which comprise
the Properties and may relocate any of the unpatented claims which FSD
believes may be defective.
5.3. Payments by FSD to IDO:
5.3.1. Payment at Closing. Upon execution of this Agreement, FSD shall pay
Fifty Five Thousand Dollars ($55,000) to IDO. A second payment in the
amount of One hundred and Thirty Five Thousand ($135,000) shall be made
on or before May 31, 2002 to IDO from FSD. These payments total
$190,000.
5.3.2. Annual Payment of Stock. Upon signature of this Agreement and on each
of the following four anniversary dates, FSD shall issue shares of
FSD's unrestricted, registered common stock subject to CDNX approval;
to IDO as listed in the following table, to keep this Agreement in good
standing. Said stock will be delivered by November 30 of each year
commencing on November 30, 2001 or upon termination by FSD, whichever
occurs sooner.
FSD shall issue, the following annual and cumulative unrestricted common stock:
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Year Annual Shares Cumulative Shares
Upon Signing 200,000 200,000
Two 250,000 450,000
Three 250,000 700,000
Four 250,000 950,000
Total 950,000
5.4. Termination of FSD's Obligation to Make Initial Contribution.
FSD may terminate this Agreement at any time during the Earn-In period for any
reason or no reason by providing IDO sixty (60) days written notice of such
termination. Until FSD has earned its interest in the Venture, FSD shall have
complete discretion in conducting exploration activities, maintaining the
Properties and shall conduct operations according to its own plans. FSD shall
hold IDO harmless from any liabilities resulting from FSD's activities on the
Properties during the Earn-In period.
Upon FSD's termination under the provisions of this Section 5.4, FSD shall have
no further right, title or interest in the Venture. FSD's withdrawal shall be
effective upon such failure, but such withdrawal shall not relieve FSD of its
obligation to fund and satisfy any liabilities to third persons incurred or
payments due to IDO prior to FSD's withdrawal.
5.5. Additional Cash Contributions.
At such time as FSD has earned its forty percent (40%) interest in the Venture,
pursuant to Sections 5.2 and 5.3, the Participants, subject to any election
permitted by Sections 6.1, 6.2, and 6.3, shall be obligated to contribute funds
to adopted Programs and Budgets in proportion to their respective Participating
Interest.
5.6. Earn-In.
FSD shall earn a forty percent (40%) Participating Interest in the Venture upon
completion of the Exploration Expenditures and payments set forth under Section
5.2. If FSD expends the $425,000 commitment in Section 5.2 prior to the end of
year four, made payments to IDO totaling $190,000 prior to May 31, 2002 pursuant
to Section 5.3.1, and issued 950,000 shares of unrestricted, registered common
stock of FSD pursuant to Section 5.3.2 prior to the end of year four, it will be
deemed to have earned its Participating Interest at that time. Except as
provided for in Section 6.2, subsequent to FSD earning a forty percent (40%)
interest in the Venture, all expenditures for the benefit of the Properties
shall be contributed by the Parties in accordance to their Participating
Interest. Immediately upon FSD satisfying its Earn-In requirements under
Sections 5.2 and 5.3, IDO shall execute and deliver to FSD such documents as are
listed in Exhibit F that are necessary to transfer IDO's interest in and to the
Properties to the Venture. FSD shall issue and deliver to IDO the balance of the
950,000
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shares of FSD common stock not previously issued pursuant to Section 5.3.2 at
the time FSD has earned its Participating Interest.
5.7. Reports.
FSD shall, during the Earn-In period, provide IDO with copies of periodic
reports describing its activities on the Properties and shall conduct a
semi-annual review with IDO to discuss the progress FSD has made during the
preceding period as well as the plans and programs being contemplated for the
next period.
Article 6. INTERESTS OF PARTICIPANTS: DEFAULTS AND REMEDIES
6.1. Participating Interests.
FSD shall have no Participating Interest unless and until it has completed the
Exploration Expenditures set forth in Section 5.2 and the payments and share
issuances set forth in section 5.3 during the Earn-In period. The Participants
shall have the following Participating Interests upon FSD's completion of the
obligations set forth in Sections 5.2, and 5.3:
FSD - 40%
IDO - 60%
6.2. Elections at Time of Earn-In.
At such time as FSD completes the obligations set forth in Sections 5.2, and 5.3
and has earned its forty percent (40%) Participating Interest in the Venture,
IDO and FSD shall have a period of sixty (60) days to do the following:
i) FSD can elect to acquire an additional ten percent (10%) interest in
the Venture by making one cash payment of Two Million Five Hundred
Thousand dollars ($2,500,000) to IDO.
ii) elect to continue to participate in the Venture and contribute to each
Program and Budget for their entire respective Participating Interest,
or
iii) to elect to withdraw from the Venture and convert to a Net Smelter
Return as set out in Exhibit C.
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In no event shall the cumulative Net Smelter Return payable to the withdrawing
party, whether one or more, exceed an aggregate of three percent (3%).
6.3. Deemed Expenditures.
i) At 40% Earn-In FSD and IDO shall, irrespective of their actual
expenditures on or with respect to the Properties, be deemed to have
incurred expenditures as follows:
FSD $425,000
IDO $637,500
ii) If FSD elects to acquire an additional ten percent (10%) participating
interest pursuant to 6.2 i), then FSD and IDO shall be deemed to have
incurred expenditures as follows:
FSD $2,925,000
IDO $2,925,000
6.4. Changes in Participating Interests.
A Participant's Participating Interest shall be changed as follows:
i) As provided in Sections 6.2 or 6.7; or
ii) Upon an election by a Participant pursuant to Section 6.5 to contribute
less to an adopted Program and Budget than the percentage reflected by
its Participating Interest; or
iii) In the event of default by a Participant in making its agreed-upon
contribution to an adopted Program and Budget; or
iv) Transfer by a Participant of less than all its Participating Interest
in accordance with Article 14; or
v) Acquisition of less than all of the Participating Interest of the other
Participant, however arising.
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6.5. Voluntary Reduction in Participation.
Except with respect to a Participant's obligation to make its Initial
Contribution, as to which no election is permitted, a Participant may elect, as
provided in Section 9.5, to limit its contributions to an adopted Program and
Budget as follows:
i) To some lesser amount than its respective Participating Interest; or
ii) Not at all.
If a Participant elects to contribute to an adopted Program and Budget some
lesser amount than its respective Participating Interest, or not at all, the
Participating Interest of that Participant shall be recalculated at the time of
election by dividing:
i) the sum of
(a) the value of the Participant's Initial Contribution as per
Section 6.3,
(b) the total of all of the Participant's contributions under
Section 5.3, and
(c) the amount, if any, the Participant elects to contribute to
the adopted Program and Budget;
by
ii) the sum of (a), (b) and (c) above for all Participants;
and then multiplying the result by one hundred.
The Participating Interest of the other Participant shall thereupon become the
difference between 100% and the recalculated Participating Interest.
6.6. Default in Making Contributions.
If a Participant defaults in making a contribution or cash call required by an
approved Program and Budget, the non-defaulting Participant may advance the
defaulted contribution on behalf of the defaulting Participant and treat the
same, together with any accrued interest, as a demand loan bearing interest from
the date of the advance at the Prime Rate plus two percent (2%) compounded
quarterly. The failure to repay said loan upon demand shall be a default. Each
Participant hereby grants to the other a lien upon its interest in the Venture
and the Properties and a security interest in its rights under this Agreement
and in its Participating Interest in other
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Assets, and the proceeds therefrom, to secure any loan made hereunder, including
interest thereon, reasonable attorneys' fees and all other reasonable costs and
expenses incurred in recovering the loan with interest and in enforcing such
lien or security interest, or both. A non-defaulting Participant may elect the
applicable remedy under this Section 6.6, or, to the extent a Participant has a
lien or security interest under applicable law, it shall be entitled to its
rights and remedies at law and in equity. All such remedies shall be cumulative.
The election of one or more remedies shall not waive the election of any other
remedies. Each Participant hereby irrevocably appoints the other its
attorney-in-fact to execute, file and record all instruments necessary to
perfect or effectuate the provisions hereof.
6.7. Conversion of Interest.
If at any time the Participating Interest of a Participant is reduced to ten
percent (10%) or less by an affirmative election not to contribute all or some
portion of its share pursuant to a Program and Budget as provided in Article 9,
the diluted Participant shall be deemed to have withdrawn from the Venture and
this Agreement shall terminate; provided, however, if FSD is the diluting
Participant, FSD shall have the right to receive an amount equal to one hundred
and fifteen percent (115%) of FSD's actual or deemed expenditures contributed
hereunder, whichever is greater only from a three percent (3%) of Net Smelter
Return Royalty, as set out in Exhibit C. Upon receipt of such amount FSD shall
thereafter have no further right, title, or interest under this Agreement or in
the Assets. If IDO is the diluting participant, IDO shall have a three percent
(3%) Net Smelter Return Royalty in perpetuity, as set out in Exhibit C.
6.8. Continuing Liabilities Upon Adjustments of Participating Interests.
Any reduction of a Participant's Participating Interest under this Article 6
shall not relieve such Participant of its share of any liability, whether it
accrued before or after such reduction, arising out of Operations conducted
prior to such reduction. For purposes of this Article 6, such Participant's
share of such liability shall be equal to its Participating Interest at the time
such liability was incurred. The increased Participating Interest accruing to a
Participant as a result of the reduction of the other Participant's
Participating Interest shall be free of royalties, liens or other encumbrances
arising by, through or under such other Participant, other than those existing
at the time the Properties were acquired or those to which both Participants
have given their written consent. An adjustment to a Participating Interest need
not be evidenced during the term of this Agreement by the execution and
recording of appropriate instruments, but each Participant's Participating
Interest shall be shown in the books of the Manager. However, either
Participant, at any time upon the request of the other Participant, shall
execute and acknowledge instruments necessary to evidence such adjustment in
form sufficient for recording in the jurisdiction where the Properties are
located.
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Article 7. MANAGEMENT COMMITTEE
7.1. Organization and Composition.
Prior to completion of FSD's' Earn-In and the election by IDO and FSD to
participate in the Venture as provided in Section 6.2, the Participants shall
establish a Management Committee to determine overall policies, objectives,
procedures, methods and actions under this Agreement. The Management Committee
shall consist of one member appointed by FSD and one member appointed by IDO.
Each Participant may appoint one or more alternates to act in the absence of a
regular member. Any alternate so acting shall be deemed a member. Appointments
shall be made or changed by notice in writing to the other Participant.
7.2. Decisions.
Prior to completion of FSD's Earn-In, each Participant, acting through its
appointed member(s), shall have an equal vote. In the event of a deadlock, the
Manager shall hold the deciding vote. After completion of FSD's Earn-In, each
Participant shall have a vote equal to its Participating Interest in the
Venture. Decisions of the Management Committee shall be decided by Simple
Majority of the Participating Interests.
7.3. Meetings.
The Management Committee shall hold regular meetings at least annually at
mutually agreed places. The Manager shall give thirty (30) days' written notice
to the Participants of such regular meetings. Additionally, either Participant
may call a special meeting upon thirty (30) days' written notice to the Manager
and the other Participant. In case of emergency, reasonable notice of a special
meeting shall suffice. There shall be a quorum if at least one member
representing each Participant is present. The Management Committee shall not
transact any business at a meeting unless a quorum is present at the
commencement of the meeting. If a quorum is not present at the commencement of
the meeting or within one-half hour after the time fixed for the commencement of
the meeting, the meeting shall be adjourned to the same time and day of the next
week at the same place. If a quorum is not present at the commencement of the
adjourned meeting, one representative shall be deemed to constitute a quorum.
Each notice of a meeting shall include an itemized agenda and detailed back-up
information prepared by the Manager in the case of a regular meeting, or by the
Participant calling the meeting in the case of a special meeting, but any
matters may be considered with the consent of all Participants. The Manager
shall prepare minutes of all meetings and shall distribute copies of such
minutes to the Participants within thirty (30) days after the meeting. The
minutes, when signed by all Participants, shall be the official record of the
decisions made by the Management Committee and shall be binding on the Manager
and the Participants. If personnel employed in Operations are required to attend
a Management Committee meeting,
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reasonable costs incurred in connection with such attendance shall be a Venture
cost. All other costs shall be paid by the Participants individually.
7.4. Action Without Meeting.
In lieu of meetings, the Management Committee may hold telephone conferences, so
long as all decisions are immediately confirmed in writing by the Participants.
7.5. Matters Requiring Approval.
Except as otherwise delegated to the Manager in Section 8.2, the Management
Committee shall have exclusive authority to determine all management matters
related to this Agreement.
Article 8. MANAGER
8.1. Appointment
Following signature of this Agreement, IDO shall be the initial Manager.
8.2. Powers and Duties of Manager.
Subject to the terms and provisions of this Agreement, the Manager shall have
the following powers and duties which shall be discharged in accordance with
adopted Programs and Budgets:
8.2.1. The Manager shall manage, direct and control Operations.
8.2.2. The Manager shall implement the decisions of the Management
Committee, shall make all expenditures necessary to carry out
adopted Programs and Budgets, and shall promptly advise the
Management Committee if it lacks sufficient funds to carry out
its responsibilities under this Agreement.
8.2.3. The Manager shall:
i) Purchase or otherwise acquire all material, supplies,
equipment, water, utility and transportation services
required for operations, such purchases and
acquisitions to be made on the best terms available,
taking into account all of the circumstances;
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ii) Obtain such customary warranties and guarantees as
are available in connection with such purchases and
acquisitions; and
iii) Keep the assets free and clear of all liens and
encumbrances, except for those existing at the time
of, or created concurrent with, the acquisition of
such assets, or mechanic's or materialmen's liens
which shall be released of discharged in a diligent
manner, or liens and encumbrances specifically
approved by the Management Committee.
8.2.4. The Manager shall conduct such title examinations and cure
such title defects as may be advisable in the reasonable
judgment of the Manager.
8.2.5. The Manager shall:
i) make or arrange for all payments required by leases,
licenses, permits, contracts and other agreements
related to the Assets;
ii) pay all taxes, assessments and like charges on
Operations and Assets except taxes determined or
measured by a Participant's sales revenue or net
income. If authorized by the Management Committee,
the Manager shall have the right to contest in the
courts or otherwise, the validity or amount of any
taxes, assessments or charges if the Manager deems
them to be unlawful, unjust, unequal or excessive, or
to undertake such other steps or proceedings as the
Manager may deem reasonably necessary to secure a
cancellation, reduction, readjustment or equalization
thereof before the Manager shall be required to pay
them, but in no event shall the Manager permit or
allow title to the Assets to be lost as the result of
the nonpayment of any taxes, assessments or like
charges; and
iii) shall do all other acts reasonably necessary to
maintain the Assets.
8.2.6. The Manager shall:
i) apply for all necessary permits, licenses and
approvals;
ii) comply with applicable federal, provincial, municipal
and local laws and regulations;
iii) notify promptly the Management Committee of any
allegations of substantial violation thereof; and
iv) prepare and file all reports or notices required for
Operations.
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The Manager shall not be in breach of this provision if a violation has occurred
in spite of the Manager's good faith efforts to comply, and the Manager has
timely cured or disposed of such violation through performance, or payment of
fines and penalties.
8.2.7. The Manager shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or
administrative proceedings greater than $50,000 arising out of
Operations. The non-managing Participant shall have the right
to participate, at its own expense, in such litigation or
administrative proceedings. The non-managing Participant's
approval shall be required in advance of any settlement
involving payments, commitments or obligations, if the
non-managing Participant's share is in excess of Twenty-Five
Thousand Dollars ($25,000) in cash or value.
8.2.8. The Manager shall provide insurance for the benefit of the
Participants as provided in Exhibit D.
8.2.9. The Manager may dispose of Assets, whether by release,
abandonment, surrender or Transfer in the ordinary course of
business, except that Properties may be released, abandoned or
surrendered only as provided in Article 13. However, without
prior authorization from the Management Committee, the Manager
shall not:
i) dispose of Assets in any one transaction having a
value in excess of $250,000:
ii) enter into any sales contracts or commitments for
Product, except as permitted in Section 11.2;
iii) begin a liquidation of the Venture; or
iv) dispose of all or a substantial part of the Assets
necessary to achieve the purposes of the Venture.
8.2.10. The Manager shall have the right to carry out its
responsibilities hereunder through agents, affiliates or
independent contractors.
8.2.11. The Manager shall be obligated to perform or cause to be
performed during the term of this Agreement all obligations
required by law in order to maintain the Properties which
obligations shall be included in Programs and Budgets.
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8.2.12. The Manager shall keep and maintain all required accounting
and financial records pursuant to the Accounting Procedure and
in accordance with customary cost accounting practices in the
mining industry.
8.2.13. The Manager shall keep the Management Committee advised of all
Operations by submitting in writing to the Management
Committee:
i) monthly progress reports which include statements of
expenditures and comparisons of such expenditures to
the adopted Budget;
ii) periodic summaries of data acquired;
iii) copies of reports concerning Operations;
iv) a detailed final report within forty-five (45) days
after completion of each Program and Budget, which
shall include comparisons between actual and budgeted
expenditures and comparisons between the objectives
and results of Programs; and
v) such other reports as the Management Committee may
reasonably request.
At all reasonable times the Manager shall provide the Management Committee or
the representative of any Participant, upon the request of any member of the
Management Committee, access to, and the right to inspect and copy all maps,
drill logs, core tests, reports, surveys, assays, analyses, production reports,
operations, technical, accounting and financial records, and other information
acquired in Operations. In addition, the Manager shall allow the non-managing
Participant, at the latter's sole risk and expense, and subject to reasonable
safety regulations, to inspect the Assets and Operations at all reasonable
times, so long as the inspecting Participant does not unreasonably interfere
with Operations.
8.2.14. The Manager shall undertake all other activities reasonably
necessary to fulfill the foregoing.
The Manager shall not be in default of any duty under this Section 8.2 if its
failure to perform results from the failure of the non-managing Participant to
perform acts or to contribute amounts required of it by this Agreement.
8.3. Standard of Care
The Manager shall conduct all Operations in a good, workmanlike and efficient
manner, in accordance with all applicable laws, sound mining and other
applicable industry standards and practices, and in accordance with the terms
and provisions of leases, licenses, permits, contracts and other agreements
pertaining to Assets. The Manager shall not be liable to the non-managing
Participant for any act or omission resulting in damage or loss except to the
extent caused by or attributable to the Manager's willful misconduct or gross
negligence.
8.4. Resignation;
Deemed Offer to Resign. The Manager may resign upon thirty (30) days prior
notice to the other Participant. If any of the following shall occur, the
Manager shall be deemed to have offered to resign, which offer shall be accepted
by the other Participant, if at all, within ninety (90) days following such
deemed offer:
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8.4.1. The Participating Interest of the Manager becomes less than
fifty percent (50%); or
8.4.2. The Manager fails to perform a material obligation imposed
upon it under this Agreement and such failure continues for a
period of thirty (30) days after written notice from the other
Participant demanding performance; or
8.4.3. The Manager fails to pay or contest in good faith its bills
within thirty (30) days after receiving written notice that
they are due; or
8.4.4. A receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for a substantial part of its
assets is appointed and such appointment is neither made
ineffective nor discharged within sixty (60) days after
receiving written notice of the making thereof, or such
appointment is consented to, requested by, or acquiesced in by
the Manager; or
8.4.5. The Manager commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in
effect; or consents to the entry of an order for relief in an
involuntary case under any such law or to the appointment of
or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of
any substantial part of its assets; or makes a general
assignment for the benefit of creditors; or fails generally to
pay its or Venture debts as such debts become due; or takes
corporate or other action in furtherance of any of the
foregoing; or
8.4.6. Entry is made against the Manager of a judgment, decree or
order for relief affecting a substantial part of its assets by
a court of competent jurisdiction in an involuntary case
commenced under any applicable bankruptcy, insolvency or other
similar law of any jurisdiction now or hereafter in effect.
8.5. Payments to Manager.
The Manager shall be compensated for its services and reimbursed for its costs
hereunder in accordance with the Accounting Procedure.
8.6. Transactions With Affiliates.
If the Manager engages Affiliates to provide services hereunder, it shall do so
on terms no more favorable than would be the case with unrelated persons in
arm's-length transactions.
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8.7. Activities During Deadlock.
If the Management Committee for any reason fails to adopt a Program and Budget,
subject to the contrary direction of the Management Committee and to the receipt
of necessary funds, the Manager shall continue Operations at levels comparable
with the last adopted Program and Budget. For purposes of determining the
required contributions of the Participants and their respective Participating
Interests, the last adopted Program and Budget shall be deemed extended.
Article 9. PROGRAMS AND BUDGETS
9.1. Initial Program and Budget.
The initial Program and Budget will be provided by the Management Committee
within ninety (90) days of FSD's Earn-In.
9.2. Operations Pursuant to Programs and Budgets.
Except as otherwise provided in Section 9.8 and Article 16, Operations shall be
conducted, expenses shall be incurred, and Assets shall be acquired only
pursuant to approved Programs and Budgets.
9.3. Presentation of Programs and Budgets.
Proposed Programs and Budgets shall be prepared by the Manager for a period of
up to one year. Each adopted Program and Budget, regardless of length, shall be
reviewed at least once a year at the annual meeting of the Management Committee.
During the period encompassed by any Program and Budget, and at least two months
prior to its expiration, a proposed Program and Budget for the succeeding period
shall be prepared by the Manager and submitted to the Management Committee.
9.4. Review and Approval of Proposed Programs and Budgets.
Within thirty (30) days after submission of a proposed Program and Budget to the
Management Committee, the Management Committee shall:
i) Approve the proposed Program and Budget; or
ii) Propose modifications of the proposed Program and Budget; or
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iii) Reject the proposed Program and Budget.
If the Management Committee makes the elections pursuant to Section 9.4 ii) or
9.4 iii), then the Manager will review the modifications and/or any
recommendations of the Management Committee and will resubmit a Program and
Budget within thirty (30) days.
9.5. Election to Participate
By written notice to the Management Committee within thirty (30) days after
approving a Program and Budget except as provided for in Section 6.1, a
Participant may elect to contribute to such Program and Budget in an amount
equal to its Participating Interest or a lesser amount as provided for in
Section 6.5. If a Participant fails to so notify the Management Committee, the
Participant shall be deemed to have elected not to contribute to such Program
and Budget and the provisions of Section 6.4 shall apply. If a Participant
elects not to participate in the Program and Budget and the other Participant
elects to contribute to the Program and Budget the provisions of Section 6.5
shall apply.
9.6. Deadlock on Proposed Programs and Budgets.
If the Participants, acting through the Management Committee, fail to approve a
Program and Budget by the beginning of the period to which the proposed Program
and Budget applies, the provisions of Section 8.7 shall apply.
9.7. Budget Overruns; Program Changes.
The Manager shall immediately notify the Management Committee of any material
departure from an adopted Program and Budget. If the Manager exceeds an adopted
Budget by more than ten percent (10%), then such excess over ten percent (10%)
shall be for the sole account of the Manager, not creditable to the calculation
of Participating Interests, unless such excess amount is directly caused by an
emergency or unexpected expenditure made pursuant to Section 9.8 or is otherwise
authorized by the approval of the Management Committee. Budget overruns of ten
percent (10%) or less shall be borne by the Participants in proportion to their
respective Participating Interests as of the time the overrun occurs.
9.8. Emergency or Unexpected Expenditures.
In case of emergency, the Manager may take any reasonable action it deems
necessary to protect life, limb or property, to protect the Assets or to comply
with law or government regulation. The Manager may also make reasonable
expenditures for unexpected events which are beyond its reasonable control and
which do not result from a breach by it of its standard of care. The Manager
shall promptly notify the Participants of the emergency or unexpected
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expenditures, and the Manager shall be reimbursed for all resulting costs by the
Participants in proportion to their respective Participating Interests at the
time the emergency or unexpected expenditures are incurred.
Article 10. ACCOUNTS AND SETTLEMENTS
10.1. Matters of Accounts and Settlements.
These items are governed by the provisions in Exhibit "B" (Accounting
Procedures) attached hereto.
Article 11. DISPOSITION OF PRODUCTION
11.1. Taking in Kind.
Each Participant shall take in kind or separately dispose of its share of all
Products in accordance with its Participating Interest. Any extra expenditure
incurred in the taking in kind or separate disposition by any Participant of its
proportionate share of Products shall be borne by such Participant. Nothing in
this Agreement shall be construed as providing, directly or indirectly, for any
joint or cooperative marketing or selling of Products or permitting the
processing of Products of any parties other than the Participants at any
processing facilities constructed by the Participants pursuant to this
Agreement. The Manager shall give the Participants notice at least ten (10) days
in advance of the delivery date upon which their respective shares of Products
will be available.
11.2. Failure of Participant to Take in Kind.
If a Participant fails to take in kind, the Manager shall have the right, but
not the obligation, for a period of time consistent with the minimum needs of
the industry, but not to exceed one year, to purchase the Participant's share
for its own account or to sell such share as agent for the Participant at not
less than the prevailing market price in the area. Subject to the terms of any
such contracts of sale then outstanding, during any period that the Manager is
purchasing or selling a Participant's share of production, the Participant may
elect by notice to the Manager to take in kind. The Manager shall be entitled to
deduct from proceeds of any sale by it for the account of a Participant
reasonable expenses incurred in such a sale.
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Article 12. WITHDRAWAL AND TERMINATION
12.1. Termination by Expiration or Agreement .
This Agreement shall terminate as expressly provided in this Agreement, unless
earlier terminated by written agreement.
12.2. Withdrawal.
A Participant may elect to withdraw as a Participant from this Agreement by
giving notice to the other Participant of the effective date of withdrawal,
which shall be the later of the end of the then current Program and Budget or at
least 45 days after the date of the notice. Upon such withdrawal, this Agreement
shall terminate, and the withdrawing Participant shall be deemed to have
transferred to the remaining Participant, without cost and free and clear of
royalties, liens or other encumbrances arising by, through or under such
withdrawing Participant, except those exceptions to title described in Exhibits
F and G and those to which both Participants have given their written consent
after the date of this Agreement, all of its Participating Interest in the
Assets and in this Agreement. Any withdrawal under this Section 12.2 shall not
relieve the withdrawing Participant of its share of liabilities to third persons
(whether such accrues before or after such withdrawal) arising out of Operations
conducted prior to such withdrawal. For purposes of this Section 12.2, the
withdrawing Participant's share of such liabilities shall be equal to its
Participating Interest at the time such liability was incurred.
12.3. Continuing Obligations.
On termination of this Agreement under Section 12.1 or 12.2, the Participants
shall remain liable for continuing obligations hereunder until final settlement
of all accounts and for any liability, whether it accrues before or after
termination, if it arises out of Operations during the term of the Agreement.
12.4. Disposition of Assets on Termination .
Promptly after termination under Section 12.1, the Manager shall take all action
necessary to wind up the activities of the Venture, and all costs and expenses
incurred in connection with the termination of the Venture shall be expenses
chargeable to the Venture. Any Participant that has a negative Joint Account
balance when the Venture is terminated for any reason shall contribute to the
Assets of the Venture an amount sufficient to raise such balance to zero. The
Assets shall first be paid, applied, or distributed in satisfaction of all
liabilities of the Venture to third parties and then to satisfy any debts,
obligations, or liabilities owed to the Participants. Before distributing any
funds or Assets to Participants, the Manager shall have the right to segregate
amounts which, in the Manager's reasonable judgment, are necessary to discharge
continuing obligations or to purchase for the account of Participants, bonds or
other securities
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for the performance of such obligations. The foregoing shall not be construed to
include the repayment of any Participant's contributions or Joint Account
balance. Thereafter, any remaining cash and all other Assets, including property
shall be distributed (in undivided interests unless otherwise agreed) to the
Participants, first in the ratio and to the extent of their respective Joint
Accounts and then in proportion to their respective Participating Interests,
subject to any dilution, reduction, or termination of such Participating
Interests as may have occurred pursuant to the terms of this Agreement. No
Participant shall receive a distribution of any interest in Products or proceeds
from the sale thereof if such Participant's Participating Interest therein has
been terminated pursuant to this Agreement.
12.5. Right to Data after Termination .
After termination of this Agreement pursuant to Section 12.1, each Participant
shall be entitled to copies of all information acquired hereunder before the
effective date of termination not previously furnished to it, but a terminating
or withdrawing Participant shall not be entitled to any such copies in respect
to a later termination or withdrawal.
12.6. Continuing Authority.
On termination of this Agreement under Section 12.1 or the deemed withdrawal of
a Participant pursuant to Sections 5.2 and 6.4, the Manager shall have the power
and authority, subject to control of the Management Committee, if any, to do all
things on behalf of the Participants which are reasonably necessary or
convenient to: (a) wind up Operations and (b) complete any transaction and
satisfy any obligation, unfinished or unsatisfied, at the time of such
termination or withdrawal, if the transaction or obligation arises out of
Operations prior to such termination or withdrawal. The Manager shall have the
power and authority to grant or receive extensions of time or change the method
of payment of an already existing liability or obligation, prosecute and defend
actions on behalf of the Participants and the Venture, mortgage Assets, and take
any other reasonable action in any matter with respect to which the former
Participants continue to have, or appear or are alleged to have, a common
interest or a common liability.
12.7. Non-Compete Covenants.
A Participant that withdraws pursuant to Section 12.2, or is deemed to have
withdrawn pursuant to Sections 6.2 or 6.7 shall not directly or indirectly
acquire any interest in property within the Area of Interest for two (2) years
after the effective date of withdrawal. If a withdrawing Participant, or an
Affiliate of a withdrawing Participant, breaches this Section 12.7, such
Participant or Affiliate shall be obligated to offer to convey to the
non-withdrawing Participant, without cost, any such property or interest so
acquired. Such offer shall be made in writing and can be accepted by the
non-withdrawing Participant at any time within forty-five (45) days after it is
received by such non-withdrawing Participant.
-27-
12.8. Mutual Withdrawal.
If a Participant elects to withdraw from this Agreement pursuant to Section
12.2, the other Participant may also elect to withdraw as a Participant by
giving written notice thereof to the other Participant within thirty (30) days
after receipt of the first Participant's notice of withdrawal, in which event
the Participants shall be deemed to have agreed to terminate the Venture as of
the first date of withdrawal pursuant to Section 12.1.
12.9. Rights to Data After Termination .
After termination of this Agreement pursuant to Sections 12.1 or 12.2 project
data shall be distributed as follows:
i) All proprietary data provided by IDO covering data on the
Properties and other Stillwater Complex lands and all copies
thereof will be returned to IDO within 30 days of the
termination date.
ii) Copies, including but not limited to, of any and all raw data
developed by FSD about or on the Properties, any geological
data, computer generated data, notes, summaries, maps,
surveys, assays, drill hole logs or other documentation
generated by FSD during the life of the Venture will be
provided to IDO.
Article 13. SURRENDER OF PROPERTIES
13.1. Surrender of Properties.
The Management Committee may authorize the Manager to surrender part or all of
the Properties. If the Management Committee authorizes any such surrender over
the objection of a Participant, the Participant that desires to surrender shall
assign to the objecting Participant, without cost to the objecting Participant,
all of the surrendering Participant's interest in the Properties to be
surrendered, and the surrendered Properties shall cease to be part of the
Properties.
13.2. Reacquisition.
If any Properties are surrendered under the provisions of this Article 13, then,
unless this Agreement is earlier terminated, neither Participant nor any
Affiliate thereof shall acquire any interest in such Properties or a right to
acquire such Properties for a period of two years following the date of such
surrender. If a Participant reacquires any Properties in violation of this
Section 13.2, the other Participant may elect by notice to the reacquiring
Participant within
-28-
forty-five (45) days after it has actual notice of such reacquisition, to have
such Properties made subject to the terms of this Agreement. In the event such
an election is made, the reacquired properties shall thereafter be treated as
Properties, and the costs of reacquisition shall be borne pro rata by the
Participants and shall be included for purposes of calculating the Participants'
respective Participating Interests.
Article 14. TRANSFER OF INTEREST
14.1. General.
A Participant shall have the right to Transfer to any third party all or any
part of its interest in or to this Agreement, its Participating Interest, or the
Assets solely as provided in this Article 14.
14.2. Limitations on Free Transferability .
The Transfer right of a Participant in Section 14.1 shall be subject to the
following terms and conditions:
14.2.1. No transferee of all or any part of the interest of a
Participant in this Agreement, any Participating Interest, or
the Assets shall have the rights of a Participant unless and
until the transferring Participant has provided to the other
Participant notice of the Transfer, and except as provided in
Sections 14.2.3 and 14.2.4, the transferee, as of the
effective date of the Transfer, has committed in writing to be
bound by this Agreement to the same extent as the transferring
Participant;
14.2.2. No Transfer permitted by this Article 14 shall relieve the
transferring Participant of its share of any liability,
whether accruing before or after such Transfer, which arises
out of Operations conducted prior to such Transfer;
14.2.3. In the event of a Transfer of less than all of a Participating
Interest, the transferring Participant and its transferee
shall act and be treated as one Participant;
14.2.4. Except as provided in Section 14.2.3, no Participant shall
transfer any interest in this Agreement or the Assets except
by Transfer of part or all of its Participating Interest;
14.2.5. From the date of execution of this Agreement, if the Transfer
is the grant of a security interest by mortgage, deed of
trust, pledge, lien or other encumbrance of
-29-
any interest in this Agreement, any Participating Interest or
the Assets to secure a loan or other indebtedness of a
Participant in a bona fide transaction, such security interest
shall be subordinate to the terms of this Agreement and the
rights and interests of the other Participant hereunder. Upon
any foreclosure or other enforcement of rights in the security
interest the acquiring third party shall be deemed to have
assumed the position of the encumbering Participant with
respect to this Agreement and the other Participant, and it
shall comply with and be bound by the terms and conditions of
this Agreement; and
14.2.6. If a sale or other commitment or disposition of Products or
proceeds from the sale of Products by a Participant upon
distribution to it pursuant to Article 11Article 11 creates in
a third party a security interest in Products or proceeds
therefrom prior to such distribution, such sales, commitment
or disposition shall be subject to the terms and conditions of
this Agreement; and
14.2.7. No Participant, without the consent of the other Participant,
shall make a Transfer which shall cause termination of the tax
partnership established by the provisions of Section 4.2;
14.3. Right of First Refusal.
Except as otherwise provided in Section 14.4, if either Participant receives an
offer to Transfer or otherwise dispose of all or a part of its Participating
Interest in the Venture and/or Assets to a third party, prior to accepting such
offer the transferring Participant shall first offer the interest to the
non-transferring Participant at the same terms and conditions as set forth in
the third party offer. The non-transferring Participant may accept the offer by
written notice to the transferring Participant given within sixty (60) days of
receipt of the transferring Participant's offer. If the non-transferring
Participant does not accept the offer, then the transferring Participant may
sell or otherwise dispose of its interest under terms and conditions not less
favorable to it than those set forth in the third party offer, provided that the
sale or other disposition is effectuated within one hundred and eighty (180)
days from the effective date of the third party offer.
14.4. Exceptions to Right of First Refusal.
Section 14.3 shall not apply to the following:
14.4.1. Transfer by a Participant of all or any part of its interest
in this Agreement, any Participating Interest, or the Assets
to an Affiliate;
14.4.2. Incorporation of a Participant, or corporate merger,
consolidation, amalgamation or reorganization of a Participant
by which the surviving entity shall possess
-30-
substantially all of the stock, or all of the property rights
and interests, and be subject to substantially all of the
liabilities and obligations of that Participant;
14.4.3. The grant by a Participant of a security interest in any
interest in this Agreement, any Participating Interest, or the
Assets by mortgage, deed of trust, pledge, lien or other
encumbrance which shall be subordinate as set forth above; or
14.4.4. A sale or other commitment or disposition of Products or
proceeds from sale of Products by a Participant upon
distribution to it pursuant to Article 11.
Article 15. CONFIDENTIALITY AND RELEASES
15.1. General.
The financial terms of this Agreement and all information obtained in connection
with the performance of this Agreement are valuable trade secrets and shall be
the exclusive property of the Participants and shall be maintained on a
confidential basis. Neither Participant shall make any disclosure to any third
party or the public or give out any publicity, press release or written material
relating to confidential information, the Venture or the terms of this Agreement
without the prior written consent of the other Participant, which consent shall
not be unreasonably withheld.
15.2. Exceptions.
The consent required by Section 15.1 shall not apply to a disclosure:
-31-
15.2.1. To an Affiliate, consultant, contractor or subcontractor that
has a bona fide need to be informed;
15.2.2. To any third party to whom the disclosing Participant
contemplates a Transfer of all or any part of its interest in
or to this Agreement, its Participating Interest, or the
Assets; or
15.2.3. Which the disclosing Participant is required by pertinent law
or regulation or the rules of any stock exchange to disclose,
provided that in any case to which this Section 15.2 is
applicable, the disclosing Participant shall give written
notice to the other Participant prior to the making of any
such disclosure. The disclosing Participant shall allow the
other party twenty-four (24) hours to comment on the nature
and extent of such required disclosure.
15.2.4. As necessary to administer or enforce this Agreement.
As to any disclosure pursuant to Section 15.2.1 or 15.2.2, only such
confidential information as such third party shall have a legitimate business
need to know shall be disclosed and such third party shall first agree in
writing to protect the confidential information from further disclosure to the
same extent as the Participants are obligated under this Article 15.
15.3. Duration of Confidentiality.
The provisions of this Article 15 shall apply during the term of this Agreement
and for two (2) years following a termination pursuant to Section 12.1 or
following withdrawal pursuant to Section 12.2, and shall continue to apply to
any Participant who withdraws, who is deemed to have withdrawn, or who Transfers
its Participating Interest, for two years following the date of such occurrence.
Article 16. AREA OF INTEREST
16.1. Acquisitions in Area of Interest.
If at any time during the existence of this Agreement FSD stakes or otherwise
acquires any right to or interest in any properties within the Area of Interest,
FSD shall forthwith give notice to IDO of such acquisition, the total cost
thereof and all details in the possession of FSD with respect to the details of
the acquisition, the nature of the property and the known mineralization. IDO
may, within thirty (30) days of receipt of FSD's notice, elect, by notice to
FSD, to require that the properties and the right or interest acquired be held
equally by the parties and be included in and thereafter form part of the
Properties for all purposes of this Agreement.
-32-
In the event properties or interests in properties are acquired by FSD through a
joint venture in the Area of Interest after the Effective Date of this
Agreement, any such acquired properties or interest in acquired properties,
shall be held equally by FSD and IDO unless otherwise agreed.
If the election aforesaid is made, IDO shall reimburse the FSD for that portion
of the cost of acquisition which is equivalent to their respective Participating
Interests. If IDO does not make the election aforesaid within that period of
thirty (30) days, the right or interest acquired shall not form part of the
Properties and FSD shall be solely entitled thereto.
Article 17. GENERAL PROVISIONS
17.1. Notices.
All notices, payments and other required communications ("Notices") to the
Participants shall be in writing, and shall be addressed respectively as
follows:
17.1.1. If to IDO:
Idaho Consolidated Metals Corporation
X.X. Xxx 0000
Xxx Xxxxx, XX 00000
Attn: Wilf Struck
Phone: (000) 000-0000
Fax: (000) 000-0000
17.1.2. If to FSD:
First Choice Industries, LTD
Suite 101 - 0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
Attn: Xxx Xxxxxxx
Phone: (000) 000-0000
-33-
Fax: (000) 000-0000
All Notices shall be given:
i) by personal delivery to the Participant, or
ii) by electronic communication or facsimile, with a confirmation
sent by registered or certified mail return receipt requested,
iii) by registered or certified mail return receipt requested or
iv) by express mail.
All Notices shall be effective and shall be deemed delivered
i) if by personal delivery on the date of delivery if delivered
during normal business hours, and, if not delivered during
normal business hours, on the next business day following
delivery,
ii) if by electronic communication or facsimile on the next
business day following receipt of the electronic communication
or facsimile, and
iii) if solely by mail on the next business day after actual
receipt.
A Participant may change its address by Notice to the other Participant.
17.2. Waiver.
The failure of a Participant to insist on the strict performance of any
provision of this Agreement or to exercise any right, power or remedy upon a
breach hereof shall not constitute a waiver of any provision of this Agreement
or limit the Participant's right thereafter to enforce any provision or exercise
any right.
17.3. Modification.
No modification of this Agreement shall be valid unless made in writing and duly
executed by the Participants.
17.4. Force Majeure.
Except for the obligation to make payments when due hereunder, the obligations
of a Participant shall be suspended to the extent and for the period that
performance is prevented by any cause, whether foreseeable or unforeseeable,
beyond its reasonable control, including, without limitation, lack of
satisfactory market, labor disputes (however arising and whether or not employee
demands are reasonable or within the power of the Participant to grant); acts of
God; laws, regulations, orders, proclamations, instructions or requests of any
government or governmental entity; judgments or orders of any court; inability
to obtain on reasonably acceptable terms any public or private license, permit
or other authorization; curtailment or suspension of activities to remedy or
avoid an actual or alleged, present or prospective violation of federal,
provincial or local environmental standards; acts of war or conditions arising
out of or attributable to war, whether declared or undeclared; riot, civil
strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood,
sink holes; drought or other adverse weather condition; delay or failure by
suppliers or transporters of materials, parts, supplies, services or equipment
or by contractors' or subcontractors' shortage of, or inability to obtain,
labor, transportation, materials, machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment, machinery or facilities; or any
other cause whether similar or dissimilar to the foregoing. The affected
Participant shall promptly give notice to the other Participant of the
suspension of performance, stating therein the nature of the suspension, the
reasons therefor, and the expected duration thereof and this Agreement shall be
extended by the total period of such delays or suspension. The affected
Participant shall resume performance as soon as reasonably possible. During the
period of suspension the obligations of the Participants to advance funds
pursuant to Section 9.2 shall be reduced to levels consistent with Operations.
17.5. Economic Force Majeure.
Following the Earn-In Period and if at any time after the Management Committee
reaches a determination, in its reasonable judgment, that the minerals
encompassed within the Properties cannot be profitably mined under the terms and
conditions of this Agreement as it is then in effect, the Management Committee
may declare that a condition of Force Majeure exists as provided in Section
17.4, above; provided, that in no event shall a condition of Force Majeure
declared pursuant to this Section 17.5 be in effect for more than five (5)
consecutive years.
17.6. Governing Law.
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Montana.
17.7. Rule Against Perpetuities.
Any right or option to acquire any interest in real or personal property under
this Agreement must be exercised, if at all, so as to vest such interest in the
acquirer within twenty-one (21) years after the effective date of this
Agreement.
17.8. Further Assurances.
Each of the Participants agrees to take from time to time such actions and
execute such additional instruments as may be reasonably necessary or convenient
to implement and carry out the intent and purpose of this Agreement.
17.9. Survival of Terms and Conditions.
The following Sections shall survive the termination of this Agreement to the
full extent necessary for their enforcement and the protection of the
Participant in whose favor they run: Sections 2.2, 4.3, 6.6, 6.8, 12.2, 12.3,
12.4, 12.5, 12.7, 13.2, 17.6, and 1.3.3 of the Accounting Procedure.
17.10. Entire Agreement; Successors and Assigns.
This Agreement contains the entire understanding of the Participants and
supersedes all prior agreements and understandings between the Participants
relating to the subject matter hereof. This Agreement shall be binding upon and
inure to the benefit of the respective successors and permitted assigns of the
Participants. In the event of any conflict between this Agreement and any
Exhibit attached hereto, the terms of this Agreement shall be controlling.
17.11. Memorandum.
At the request of either Participant, a Memorandum or short form of this
Agreement, as appropriate, which shall not disclose financial information
contained herein, shall be prepared and recorded by Manager. This Agreement
shall not be recorded.
17.12. Funds.
All references to dollar amounts contained in this Agreement are references to
United States dollars.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
effective as of the day and year first above written.
Idaho Consolidated Metals Corp
By:
Title:
First Choice Industries, LTD
By :
Title:
Tax ID#:
Stillwater West PGM Venture Agreement November 1, 2001 CONFIDENTIAL
EXHIBIT A
LIST OF CLAIMS
EXHIBIT A
Attached to and made part of that certain Option Agreement dated the 1st day of
November, 2001 between Idaho Consolidated Metals Corporation and First Choice
Industries, LTD.
The following unpatented mining claims located in Park and Sweetgrass Counties,
State of Montana.
County_
Claim number County Book/Page MTMMC Claim_Type Claim_title Date_recorded
SR 235 128384 Sweetgrass 45/632 205847 lode unpatented 3/16/1999
SR 236 128385 Sweetgrass 45/633 205848 lode unpatented 3/16/1999
SR 237 128386 Sweetgrass 45/634 205849 lode unpatented 3/16/1999
SR 238 128387 Sweetgrass 45/635 205850 lode unpatented 3/16/1999
SR 239 128388 Sweetgrass 45/636 205851 lode unpatented 3/16/1999
SR 240 128389 Sweetgrass 45/637 205852 lode unpatented 3/16/1999
SR 241 128390 Sweetgrass 45/638 205853 lode unpatented 3/16/1999
SR 242 128391 Sweetgrass 45/639 205854 lode unpatented 3/16/1999
SR 243 128392 Sweetgrass 45/640 205855 lode unpatented 3/16/1999
SR 244 128393 Sweetgrass 45/641 205856 lode unpatented 3/16/1999
SR 245 128394 Sweetgrass 45/642 205857 lode unpatented 3/16/1999
SR 246 128395 Sweetgrass 45/643 205858 lode unpatented 3/16/1999
SR 247 128396 Sweetgrass 45/644 205859 lode unpatented 3/16/1999
SR 248 128397 Sweetgrass 45/645 205860 lode unpatented 3/16/1999
SR 249 128398 Sweetgrass 45/646 205861 lode unpatented 3/16/1999
SR 250 128399 Sweetgrass 45/647 205862 lode unpatented 3/16/1999
SR 251 128400 Sweetgrass 45/648 205863 lode unpatented 3/16/1999
SR 252 128401 Sweetgrass 45/649 205864 lode unpatented 3/16/1999
SR 253 128402 Sweetgrass 45/650 205865 lode unpatented 3/16/1999
SR 254 128403 Sweetgrass 45/651 205866 lode unpatented 3/16/1999
SR 255 128404 Sweetgrass 45/652 205867 lode unpatented 3/16/1999
SR 271 128419 Sweetgrass 45/667 205870 lode unpatented 3/16/1999
SR 272 128420 Sweetgrass 45/668 205871 lode unpatented 3/16/1999
SR 336 128866 Sweetgrass 45/713 206186 lode unpatented 6/17/1999
SR 337 128867 Sweetgrass 45/714 206187 lode unpatented 6/17/1999
SR 338 128868 Sweetgrass 45/715 206188 lode unpatented 6/17/1999
SR 339 128869 Sweetgrass 45/716 206189 lode unpatented 6/17/1999
SR 340 128870 Sweetgrass 45/717 206190 lode unpatented 6/17/1999
SR 341 128871 Sweetgrass 45/718 206191 lode unpatented 6/17/1999
SR 342 128872 Sweetgrass 45/719 206192 lode unpatented 6/17/1999
SR 343 128873 Sweetgrass 45/720 206193 lode unpatented 6/17/1999
SR 344 128874 Sweetgrass 45/721 206194 lode unpatented 6/17/1999
SR 345 128875 Sweetgrass 45/722 206195 lode unpatented 6/17/1999
SR 399 128928 Sweetgrass 45/775 206248 lode unpatented 6/17/1999
SR 400 128929 Sweetgrass 45/776 206249 lode unpatented 6/17/1999
SR 401 128930 Sweetgrass 45/777 206250 lode unpatented 6/17/1999
SR 402 128931 Sweetgrass 45/778 206251 lode unpatented 6/17/1999
SR 403 128932 Sweetgrass 45/779 206252 lode unpatented 6/17/1999
SR 404 128933 Sweetgrass 45/780 206253 lode unpatented 6/17/1999
SR 405 128934 Sweetgrass 45/781 206254 lode unpatented 6/17/1999
SR 406 128935 Sweetgrass 45/782 206255 lode unpatented 6/17/1999
SR 407 128936 Sweetgrass 45/783 206256 lode unpatented 6/17/1999
WC 1027 130499 Sweetgrass 46/276 207266 lode unpatented 2/25/2000
WC 1028 130498 Sweetgrass 46/275 207267 lode unpatented 2/25/2000
WC 1029 130497 Sweetgrass 46/274 207268 lode unpatented 2/25/2000
WC 1030 130496 Sweetgrass 46/273 207269 lode unpatented 2/25/2000
WC 1126 130495 Sweetgrass 46/272 207270 lode unpatented 2/25/2000
WC 1127 130494 Sweetgrass 46/271 207271 lode unpatented 2/25/2000
WC 1128 130493 Sweetgrass 46/270 207272 lode unpatented 2/25/2000
WC 1129 130492 Sweetgrass 46/269 207273 lode unpatented 2/25/2000
WC 1130 130491 Sweetgrass 46/268 207274 lode unpatented 2/25/2000
WC 1225 130490 Sweetgrass 46/267 207275 lode unpatented 2/25/2000
WC 1226 130489 Sweetgrass 46/266 207276 lode unpatented 2/25/2000
WC 1227 130488 Sweetgrass 46/265 207277 lode unpatented 2/25/2000
WC 1228 130487 Sweetgrass 46/264 207278 lode unpatented 2/25/2000
WC 1229 130486 Sweetgrass 46/263 207279 lode unpatented 2/25/2000
WC 1230 130485 Sweetgrass 46/262 207280 lode unpatented 2/25/2000
WC 1325 130484 Sweetgrass 46/261 207281 lode unpatented 2/25/2000
WC 1326 130483 Sweetgrass 46/260 207282 lode unpatented 2/25/2000
WC 1327 130482 Sweetgrass 46/259 207283 lode unpatented 2/25/2000
WC 1328 130481 Sweetgrass 46/258 207284 lode unpatented 2/25/2000
WC 1329 130480 Sweetgrass 46/257 207285 lode unpatented 2/25/2000
WC 1330 130479 Sweetgrass 46/256 207286 lode unpatented 2/25/2000
WC 1424 130478 Sweetgrass 46/255 207287 lode unpatented 2/25/2000
WC 1425 130477 Sweetgrass 46/254 207288 lode unpatented 2/25/2000
WC 1426 130476 Sweetgrass 46/253 207289 lode unpatented 2/25/2000
WC 1427 130475 Sweetgrass 46/252 207290 lode unpatented 2/25/2000
WC 1428 130474 Sweetgrass 46/251 207291 lode unpatented 2/25/2000
WC 1429 130473 Sweetgrass 46/250 207292 lode unpatented 2/25/2000
WC 1430 130472 Sweetgrass 46/249 207293 lode unpatented 2/25/2000
WC 1524 130471 Sweetgrass 46/248 207294 lode unpatented 2/25/2000
WC 1525 130470 Sweetgrass 46/247 207295 lode unpatented 2/25/2000
WC 1526 130469 Sweetgrass 46/246 207296 lode unpatented 2/25/2000
WC 1527 130468 Sweetgrass 46/245 207297 lode unpatented 2/25/2000
WC 1528 130467 Sweetgrass 46/244 207298 lode unpatented 2/25/2000
WC 1529 130466 Sweetgrass 46/243 207299 lode unpatented 2/25/2000
WC 1530 130465 Sweetgrass 46/242 207300 lode unpatented 2/25/2000
WC 1623 130464 Sweetgrass 46/241 207301 lode unpatented 2/25/2000
WC 1624 130463 Sweetgrass 46/240 207302 lode unpatented 2/25/2000
WC 1625 130462 Sweetgrass 46/239 207303 lode unpatented 2/25/2000
WC 1626 130461 Sweetgrass 46/238 207304 lode unpatented 2/25/2000
WC 1627 130460 Sweetgrass 46/237 207305 lode unpatented 2/25/2000
WC 1628 130459 Sweetgrass 46/236 207306 lode unpatented 2/25/2000
WC 1629 130458 Sweetgrass 46/235 207307 lode unpatented 2/25/2000
WC 1630 130457 Sweetgrass 46/234 207308 lode unpatented 2/25/2000
WC 1723 130456 Sweetgrass 46/233 207309 lode unpatented 2/25/2000
WC 1724 130455 Sweetgrass 46/232 207310 lode unpatented 2/25/2000
WC 1725 130454 Sweetgrass 46/231 207311 lode unpatented 2/25/2000
WC 1726 130453 Sweetgrass 46/230 207312 lode unpatented 2/25/2000
WC 1727 130452 Sweetgrass 46/229 207313 lode unpatented 2/25/2000
WC 1728 130451 Sweetgrass 46/228 207314 lode unpatented 2/25/2000
WC 1729 130450 Sweetgrass 46/227 207315 lode unpatented 2/25/2000
MB 3936 291955 Park R161/875 To Be assigned lode unpatented 10/23/2001
MB 3937 291956 Park R161/876 To Be assigned lode unpatented 10/23/2001
MB 3938 291957 Park R161/877 To Be assigned lode unpatented 10/23/2001
MB 3939 291958 Park R161/878 To Be assigned lode unpatented 10/23/2001
MB 3940 291959 Park R161/879 To Be assigned lode unpatented 10/23/2001
MB 3941 291960 Park R161/880 To Be assigned lode unpatented 10/23/2001
MB 3942 291961 Park R161/881 To Be assigned lode unpatented 10/23/2001
MB 3943 291962 Park R161/882 To Be assigned lode unpatented 10/23/2001
MB 3944 291963 Park R161/883 To Be assigned lode unpatented 10/23/2001
MB 3945 291964 Park R161/884 To Be assigned lode unpatented 10/23/2001
MB 3946 291965 Park R161/885 To Be assigned lode unpatented 10/23/2001
MB 4036 291966 Park R161/886 To Be assigned lode unpatented 10/23/2001
MB 4037 291967 Park R161/887 To Be assigned lode unpatented 10/23/2001
MB 4038 291968 Park R161/888 To Be assigned lode unpatented 10/23/2001
MB 4039 291969 Park R161/889 To Be assigned lode unpatented 10/23/2001
MB 4040 291970 Park R161/890 To Be assigned lode unpatented 10/23/2001
MB 4041 291971 Park R161/891 To Be assigned lode unpatented 10/23/2001
MB 4042 291972 Park R161/892 To Be assigned lode unpatented 10/23/2001
MB 4043 291973 Park R161/893 To Be assigned lode unpatented 10/23/2001
MB 4044 291974 Park R161/894 To Be assigned lode unpatented 10/23/2001
MB 4045 291975 Park R161/895 To Be assigned lode unpatented 10/23/2001
MB 4046 291976 Park R161/896 To Be assigned lode unpatented 10/23/2001
MB 4135 291977 Park R161/897 To Be assigned lode unpatented 10/23/2001
MB 4136 291978 Park R161/898 To Be assigned lode unpatented 10/23/2001
MB 4137 291979 Park R161/899 To Be assigned lode unpatented 10/23/2001
MB 4138 291980 Park R161/900 To Be assigned lode unpatented 10/23/2001
MB 4139 291981 Park R161/901 To Be assigned lode unpatented 10/23/2001
MB 4140 291982 Park R161/902 To Be assigned lode unpatented 10/23/2001
MB 4141 291983 Park R161/903 To Be assigned lode unpatented 10/23/2001
MB 4142 291984 Park R161/904 To Be assigned lode unpatented 10/23/2001
MB 4143 291985 Park R161/905 To Be assigned lode unpatented 10/23/2001
MB 4144 291986 Park R161/906 To Be assigned lode unpatented 10/23/2001
MB 4145 291987 Park R161/907 To Be assigned lode unpatented 10/23/2001
MB 4146 291988 Park R161/908 To Be assigned lode unpatented 10/23/2001
MB 4235 291989 Park R161/909 To Be assigned lode unpatented 10/23/2001
MB 4236 291990 Park R161/910 To Be assigned lode unpatented 10/23/2001
MB 4237 291991 Park R161/911 To Be assigned lode unpatented 10/23/2001
MB 4238 291992 Park R161/912 To Be assigned lode unpatented 10/23/2001
MB 4239 291993 Park R161/913 To Be assigned lode unpatented 10/23/2001
MB 4240 291994 Park R161/914 To Be assigned lode unpatented 10/23/2001
MB 4241 291995 Park R161/915 To Be assigned lode unpatented 10/23/2001
MB 4242 291996 Park R161/916 To Be assigned lode unpatented 10/23/2001
MB 4243 291997 Park R161/917 To Be assigned lode unpatented 10/23/2001
MB 4244 291998 Park R161/918 To Be assigned lode unpatented 10/23/2001
MB 4245 291999 Park R161/919 To Be assigned lode unpatented 10/23/2001
MB 4246 292000 Park R161/920 To Be assigned lode unpatented 10/23/2001
MB 4335 292001 Park R161/921 To Be assigned lode unpatented 10/23/2001
MB 4336 292002 Park R161/922 To Be assigned lode unpatented 10/23/2001
MB 4337 292003 Park R161/923 To Be assigned lode unpatented 10/23/2001
MB 4338 292004 Park R161/924 To Be assigned lode unpatented 10/23/2001
MB 4339 292005 Park R161/925 To Be assigned lode unpatented 10/23/2001
MB 4340 292006 Park R161/926 To Be assigned lode unpatented 10/23/2001
MB 4341 292007 Park R161/927 To Be assigned lode unpatented 10/23/2001
MB 4342 292008 Park R161/928 To Be assigned lode unpatented 10/23/2001
MB 4343 292009 Park R161/929 To Be assigned lode unpatented 10/23/2001
MB 4344 292010 Park R161/930 To Be assigned lode unpatented 10/23/2001
MB 4345 292011 Park R161/931 To Be assigned lode unpatented 10/23/2001
MB 4346 292012 Park R161/932 To Be assigned lode unpatented 10/23/2001
MB 4347 292013 Park R161/933 To Be assigned lode unpatented 10/23/2001
MB 4434 292014 Park R161/934 To Be assigned lode unpatented 10/23/2001
MB 4435 292015 Park R161/935 To Be assigned lode unpatented 10/23/2001
MB 4436 292016 Park R161/936 To Be assigned lode unpatented 10/23/2001
MB 4437 292017 Park R161/937 To Be assigned lode unpatented 10/23/2001
MB 4438 292018 Park R161/938 To Be assigned lode unpatented 10/23/2001
MB 4439 292019 Park R161/939 To Be assigned lode unpatented 10/23/2001
MB 4440 292020 Park R161/940 To Be assigned lode unpatented 10/23/2001
MB 4441 292021 Park R161/941 To Be assigned lode unpatented 10/23/2001
MB 4442 292022 Park R161/942 To Be assigned lode unpatented 10/23/2001
MB 4443 292023 Park R161/943 To Be assigned lode unpatented 10/23/2001
MB 4444 292024 Park R161/944 To Be assigned lode unpatented 10/23/2001
MB 4445 292025 Park R161/945 To Be assigned lode unpatented 10/23/2001
MB 4446 292026 Park R161/946 To Be assigned lode unpatented 10/23/2001
MB 4447 292027 Park R161/947 To Be assigned lode unpatented 10/23/2001
MB 4534 292028 Park R161/948 To Be assigned lode unpatented 10/23/2001
MB 4535 292029 Park R161/949 To Be assigned lode unpatented 10/23/2001
MB 4536 292030 Park R161/950 To Be assigned lode unpatented 10/23/2001
MB 4537 292031 Park R161/951 To Be assigned lode unpatented 10/23/2001
MB 4538 292032 Park R161/952 To Be assigned lode unpatented 10/23/2001
MB 4539 292033 Park R161/953 To Be assigned lode unpatented 10/23/2001
MB 4540 292034 Park R161/954 To Be assigned lode unpatented 10/23/2001
MB 4541 292035 Park R161/955 To Be assigned lode unpatented 10/23/2001
MB 4542 292036 Park R161/956 To Be assigned lode unpatented 10/23/2001
MB 4634 133557 Sweetgrass and Park 46LL/947 To Be assigned lode unpatented 10/23/2001
MB 4635 133558 Sweetgrass and Park 46LL/948 To Be assigned lode unpatented 10/23/2001
MB 4636 133559 Sweetgrass and Park 46LL/949 To Be assigned lode unpatented 10/23/2001
MB 4637 133560 Sweetgrass and Park 46LL/950 To Be assigned lode unpatented 10/23/2001
MB 4638 133561 Sweetgrass and Park 46LL/951 To Be assigned lode unpatented 10/23/2001
MB 4644 133562 Sweetgrass 46LL/952 To Be assigned lode unpatented 10/23/2001
MB 4645 133563 Sweetgrass 46LL/953 To Be assigned lode unpatented 10/23/2001
MB 4738 133564 Sweetgrass 46LL/954 To Be assigned lode unpatented 10/23/2001
MB 4739 133565 Sweetgrass 46LL/955 To Be assigned lode unpatented 10/23/2001
MB 4740 133566 Sweetgrass 46LL/956 To Be assigned lode unpatented 10/23/2001
MB 4741 133567 Sweetgrass 46LL/957 To Be assigned lode unpatented 10/23/2001
MB 4742 133568 Sweetgrass 46LL/958 To Be assigned lode unpatented 10/23/2001
MB 4743 133569 Sweetgrass 46LL/959 To Be assigned lode unpatented 10/23/2001
MB 5046 133570 Sweetgrass 46LL/960 To Be assigned lode unpatented 10/23/2001
MB 5047 133571 Sweetgrass 46LL/961 To Be assigned lode unpatented 10/23/2001
MB 5048 133572 Sweetgrass 46LL/962 To Be assigned lode unpatented 10/23/2001
MB 5146 133573 Sweetgrass 46LL/963 To Be assigned lode unpatented 10/23/2001
MB 5147 133574 Sweetgrass 46LL/964 To Be assigned lode unpatented 10/23/2001
MB 5148 133575 Sweetgrass 46LL/965 To Be assigned lode unpatented 10/23/2001
MB 5246 133576 Sweetgrass 46LL/966 To Be assigned lode unpatented 10/23/2001
MB 5247 133577 Sweetgrass 46LL/967 To Be assigned lode unpatented 10/23/2001
MB 5248 133578 Sweetgrass 46LL/968 To Be assigned lode unpatented 10/23/2001
MB 5346 133579 Sweetgrass 46LL/969 To Be assigned lode unpatented 10/23/2001
MB 5347 133580 Sweetgrass 46LL/970 To Be assigned lode unpatented 10/23/2001
MB 5348 133581 Sweetgrass 46LL/971 To Be assigned lode unpatented 10/23/2001
MB 5446 133582 Sweetgrass 46LL/972 To Be assigned lode unpatented 10/23/2001
MB 5447 133583 Sweetgrass 46LL/973 To Be assigned lode unpatented 10/23/2001
MB 5448 133584 Sweetgrass 46LL/974 To Be assigned lode unpatented 10/23/2001
MB 5544 133585 Sweetgrass 46LL/975 To Be assigned lode unpatented 10/23/2001
MB 5545 133586 Sweetgrass 46LL/976 To Be assigned lode unpatented 10/23/2001
MB 5546 133587 Sweetgrass 46LL/977 To Be assigned lode unpatented 10/23/2001
MB 5547 133588 Sweetgrass 46LL/978 To Be assigned lode unpatented 10/23/2001
MB 5548 133589 Sweetgrass 46LL/979 To Be assigned lode unpatented 10/23/2001
MB 5643 133590 Sweetgrass 46LL/980 To Be assigned lode unpatented 10/23/2001
MB 5644 133591 Sweetgrass 46LL/981 To Be assigned lode unpatented 10/23/2001
MB 5645 133592 Sweetgrass 46LL/982 To Be assigned lode unpatented 10/23/2001
MB 5646 133593 Sweetgrass 46LL/983 To Be assigned lode unpatented 10/23/2001
MB 5647 133594 Sweetgrass 46LL/984 To Be assigned lode unpatented 10/23/2001
MB 5648 133595 Sweetgrass 46LL/985 To Be assigned lode unpatented 10/23/2001
MB 5742 133596 Sweetgrass 46LL/986 To Be assigned lode unpatented 10/23/2001
MB 5743 133597 Sweetgrass 46LL/987 To Be assigned lode unpatented 10/23/2001
Total 000
Xxxxxxxxxx Xxxx PGM Venture Agreement November 1, 2001 CONFIDENTIAL
EXHIBIT B
ACCOUNTING PROCEDURES
EXHIBIT B
Attached to and made part of that certain Option Agreement dated the 1st day of
November, 2001 between Idaho Consolidated Metals Corporation and First Choice
Industries, LTD.
ACCOUNTING PROCEDURES
The purpose of these Accounting Procedures is to establish equitable
methods for determining charges and credits applicable to Operations under the
captioned Agreement (the "Agreement"). It is the intent of the Manager and any
Participant that is not acting as the Manager ("the non-Manager") that neither
of them shall gain nor lose by reason of their duties and responsibilities as
the Manager or the non-Manager but that the Manager should be reimbursed for the
value of services provided hereunder. If any method proves unfair or inequitable
to the Manager or the non-Manager, the Participants shall meet and in good faith
endeavor to agree upon changes deemed necessary to correct the unfairness or
inequity. In the event of a conflict between the provisions of these Accounting
Procedures and those of the Agreement, the provisions of the Agreement shall
control.
Article 1.
GENERAL PROVISIONS
1.1. Definitions.
The definitions set forth in the Agreement shall apply to these Accounting
Procedures and shall have the same meanings as used herein. Additional terms
used in these Accounting Procedures are set forth below shall have the following
meanings:
1.1.1. "Material" shall mean personal property, including but not
limited to supplies and non-depreciable equipment, acquired
and held for use in Operations.
1.1.2. "Outsider" shall mean participants other than "Participant" to
the Agreement and their affiliates.
1.1.3. "Personal Expenses" shall mean travel and other reasonable
reimbursable expenses of employees of the Manager or its
Affiliates.
1.1.4. "Technical Employees" shall mean those employees having
special and specific engineering, geological, legal, or other
professional skills, and whose primary function in Operations
is the handling of specific matters for the benefit of
Operations.
B-1
1.2. Accounting Records.
1.2.1. The Manager shall maintain accounting records for the Joint
Account in accordance with generally accepted accounting
principles consistently applied and used in the mining
industry.
1.2.2. The Manager shall take advantage of and credit the Venture
with all cash and trade discounts, freight allowances and
equalizations, annual volume or other allowances, credits,
salvages, commissions, insurance discount dividends and
retroactive premium adjustments, and any other benefits which
accrue to the Manager wholly or in part because of Operations.
1.3. Statements, Xxxxxxxx and Adjustments.
1.3.1. The Manager shall promptly submit to the Management Committee
monthly statements of account reflecting in reasonable detail
the charges and credits to the Joint Account during the
preceding month.
1.3.2. On the basis of the adopted Program and Budget, the Manager
shall submit to each Participant prior to the last day of each
month, a billing for estimated cash requirements for the next
month. Within ten (10) days after receipt of each billing,
each Participant shall advance to the Manager its
proportionate share of the estimated amount. Time is of the
essence of payment of such xxxxxxxx. The Manager shall at all
times maintain a cash balance approximately equal to the rate
of disbursement for up to forty-five (45) days.
1.3.3. A Participant that fails to meet cash calls in the amount and
at the times specified in Section 1.3.2 shall be in default,
and the amount of the defaulted cash call shall bear interest
from the date due at an annual rate equal to two (2)
percentage points over the Prime Rate, but in no event shall
said rate of interest exceed the maximum permitted by law. The
non-defaulting Participant shall have those rights, remedies
and elections specified in Section 6.4 of the Agreement.
1.3.4. Payment of bills shall not prejudice the right of the
non-Manager to protest or question the correctness thereof;
however, all bills and statements rendered during any calendar
year shall be presumed conclusively to be true and correct
after twelve (12) months following the end of any such
calendar year unless, within the said twelve-month period, the
non-Manager takes written exception thereto and makes claim on
the Manager for adjustment. No adjustment favorable to the
Manager shall be made unless it is made within the same
prescribed period or in connection with an adjustment in favor
of the non-Manager. The provisions of this paragraph shall not
prevent adjustments resulting from a physical inventory of the
Assets.
1.4. Advances and Payments.
1.4.1. As provided for in this Exhibit "B", the non-Manager shall
advance its share of the estimated cash outlay for the
succeeding month's operation. If the non-Manager's advances
exceed its share of actual expenditures, subsequent cash calls
will be adjusted downward or the Manager will refund to the
non-Manager excess funds that are not necessary for subsequent
Operations.
1.4.2. The Manager shall base its estimates of cash advance
requirements on the latest information available and shall
take into account cash on hand which may be applied to satisfy
such requirements in order to reduce the amounts to be
advanced. It is the intent of the Participants to provide
adequate funds for the Operations and to maintain bank
balances at minimum levels.
B-2
1.4.3. If the Manager does not request the non-Manager to advance its
share of estimated cash requirements, the non-Manager shall
pay its share of expenditures within thirty (30) days
following receipt of the Manager's billing.
1.4.4. Except as provided in Section 6.4 of the Agreement, all
payments shall be made on or before the due date by wire
transfer in immediately available funds to bank accounts
designated by the Manager. If not so paid, the unpaid balance
shall bear interest after the due date at the rate of Prime
Rate plus two percent (2%) for each thirty (30) day period or
portion thereof until such amount is paid, plus attorneys'
fees, court costs, and other costs related to the collection
of the unpaid amounts.
1.4.5. Funds received by the Manager from the non-Manager Participant
shall be segregated or maintained by the Manager as a separate
fund, and may not be commingled with the Manager's own funds,
except with the consent of the non-Manager Participant.
1.5. Audits.
Upon notice in writing to the Manager, the non-Manager shall have the right to
audit the accounts and records relating to the accounting made under this
Agreement for any calendar year within the twelve (12) month period following
the end of such calendar year; provided, however, the making of an audit shall
not extend the time for the taking of written exception to and the adjustments
of accounts pursuant to Section 1.3.4. The non-Manager may arrange for audits by
its own staff or outside professional and qualified independent auditors. Audits
shall be conducted in a manner so as to cause the minimum inconvenience to the
Manager. The Manager shall bear no portion of non-Manager's audit costs unless
agreed to by the Manager in advance of such audit. Notwithstanding the above, in
the event the non-Manager does not audit the accounts and records relating to
the accounting made under this Agreement the Manager shall have conducted
annually an audit of the accounts and records relating to the accounting made
under this Agreement. Such audit shall be for the account of the Venture. If the
non-Manager does have an audit performed as provided herein, the Manager shall
not be required to perform an additional audit.
Article 2.
CHARGEABLE COSTS
Subject to the provisions of the Agreement, the Manager shall charge
the Joint Account with all costs incurred by it as necessary and proper for the
conduct of Operations or maintenance of the Assets. Such costs shall be
reasonable and comparable with similar projects in the area. Except as otherwise
provided in the Agreement, the Manager shall charge the Joint Account with: (1)
exploration expenditures made for the exploration activities
B-3
within the Property, (2) expenditures made for engineering, environmental,
planning, Development and construction related to the Property and for the
equipment and facilities necessary for Operations, including all working capital
and sustaining capital for ongoing Operations and for the expansion and updating
of Operations, and (3) costs and expenses of mining, processing, reclamation,
restoration, worker's compensation and other claims upon closing of the mines,
and any other costs following the mine closing. Such costs include, but are not
limited to the following:
2.1. Property Payments.
Property payments, rentals, royalties and other payments out of production
(unless such royalties or other payments shall burden the ownership interests of
only one Participant) and fees, paid by the Manager for Operations including
permits, fees, and other charges which are assessed by various governmental
agencies. Such costs also include acquisition of easements, rights of way, and
surface rights.
2.2. Labor.
2.2.1. Salaries and wages of the Manager's employees directly engaged
in and the conduct of and for the benefit of Operations,
whether temporarily or permanently assigned. The proportion of
salaries and wages charged will be prorated proportionate to
the time spent by employees for the benefit of Operations.
Salaries and wages shall include everything constituting gross
pay to employees as reflected on the Manager's payroll,
including travel time and overtime.
2.2.2. The Manager's cost of holidays, rest days, vacations,
disability benefits, sickness, and other customary allowances
and reasonable expenses which are paid or reimbursed under the
Manager's usual practice. Such amounts may be charged either
on a "percentage assessment" of salaries and wages, or on a
cash basis.
2.2.3. Costs of expenditures or contributions made pursuant to
assessments imposed by governmental authority which are
applicable to the Manager's cost of salaries and wages.
2.2.4. Personal Expenses of employees whose salaries and wages are
chargeable to the Joint Account under Section 2.2.1, but only
to the extent that such Personal Expenses are incurred in
connection with their efforts while directly engaged in the
conduct of and for the benefit of Operations.
2.2.5. The Manager's actual costs of established plans for employees'
group life insurance, hospitalization, medical, dental,
pension, retirement, stock purchase, profit sharing, thrift,
bonus, and other benefit plans of a similar nature applicable
to the Manager's labor cost chargeable to the Joint Account.
2.2.6. If a percentage assignment is used for Section 2.2.2 and
2.2.5, the rate shall be based on actual cost experience for
the previous year. Such rate shall be determined during the
first quarter of each year and shall be applied in current
year operations.
2.2.7. Relocation costs of employees permanently or temporarily
assigned and directly engaged in the conduct of Operations.
Such costs shall include transportation of employees' families
and their personal and household effects and all other
relocation costs in accordance with the Manager's usual
practice.
B-4
2.3. Material.
Material purchased or furnished by the Manager for use in Operations as provided
under Article 3. So far as is reasonably practical, and consistent with
efficient and economical operations, only such Material shall be purchased or
transferred for use in Operations as may be required for immediate use.
2.4. Transportation.
2.4.1. Transportation of material and other related costs such as
expediting, crating, freight, and unloading at destination.
2.4.2. Transportation of employees as required in the conduct of
Operations.
2.5. Services.
2.5.1. The cost of consultants, contract labor, services, equipment,
and utilities procured from Outsiders.
2.5.2. Technical or research services, such as, but not limited to,
laboratory analysis, drafting, geophysical and geological
interpretation, engineering, reserve studies and related
computer services, and data processing, which may be delegated
to and performed by the specialized staffs of one of the
Participants or their Affiliate. Such professional services
shall be on a cost of service basis and charges shall not
exceed the cost of comparable quality services by qualified
Outsiders. Charges to the Joint Account for services directly
benefitting Operations shall be in addition to any charges
allowed under Sections 2.11 and 2.12.
2.5.3. In the event the Manager from time to time utilizes skilled
personnel of the Participants or their Affiliates for
performance of services either within the Property or
elsewhere for the benefit of Operations, whose time in full or
in part is not otherwise charged hereunder, a proper
proportion of the direct and indirect salary, employee
benefits, and travel expenses of such personnel shall be
charged to the Joint Account, provided such work is pursuant
to written authorization by the Manager. Such professional
services shall be on a cost of service basis and charges shall
not exceed the cost of comparable quality services by
qualified Outsiders.
2.5.4. Use of the Manager's and the non-Manager's separately owned
equipment and facilities for benefit of Operations. Such use
shall be charged to the Joint Account at rates commensurate
with the Manager's actual and full costs of ownership and
operation and such rates shall include cost of maintenance,
repairs, other operating expense, insurance, taxes (other than
income taxes), depreciation, and other overhead. These charges
shall not exceed the prevailing commercial rates in the area.
2.5.5. Data processing and computer services acquired for the benefit
of Operations may be contracted through Outsiders, or by
arrangement for computer services from one of the
Participants, or their Affiliates, even though such facilities
are not physically located within the Property. Charges to the
Joint Account under this provision for services directly
benefiting Operations shall be in addition to any charges
allowed under Section 2.11 and 2.12. Such professional
services shall be on a cost of service basis and charges shall
not exceed the cost of comparable quality services by
qualified Outsiders.
B-5
2.5.6. Any technical services, skilled personnel, equipment,
facilities or data processing services provided to Operations
by the non-Manager, at the request of the Manager, shall be
charged on the same basis as provided in Sections 2.5.2,
2.5.3, 2.5.4, and 2.5.5 above. The non-Manager shall xxxx the
Manager in accordance with Section 1.4.3 of the Accounting
Procedures. The Manager may audit the records of the
non-Manager with regard to such services in accordance with
the procedure set forth in Section 1.5.
2.6. Repair and Replacement of Property.
All costs or expenses (net of the recoveries from insurance for which the
premiums have been charged to the Joint Account, if any) necessary for the
repair or replacement of property resulting from damages or losses incurred by
fire, flood, storm, theft, accident, or any other cause, excepting the Manager's
gross negligence or willful misconduct. The Manager shall furnish to the
non-Manager written notice of damages or losses in excess of Fifteen Thousand
Dollars ($15,000) as soon as practicable. Such costs and expenses include the
costs to combat and control the actions of the hazard.
2.7. Insurance.
2.7.1. Premiums paid for Workers' Compensation or Employer's
Liability Insurance required to be carried for Operations.
Premiums paid for an insurance program covering such property,
business interruption, casualty, and fidelity risks as are
deemed prudent by the Manager based on sound business
judgment, which judgment shall be subject to review and
revision by the Management Committee. Premiums paid for other
insurance as requested by the Management Committee. Each
Participant may procure and maintain, at its own cost and
expense, such other insurance as it may determine to be
necessary to protect its interests, and any such insurance so
procured and maintained shall inure solely to the benefit of
the Participant procuring the same.
2.7.2. Actual expenditures incurred in the investigation, defense,
and settlement of all losses, claims, damages, judgments, and
other expenses for the benefit of Operations, excepting those
resulting from the Manager's gross negligence or willful
misconduct.
B-6
2.8. Litigation and Claims.
All costs or expenses of handling, investigation and settling litigation or
claims arising by reason of Operations or necessary to protect or recover
property, including, but not limited to, attorneys' fees, court costs, cost of
investigation or procuring evidence and amounts paid in settlement or
satisfaction of any such litigation or claims. In the event actions or claims
affecting Operations shall be handled by the legal staff of one of the
Participants, a charge commensurate with the cost of providing such service is
chargeable to the Joint Account.
2.9. Taxes.
All taxes (except taxes based on or determined with reference to income), fees,
and governmental assessments of every kind and nature. If the Manager is
required hereunder to pay ad valorem taxes based in whole or in part upon
separate valuations of each Participant's Interest, then notwithstanding
anything to the contrary herein, charges to the Joint Account shall be made and
paid by the Participants hereto in accordance with the percentage of tax value
generated by each Participant's Interest.
2.10. Fines.
All fines resulting from non-compliance with applicable laws, rules, and
regulations, except to the extent that such fines were due to the gross
negligence or willful misconduct of the Manager.
2.11. Direct Administrative Costs.
The net cost of maintaining and operating any offices (excepting the corporate
headquarters office), suboffices, camps, warehouses, housing, and other
facilities directly serving Operations shall be charged to the Joint Account. If
such facilities serve operations in addition to Operations, the net costs shall
be allocated to all operations served on an equitable basis mutually agreed to
by the Participants.
2.12. Manager's Management Fee.
A charge to reimburse the Manager for overhead and other general and
administrative services of the Manager's corporate headquarters office equal to
the following percentages
B-7
applied to costs and expenses determined on a monthly basis under the provisions
of Paragraphs 2 through 7, 11 and 13 through 15 of this Article 2:
2.12.1. Ten percent (10%) of all cash expenditures incurred prior to
Development.
2.12.2. Ten percent (10%) of all cash expenditures incurred following
commencement of Development.
Notwithstanding the above, such Manager's fees shall not be
charged on the overhead of any contractors or agents. The overhead rates set out
above shall be reviewed annually at the request of either party. If a detailed
analysis of the Manager's actual cost experiences establishes that higher or
lower overhead expenses were incurred or are likely to be incurred, and if
higher, are reasonable in the circumstances, then the rates shall be amended by
the Management Committee. Such amendment shall be on the basis that the Manager
neither profits nor loses as a result thereof.
2.13. Storage of Production Inventories.
Each Participant will bear the cost incurred for handling and storage of
merchantable ore or concentrates as follows:
2.13.1. Personal property taxes on ore or concentrates in storage for
a Participant within the Property shall be charged to such
Participant.
2.13.2. The cost of loading out such ore in storage for a Participant
from the Property shall be charged to such Participant.
2.13.3. Cost associated with providing storage of ore or concentrates
within the Property will be charged on a pro rata basis
determined by the Participants.
2.13.4. Other costs arising out of storage or handling of ore or
concentrates shall be charged to the Participant owning such
Materials.
2.13.5. Project Assets. The cost of all capital expenses of the Assets
which are normally depreciable, depletable, or amortizable,
including but not limited to land acquisition, exploration,
development, pre-mine development and stripping, machinery,
equipment, plant, buildings, rail facilities and equipment,
improvements, camp and port facilities, townsites and other
infrastructure, whether incurred or acquired prior to or after
Commencement of Commercial Production.
2.14. Other Necessary Expenses.
Any other chargeable expenditures not covered or dealt with in the foregoing
provisions which are necessary and proper for the conduct of Operations.
B-8
Article 3.
PRICING OF JOINT ACCOUNT MATERIAL PURCHASES,
TRANSFERS, AND DISPOSITION
The Manager is responsible for Joint Account Material and shall make
proper and timely charges and credits for all Material movements affecting the
Property. The Manager shall provide all Material for use within the Property,
however, at the Manager's option, such Material may be supplied by the
non-Manager.
3.1. Purchases.
Material purchased shall be charged at the price paid by the Manager after
deduction of all discount received. In case of Material found to be defective or
returned to vendor for any other reason, credit shall be passed to the Joint
Account when adjustment has been received by the Manager.
3.2. Transfer and Dispositions.
Material furnished to the Property and Material transferred from the Property or
disposed of by the Manager, unless otherwise agreed to by the Participants,
shall be priced at its current fair market value.
3.2.1. Premium Prices. Whenever Material is not readily obtainable at
published or listed prices because of national emergencies,
strikes, or other unusual causes over which the Manager has no
control, the Manager may charge the Joint Account for the
required Material at the Manager's actual cost incurred in
providing such Material, in making it suitable for use, and in
moving it to the Property.
3.3. Warranty of Material.
The Manager shall not be held responsible for defects in Material furnished for
Operations. In the event Material is defective, credit shall not be passed to
the Joint Account until the adjustment has been received by the Manager from the
manufacturer or its agents.
B-9
Article 4.
DISPOSAL OF SURPLUS MATERIAL
4.1. Distribution Generally.
The disposition of major items of surplus Material shall be decided upon by the
Manager. The Manager may purchase, but shall be under no obligation to purchase,
the interests of the non-Manager in surplus Material.
4.2. Purchase by Participants.
Surplus Material purchased by either the Manager or the non-Manager shall be
credited by the Manager to the Joint Account at its fair market value.
4.3. Distribution to Participants.
Division of Material in kind, if made between the Manager and the non-Manager,
shall be in proportion to their respective interests in such Material. Each
Participant will thereupon be charged individually with the value of the
Material received or receivable by each Participant, and corresponding credits
will be made by the Manager to the Joint Account. Such credits shall appear in
the monthly statement of operations.
4.3.1. Sales. Sales to Outsiders of Material from the Property shall
be credited by the Manager to the Joint Account at the net
amount collected by the Manager from vendee, which shall be
priced on the basis of the best available market price. Any
claim by vendee for defective Materials or otherwise shall be
charged back to the Joint Account if and when paid by the
Manager.
Article 5.
INVENTORIES
5.1. Periodic Inventories.
The Manager shall take physical inventory of Joint Account Material at
reasonable intervals in accordance with generally accepted accounting principles
but not less than once a year. The non-Manager may be represented when any
inventory shall bind the non-Manager to accept the inventory taken by the
Manager.
5.2. Reconciliation.
Reconciliation of inventories with the Joint Account shall be made by the
Manager, and a list of overages and shortages shall be furnished to the
non-Manager within ninety (90) days
B-10
following the taking of inventory. Inventory adjustments shall be made by the
Manager to the Joint Account for overages and shortages, but the Manager shall
be held accountable to the non-Manager only for shortages due to the lack of
reasonable diligence.
5.3. Special Inventories.
Whenever there is a sale or change of Interest in the Mineral Rights, the
Property or the Assets, a special inventory may be taken by the Manager,
provided the seller or purchaser or such Interest requests such inventory and
agrees to bear all of the expense thereof. In such cases, both the seller and
the purchaser shall be entitled to be represented. A special inventory shall be
required when there is a change in the Manager. The cost of the latter inventory
will be charged to the Joint Account when the change in the Manager does not
come about as the result of a sale of the former Manager's Interest.
5.4. Expenses.
The expense incurred by the Manager in conducting periodic inventories shall be
charged to the Joint Account.
B-11
Stillwater West PGM Venture Agreement November 1, 2001 CONFIDENTIAL
EXHIBIT C
NET SMELTER RETURN ROYALTY
EXHIBIT C
Attached to and made part of that certain Option Agreement dated the 1st day of
November, 2001 between Idaho Consolidated Metals Corporation and First Choice
Industries, LTD.
NET SMELTER RETURN ROYALTY
1. The royalty which may be payable to Idaho Consolidated Metals Corp.
(hereinafter called the "Payee") by First Choice Industries, LTD.
(hereinafter called the "Payor") will be three percent (3%) of One
Hundred percent (100%) of the Net Smelter Revenue (as hereinafter
defined) and will be calculated and paid to the Payee in accordance
with the terms of this schedule. Terms having defined meanings in the
agreement and used herein will have the same meanings in this Schedule
as assigned to them in the Assignment of Interest Agreement unless
otherwise specified or the context otherwise requires.
2. The Net Smelter Revenue will be calculated on a calendar quarterly
basis and will, subject to paragraph 7 of this schedule, be equal to
gross revenue less permissible deductions for such quarter.
3. The following words will have the following meanings:
3.1. "Gross Revenue" means the aggregate of the following amounts
received in each quarterly period following the commencement
of commercial production from the Mining Properties:
3.1.1. The revenue received by the Payor from arm's-length
purchasers of all product;
3.1.2. the fair market value of all Product sold by the
Payor in such period to persons not dealing at
arm's-length with the Payor; and
3.1.3. Any proceeds of insurance on Product;
C-1
3.2. Ore means all materials from the mining properties, the nature
and composition of which justifies either:
3.2.1. Mining or removing from place and shipping and
selling such material, or delivering such material to
a processing plant for physical or chemical
treatment; or
3.2.2. Leaching such material in place;
3.2.3. "Permissible Deductions" means the aggregate of the
following charges (to the extent that they are not
deducted by any purchaser in computing payment) that
are paid in each quarterly period:
3.2.3.1. Sales charges levied by any sales agent on
the sale of Product,
3.2.3.2. Transportation costs for Product from the
Mining Properties to the place of
beneficiation, processing or treatment and
thence to the place of delivery of product
to a purchaser thereof, including shipping,
freight, handling and forwarding expenses;
3.2.3.3. All costs, expenses and charges of any
nature whatsoever which are either paid or
incurred by Payor in connection with
refinement, beneficiation of product after
leaving the property, including all
weighing, sampling, assaying and
representation costs, metal losses, any
umpire charges and any penalties charged by
the processor, refinery or smelter, and
3.2.3.4. All insurance costs on Product, and any
government royalties, production taxes,
severance taxes and sales and other taxes
levied on Ore, Product or on the production
or value thereof (other than any Federal or
State taxes levied on the income or profit
of the Payor);
3.2.4. "Product" means: the
3.2.4.1. All ore shipped and sold prior to treatment,
and
3.2.4.2. All concentrates, precipitates and products
produced from Ore.
4. The payment on account of the royalty for each calendar quarter will be
calculated and paid within 60 days after the end of each calendar
quarter. Smelter settlement sheets, if any, and a statement setting
forth calculations in sufficient detail to show the payments derivation
(the "Statement") must be submitted with the payment.
5. In the event that final amounts required for the calculation of the
payment on the account of the royalty are not available within the time
frame referred to in section 4
C-2
of this schedule C, then provisional amounts will be estimated and such
payment will be paid on the basis of this provisional calculation.
Positive or negative adjustments will be made to the payment on account
of the royalty for the succeeding quarter.
6. All payments on account of the royalty will be considered final and in
full satisfaction of all obligations of the Payor with respect thereto,
unless the Payee delivers to the Payor a written notice (the "Objection
notice") describing and setting forth a specific objection to the
calculation thereof within 60 days after receipt by the payee of the
statement. If the Payee objects to a particular statement as herein
provided, the Payee will, for a period of 60 days after the Payor's
receipt of such objection notice, have the right, upon reasonable
notice and at a reasonable times, to have the Payor's accounts and
records relating to the calculation of the payment in question audited
by the auditors of the payee. If such audit determines that there has
been a deficiency or an excess in payment due to the payee, such
deficiency or excess will be resolved by adjusting the next quarterly
payment due hereunder. The Payee will paid or at the costs and expenses
of such product unless the deficiency of five (5) percent or more of
the amount due is determined to exist. The Payor will pay the costs and
expenses of such audit if a deficiency of five (5) percent or more of
the amount due is determined to exist. Failure on the part of the Payee
to make a claim against the Payor for adjustment in such 60 day period
by delivery of objection noticed will conclusively establish the
correctness and sufficiency of the statement and payment on account of
the royalty for such quarter.
7. All profits and losses resulting from the Payor engaging in any
commodity futures trading, options trading, metals trading, gold loans
or any combination thereof, and any other hedging transactions with
respect to the product which is a precious metal (collectively,
"Hedging Transactions") are specifically excluded from calculations of
the payment on account of the royalty pursuant to this schedule C but
(it being the intent of the parties that the Payor will have the
unrestricted right to market and sell Product to third parties in any
manner it chooses and that the payee will not have any right to
participate in such marketing activities or to share in a profit losses
therefrom. All hedging transactions by the Payor and all profit or
losses associated therewith, if any, will be solely for the Payor's
account. The amount of net smelter revenue derived from all products
subject to Hedging Transactions by the Payor will be determined
pursuant to the provisions of this paragraph 7 and not to Paragraph 2.
As to precious metal subject to hedging transactions by the Payor, Net
Smelter Revenue will be determined without reference to Hedging
Transactions and will be determined by using the quarterly average
price of the metal, which will be calculated by dividing the sum of all
the London Bullion Market Association P.M. Metal Fix prices reported
for the calendar quarter in question by the number of days for which
such prices were quoted. Any product subject to Hedging Transactions
will be deemed to be sold, and revenues received therefrom, only on the
date of the final settlement of the amount of refined product allocated
to the account of the Payor by a third party refinery in respect of
such transactions. Furthermore, the Payor will have no obligations to
C-3
fulfill any futures contracts, forward sales, gold loans or other
Hedging Transactions which the Payor may hold with product.
8. If the Royalty becomes payable to two or more parties, those parties
will appoint, and will deliver to the Payor a document executed by all
of those parties appointing, a single agent or trustee of all such
parties to whom the Payor will make all payments on account of the
royalty. The Payor will have no responsibility as to the division of
the royalty payments to such parties, and if the Payor makes a payment
or payments on account of the royalty in accordance with the provisions
of this paragraph 8, it will be conclusively deemed that such payment
or payments have been received by the Payee. All charges of the agent
or trustee will be borne solely by the parties receiving payments on
account of the royalty.
C-4
Stillwater West PGM Venture Agreement November 1, 2001 CONFIDENTIAL
EXHIBIT D
INSURANCE
EXHIBIT D
Attached to and made part of that certain Option Agreement dated the
1st day of November, 2001 between Idaho Consolidated Metals Corporation
and First Choice Industries, LTD.
INSURANCE
The Manager shall, at all times while conducting Operations, comply
fully with the applicable worker's compensation laws and purchase, or with the
unanimous consent of the Management Committee provide through self-insurance,
protection for the Participants comparable to that provided under standard form
insurance policies for (i) comprehensive public liability and property damage
with combined limits of Two Million Dollars for bodily injury and property
damage; (ii) automobile insurance with combined limits of Two Million Dollars;
and (iii) adequate and reasonable insurance against risk of fire and other risks
ordinarily insured against in similar operations. If the Manager elects to
self-insure, it shall charge to the Joint Account an amount equal to the premium
it would have paid had it secured and maintained a policy or policies of
insurance on a competitive bid basis in the amount of such coverage. Each
Participant may self-insure or purchase for its own account such additional
insurance as it deems necessary.
D-1
EXHIBIT E
MAP OF AREA OF INTEREST
[GRAPHIC OMITTED] MAP OF AREA OF INTEREST
Stillwater West PGM Venture Agreement November 1, 2001 CONFIDENTIAL
EXHIBIT F
MINING DEED AND ASSIGNMENT
Stillwater West PGM Venture Agreement November 1, 2001 CONFIDENTIAL
EXHIBIT F
Attached to and made part of that certain Option Agreement dated the
1st day of November, 2001 between Idaho Consolidated Metals Corporation
and First Choice Industries, LTD.
_________________________
When Recorded, Return to:|
|
|
_________________________|
MINING DEED AND ASSIGNMENT
This Mining Deed and Assignment is made as of ____________________ 20__ by Idaho
Consolidated Metals Corp., a British Columbia corporation (hereinafter called
"Grantor") to Stillwater West PGM Venture, a Montana joint venture comprised of
Idaho Consolidated Metals Corp., a British Columbia corporation, and First
Choice Industries, Ltd., a British Columbia corporation (hereinafter called
"Grantee").
KNOW ALL MEN BY THESE PRESENTS that Grantor, for and in consideration of $10.00
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by Grantor, does hereby grant and convey to Grantee all
of the right, title and interest of the Grantor in and to the unpatented lode
claims in Park and Sweet Grass Counties, Montana, more particularly described in
Exhibit A (hereinafter collectively called the "Properties").
TOGETHER WITH all and singular the tenements, hereditaments and appurtenances
thereunto belonging or in anywise appertaining, including all extralateral
rights and all ores, waste and rock therein or thereon, and together with all
right, title and interest therein which Grantor may hereafter acquire.
SUBJECT TO current taxes, assessments, reservations in patents, and the
Underlying Agreements.
GRANTOR REPRESENTS AND WARRANTS to Grantee that Grantor has full power and
authority to execute this Deed and to transfer and assign the Underlying
Agreements.
F-1
1. Grantor further represents and warrants to Grantee the following as of
the date hereof:
(a) Grantor is a corporation duly organized and validly existing
under the laws of the Province of British Columbia, Canada
qualified to transact business in the State of Montana and has
the requisite power and authority to convey the Properties in
accordance with the terms of this Deed.
(b) The person(s) executing this Deed on behalf of Grantor is
(are) duly authorized so to do.
(c) To the best of Grantor's knowledge and belief with respect to
unpatented mining claims set forth in Exhibit A and that are
included within the Properties, subject to the paramount title
of the United States and except as disclosed in writing to the
Grantee:
(i) the unpatented mining claims were properly laid out
and monumented;
(ii) all required location and validation work was
properly performed;
(iii) location notices and certificates were properly
recorded and filed with appropriate governmental
agencies;
(iv) the claims are free and clear of defects, liens and
encumbrances arising by, through or under Grantor,
except those of record, state and federal
environmental and development laws, rules and
regulations, and in this Agreement and defects,
liens, and any such encumbrances that do not
materially affect Grantee's rights under this
Agreement;
(v) Grantor has not received notice from anyone asserting
conflicting claims; and
(vi) the unpatented mining claims are in good standing and
compliance with all federal and state regulations in
force as of the effective date of this Agreement.
Nothing in this paragraph, however, shall be deemed
to be a representation or a warranty that any of the
mining claims contains a discovery of minerals.
(f) Grantor knows of no violation of any applicable federal,
state, regional, or county law or regulation relating to
zoning, land use, environmental protection, or otherwise with
respect to the Properties or activities relating thereto; and,
(g) With respect to the Properties, Grantor knows of no pending or
threatened actions, suits, claims or proceedings.
F-2
2. Any failure or loss of title to the Properties, and all costs of
defending title, shall be paid by the Grantee, except that all costs
and losses arising out of or resulting from breach of the
representations and warranties of Grantor shall be charged to Grantor
and all such costs and losses arising out of gross negligence by
Grantee shall be charged to Grantee as the case may be. Grantee shall
have the right, but not the obligation, to undertake to cure such
defects or to defend or to initiate litigation to defend such defects.
With respect to third party claims:
(a) If Grantor fails to satisfy and discharge any mortgage, lien,
tax levy or encumbrance (an "Encumbrance") chargeable solely
or in part to Grantor on the claims listed on Exhibit A, or
suffers or permits any Encumbrance to be imposed upon such,
Grantee at its option may, but shall not be obligated to, pay
for and discharge any Encumbrance and set off such payment by
withholding and retaining from any payments due Grantor any
amounts so paid by Grantee, without prejudice to any right of
Grantee to recover from Grantor the amount of such payment, in
any manner or by any remedy whatsoever, and Grantee shall have
all the rights and remedies against Grantor which the
mortgagor, lienor or creditor had immediately prior to the
time of such payment. Upon the request of Grantee, Grantor
shall promptly make, execute, acknowledge and deliver to
Grantee any and all instruments (in a form and substance
satisfactory to Grantee) that Grantee in its sole judgment may
deem necessary or desirable to fully effectuate the provisions
of this paragraph.
(b) If any person or entity not a party hereto asserts to have a
claim of ownership in the claims listed on Exhibit A, or a
claim to a share in the production from the claims listed on
Exhibit A (an "Adverse Claim"), Grantee at its sole
discretion, after written notice to Grantor, may suspend its
obligation to make payments as provided herein, and in lieu
thereof, may deposit in an interest-bearing account payments
equivalent to payments which may otherwise become due Grantor.
Such deposit or deposits shall remain in such interest-bearing
account until the claim or controversy is resolved or settled
by final court decision, by arbitration, negotiation or
otherwise. When Grantee is required or elects to make any
payments to such persons or entities not a party hereto as a
result of, or in settlement of, any such Adverse Claim, either
by way of contract, settlement, compromise, final court
judgment, or otherwise, Grantee may recover from, or credit
against, any payments thereafter becoming due Grantor
hereunder, the amount of such payments of all other costs and
expenses (including reasonable attorneys fees) paid or
incurred by Grantee as a result of any such Adverse Claim.
F-3
DATED:______________________, 20_____
Idaho Consolidated Metals Corp.
a British Columbia corporation,
Attest_____________________________By________________________________________
Wilf Struck
Secretary-Treasurer Vice President and Chief Operating Officer
F-4
