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EXHIBIT 10.12
RIGHT OF FIRST REFUSAL AGREEMENT
BETWEEN:
AZCO MINING INC.
AND:
SEVILLE MINERAL DEVELOPMENTS S.A. DE C.V.
AND:
XXXXXX XXXXXX RESOURCES LTD.
XXXXXX XXXXXX
Barristers and Solicitors
Suite 2550, 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
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-- Right of First Refusal Agreement --
-- Azco Mining Inc. --
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RIGHT OF FIRST REFUSAL AGREEMENT
THIS RIGHT OF FIRST REFUSAL AGREEMENT (the "Agreement") is made and
dated for reference effective as fully executed on this 18th day of June, 1998
(the "Effective Date").
BETWEEN:
AZCO MINING INC., a corporation duly incorporated under the laws of
the State of Delaware, U.S.A., and having an address for notice and
delivery located at Suite 1250, 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0
("Azco");
OF THE FIRST PART
AND:
SEVILLE MINERAL DEVELOPMENTS S.A. DE C.V., a corporation having an
address for notice and delivery located at Plaza Agua Caliente Blvd.
Agua Caliente 4558-1201 Xxxxxxx, X.X. 00000, Xxxxxx
("Seville");
OF THE SECOND PART
AND:
XXXXXX XXXXXX RESOURCES LTD., a corporation having an address for
notice and delivery at 0000 Xxxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X0
("Xxxxxx Xxxxxx");
OF THE THIRD PART
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(Seville and Xxxxxx Xxxxxx being hereinafter collectively referred to
as "Minera" as the context so requires); and
(Azco and Minera being hereinafter singularly also referred to as a
"Party" and collectively referred to as the "Parties" as the context
so requires).
WHEREAS IN CONSIDERATION of the mutual covenants contained in, and
the mutual benefits to be derived from, this Agreement, and including, without
limiting the generality of the foregoing, the subscription by Azco for 200,000
common shares of Mineral Xxxxxx at a subscription price of $0.25 per common
share, the Parties hereto agree as follows:
ARTICLE I
RIGHT OF FIRST REFUSAL - PROPERTY INTERESTS
1.1 RESTRICTION AND ASSIGNMENT RESPECTING PROPERTY INTERESTS. During the
subsistence of this Agreement, which shall be for a period of five years from
the above-referenced Effective Date of this Agreement (the "Option Period"),
Minera may not joint venture, option, sell, transfer or otherwise dispose of all
or any part of its present or hereinafter acquired interest in and to any
resource property interest (each being a "Property Interest") except in
accordance with the terms of this Agreement; provided, however, that Minera may
at any time at its sole discretion and without the prior approval of Azco assign
and transfer a Property Interest to any of its wholly owned subsidiaries, if
any, subject at all times to the requirement that any such subsidiary remain
wholly owned by Minera failing which any such interest must be immediately
transferred back to Minera; and provided further that any transfer of all or any
part of Minera's Property Interests or interests under this Agreement to its
wholly owned subsidiary shall be accompanied by the written agreement of any
such subsidiary to assume the obligations of Minera hereunder and to be bound by
the terms and conditions hereof.
1.2 RIGHT OF FIRST REFUSAL ON ANY OFFERED PROPERTY INTERESTS. Minera
hereby grants to Azco a 60 calendar day right of first refusal during the Option
Period to acquire all, but not less than all, of any Property Interest which
Minera desires to either joint venture, option or dispose of in any manner
during the Option Period (each being an "Offered Property Interest").
1.3 BONA FIDE OFFER. If Minera receives a bona fide offer (an "Offer") to
either joint venture, option or sell any Offered Property Interest, then Minera
shall forthwith offer the Offered Property Interest to Azco. The offer to Azco
shall be on terms and conditions substantially identical to, and of pro rata
equivalent dollar value as, those contained in the Offer either to or from the
third party.
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1.4 ELECTION. Azco shall be entitled to elect, by notice in writing (the
"Notice") to Minera within 60 calendar days from the date of receipt by Azco of
the Offer, to accept the Offered Property Interest on terms and conditions
substantially identical to those contained in the Offer either to or from the
third party (collectively, the "Terms and Conditions"). If Azco fails to provide
the Notice within the time required, Azco shall be deemed to have declined to
exercise its right of first refusal in connection with that particular Offer.
1.5 CONSIDERATION. Subject to Article "III" hereinbelow, in the event
that Azco elects, pursuant to section "1.4" hereinabove, to accept an Offered
Property Interest then, notwithstanding the remaining Terms and Conditions, and
in order that Azco may accept the Offered Property Interest on terms
substantially identical with the proposed consideration terms under the original
Offer, Azco will be entitled to match the proposed consideration terms under any
such Offer by way of the equivalent combination of both issuing shares of Azco
(collectively, the "Shares") and paying cash consideration (the "Cash
Consideration") to Minera such that the value of any such Shares and/or Cash
Consideration, as the case may be, will be equivalent in value to the proposed
consideration terms under the Offer and in the substantially identical relative
share/cash proportions. In this regard, and in order to more particularly
determine the value of any Shares to be provided by Azco for its acceptance of
an Offered Property Interest, Azco shall be entitled to utilize the previous
ten-day average closing price of Azco's common shares on The Toronto Stock
Exchange as at the date of any Notice as the appropriate per Share price forming
part of any such Share consideration. For greater certainty it is hereby
acknowledged and agreed that any proposed consideration under the terms of an
Offer which contemplates either cash consideration and/or work commitment
expenditures or the like must be matched by Azco in the Terms and Conditions of
its Notice.
1.6 NOT EXERCISED. If Azco does not exercise its right to accept an
Offered Property Interest as aforesaid, Minera may, for a period of 180 calendar
days following the last date upon which Azco could have made the election
pursuant to section "1.4" hereinabove, dispose of the Offered Property Interest
but only on terms and conditions substantially identical to those as contained
in the Offer for that Offered Property Interest.
1.7 TERMINATION OF RIGHT OF FIRST REFUSAL. Except with respect to the
specified Offered Property Interest, the right of first refusal to acquire up to
100% of any Offered Property Interest will not terminate if, on receipt of any
Offer from Minera under this section, Azco fails to exercise the right.
1.8 EXCLUSIONS TO RIGHT OF FIRST REFUSAL. The right of first refusal
shall not apply to any sales or transfers of Property Interests from Seville to
Xxxxxx Xxxxxx. In addition, it shall be subordinated to any such right granted
by Xxxxxx Xxxxxx in any joint venture, option or property purchase to an
optionor or vendor of any Property Interests acquired by Mineral Xxxxxx
subsequent to the Effective Date hereof.
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ARTICLE II
RIGHT OF FIRST REFUSAL - FINANCINGS FOR XXXXXX XXXXXX
2.1 NOTIFICATION. Xxxxxx Xxxxxx will notify Azco of the terms of any
further private and/or public equity or debt financing that it requires or
proposes to obtain during the Option Period (each a "Financing") and Azco will
have the right of first refusal to provide up to 100% of any such Financing on
terms and timing substantially identical as any third party is prepared to
provide.
2.2 EXERCISE OF RIGHT. This right of first refusal must be exercised by
Azco within 7 calendar days following its receipt of the notice from Mineral
Xxxxxx offering terms of Financing, or advising that it is prepared to accept a
third party offer of Financing, by notifying Xxxxxx Xxxxxx that they will
provide up to 100% of such Financing on terms substantially identical to those
contained in the notice.
2.3 FAILURE TO GIVE NOTICE. If Azco fails to give notice within the 7
calendar days that it will provide up to 100% of such Financing upon the terms
set out in the notice, Xxxxxx Xxxxxx will then be free for 180 calendar days to
make other arrangements to obtain financing from another source on substantially
identical terms.
2.4 TERMINATION OF RIGHT OF FIRST REFUSAL. The right of first refusal to
provide Financing will not terminate if, generally, on receipt of any notice
from Xxxxxx Xxxxxx under this section, Azco fails to exercise the right for that
Financing.
2.5 EXCLUSIONS TO RIGHT OF FIRST REFUSAL. For greater certainty the right
of first refusal to provide Financing hereunder shall not apply to any
securities issued by Xxxxxx Xxxxxx for incentive stock options, to vendors or
optionors for properties, pursuant to any amalgamation or reorganization or
pursuant to its initial public offering of securities (unless Xxxxxx Xxxxxx will
thereupon have adequate share distribution for listing). In addition, the right
of first refusal to provide Financing shall not apply to Seville.
ARTICLE III
ARBITRATION
3.1 MATTERS FOR ARBITRATION. Notwithstanding section "1.5" hereinabove,
the Parties hereto agree that all questions or matters in dispute with respect
to this Agreement shall be submitted to binding arbitration pursuant to the
terms hereof.
3.2 NOTICE AND NEGOTIATION. It shall be a condition precedent to the
right of any Party to submit any matter to arbitration pursuant to the
provisions hereof that such
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Party intending to refer any matter to arbitration shall have given to the other
Party, not less than 10 calendar days' prior written notice of its intention to
do so, together with reasonable particulars of the matter in dispute, and that
such complaining Party shall have invited the noticed Party at least once to
negotiate the dispute. On the expiration of such 10 calendar days the Party who
gave such notice may proceed to refer the dispute to arbitration as provided for
in section "3.3" hereinbelow.
3.3 APPOINTMENTS AND PROCEDURE. After the 10 calendar day period set
forth in section "3.2" hereinabove a Party desiring arbitration shall appoint
one arbitrator with a statement of credentials and shall notify the noticed
Party of such appointment, and the noticed Party shall, within 10 calendar days
after receiving such notice, agree that such first arbitrator shall be the only
arbitrator or shall appoint a second arbitrator and give notice of the same. The
two arbitrators so named, before proceeding to act, shall, within 10 calendar
days of the appointment of the last appointed arbitrator, agree on the
appointment of a third arbitrator to act with them, and such three arbitrators
shall select a chairman from themselves. If the noticed Party shall fail to
appoint and give notice of an arbitrator within 10 calendar days after receiving
notice of the appointment of the first arbitrator, then the first arbitrator
shall act as a single arbitrator, and if the two arbitrators appointed by the
Parties shall be unable to agree on the appointment of a third, then the third
arbitrator shall be appointed under the provisions (the "Rules") of the
Commercial Arbitration Act (British Columbia) or, failing that, by a judge of
the Supreme Court of the Province of British Columbia on the motion of any Party
to the dispute. Except as specifically otherwise provided in this section, the
arbitration herein provided for shall be conducted in accordance with such
Rules. Where there is an insufficiency in this Article or the Rules then the
arbitrators shall make reference to the provisions of the procedures and
practices of the British Columbia International Commercial Arbitration Centre
(Domestic Arbitration) and, if there is further insufficiency, and otherwise in
interpretation and rulings regarding this Article or the Rules and regarding the
matters of dispute, the arbitrators shall be the masters of procedure, evidence,
rules of order and the process of law and judgment. Where this Agreement, the
constating documents of either Party, other documents relevant to the Parties or
the law does not provide for or address any material matter in dispute, then the
arbitrator(s) shall have reference to the customary practice of the industry
and, if the Parties do not call expert testimony, the arbitrator(s) may, but is
not obliged to, call its own determined expert testimony at the cost of the
Parties. The arbitrators, or in the case where only one arbitrator is appointed,
the single arbitrator, shall fix a time and place in accordance with agreement
of the Parties or the Rules and shall establish the calendar and procedure for
the purpose of hearing the evidence and representations of the Parties. When
Azco is not a party to the arbitration the Parties and the arbitrator(s) shall
copy Azco with all correspondence and submissions to or from the arbitrator(s)
(omission to do so shall not invalidate the proceedings) unless the
arbitrator(s) rules that any communication is privileged, or any rulings or
awards. Azco shall have the right to intervene in the arbitration and have
standing to make representations on such terms as to costs as the arbitrator(s)
may determine. Any arbitration shall be transcribed, unless the Parties waive
such, and the proceedings and hearings and decisions shall be confidential and
in closed hearings unless the Parties waive such, partly or wholly or as may be
necessary for any execution of an arbitration award. After hearing any evidence
and representations that the Parties may submit, the single arbitrator, or the
arbitrators, as the case may be, shall make an award and reduce the same to
writing, and deliver one copy thereof to each of the Parties. The expense of the
arbitration shall be paid as specified in the award but, failing specification,
each Party
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shall bear its own costs and the losing party shall bear the cost of the
arbitrator(s) and the arbitration facilities.
3.4 AWARD. The Parties agree that the award of a majority of the
arbitrators, or in the case of a single arbitrator, of such arbitrator, shall be
final, binding and enforceable upon each of them and shall not be appealable
except for manifest error of law.
ARTICLE IV
GENERAL
4.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement to
date between the Parties hereto and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, between the
Parties hereto with respect to the subject matter of this Agreement. No
modification of this Agreement shall be effective unless in writing and executed
by each of the Parties to this Agreement.
4.2 ENUREMENT AND ASSIGNMENT. This Agreement will enure to the benefit of
and will be binding upon the Parties hereto and their respective successors. In
addition, and subject to section "1.1" hereinabove, this Agreement may not be
assigned without the prior written consent of all of the Parties hereto, which
consent shall be in their sole discretion.
4.3 TIME OF THE ESSENCE. Time will be of the essence of this Agreement.
4.4 REPRESENTATION. It is hereby acknowledged by each of the Parties
hereto that, as between the Parties herein, Xxxxxx Xxxxxx acts solely for Azco
and Lang Xxxxxxxx Xxxxxxxx & Xxxx acts solely for Xxxxxx Xxxxxx and,
correspondingly, that Seville has been advised by each of Xxxxxx Xxxxxx and Xxxx
Xxxxxxxx Xxxxxxxx & Xxxx to obtain independent legal advice with respect to
their respective review and execution of this Agreement.
4.5 APPLICABLE LAW. The situs of this Agreement is Vancouver, British
Columbia, and for all purposes this Agreement will be governed exclusively by
and construed and enforced in accordance with the laws prevailing in the
Province of British Columbia.
4.6 FURTHER ASSURANCES. The Parties hereto hereby, jointly and severally,
covenant and agree to forthwith, upon request, execute and deliver, or cause to
be executed and delivered, such further and other deeds, documents, assurances
and
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instructions as may be required by the Parties hereto or their respective
counsel in order to carry out the true nature and intent of this Agreement.
4.7 SEVERABILITY AND CONSTRUCTION. Each Article, section, paragraph, term
and provision of this Agreement, and any portion thereof, shall be considered
severable, and if, for any reason, any portion of this Agreement is determined
to be invalid, contrary to or in conflict with any applicable present or future
law, rule or regulation in a final unappealable ruling issued by any court,
agency or tribunal with valid jurisdiction in a proceeding to which any Party
hereto is a party, that ruling shall not impair the operation of, or have any
other effect upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the Parties and continue to
be given full force and agreement as of the date upon which the ruling becomes
final).
4.8 CAPTIONS. The captions, section numbers and Article numbers appearing
in this Agreement, if any, are inserted for convenience of reference only and
shall in no way define, limit, construe or describe the scope or intent of this
Agreement nor in any way affect this Agreement.
4.9 COUNTERPARTS. This Agreement may be signed by the Parties hereto in
as many counterparts as may be necessary, each of which so signed shall be
deemed to be an original, and such counterparts together shall constitute one
and the same instrument and notwithstanding the date of execution will be deemed
to bear the execution date as set forth on the front page of this Agreement.
4.10 NO PARTNERSHIP OR AGENCY. The Parties have not created a partnership
and nothing contained in this Agreement shall in any manner whatsoever
constitute any Party the partner, agent or legal representative of any other
Party, nor create any fiduciary relationship between them for any purpose
whatsoever. No Party shall have any authority to act for, or to assume any
obligations or responsibility on behalf of, any other party except as may be,
from time to time, agreed upon in writing between the Parties or as otherwise
expressly provided.
4.11 CONSENTS AND WAIVERS. No consent or waiver expressed or implied by
any Party in respect of any breach or default by any other Party in the
performance by such Party of its obligations hereunder shall:
(a) be valid unless it is in writing and stated to be a
consent or waiver pursuant to this section;
(b) be relied upon as a consent to or waiver of any other
breach or default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
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(d) eliminate or modify the need for a specific consent or
waiver pursuant to this section in any other or subsequent
instance.
IN WITNESS WHEREOF the Parties hereto have hereunto set
their respective hands and seals in the presence of their duly authorized
signatories effective on the day and year first above written.
The CORPORATE SEAL of )
AZCO MINING INC. )
)
was hereunto affixed in the presence of: )
) (C/S)
)
______________________________________________)
Authorized Signatory )
The CORPORATE SEAL of )
SEVILLE MINERAL )
DEVELOPMENTS S.A. DE C.V. )
was hereunto affixed in the presence of: ) (C/S)
)
)
______________________________________________)
Authorized Signatory )
The CORPORATE SEAL of )
XXXXXX XXXXXX RESOURCES LTD. )
was hereunto affixed in the presence of: )
) (C/S)
)
______________________________________________)
Authorized Signatory )
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-- Azco Mining Inc. --
