ENGLISH VERSION unexecuted
ENGLISH VERSION
unexecuted
THIS TEMPORARY OCCUPATION OF EJIDO LAND AGREEMENT is made and entered in the Town of Ocobiachi, Municipality of Guazap arez, State of Chihuahua, Mexico, on this the 7th day of May, 2006, between:
EJIDO OCOBIACHI of the Municipality of Guazaparez, State of Chihuahua, Mexico, an ejido duly incorporated pursuant to the Act, with main offices located at Salon Ejidal, Monterde, Guazaparez, Chihuahua, herein represented by the members of its board of directors Masseurs ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MARQTJEZ, President, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Secretary, MAIRCIAL ▇▇▇▇ ▇▇▇▇▇, Treasurer and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, President of the Supervisory Board (hereinafter referred to as the “Ejido”),
OF THE FIRST PART;
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, S. DE ▇.▇. DE C.V. a company duly incorporated pursuant to the Business Corporations Act of Mexico, with main offices located at Camino al Campestre no. 4302, Col. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇. Mexico, herein represented by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ acting as its General Manager holding General Powers of Attorney for Legal Representation and Collections, Acts of Administration and Domain (hereinafter referred to as the “Company”),
OF THE SECOND PART.
The appearing parties have caused the execution of this Agreement to set forth the terms and conditions under which the Ejido transfers to the Company, and the Company acquires from the Ejido, the rights of use, enjoyment and occupation in, to and under the Mining Occupation Land for execution of the Mining Activities (as defined here-below).
This Agreement is entered into by the parties hereto pursuant to the laws of
Mexico and, specifically, pursuant to the provisions set forth under the
Agrarian Act, the Mining Act and its Regulations and. the Federal Civil Code.
WARRANTIES AND REPRESENTATIONS UNDER OATH
I. The Ejido represents and warrants to the Company that
I.
It acknowledges that the Company is the sole proprietor of the Mining Concessions described in schedule B attached hereto and made part hereof (the “Mining Concessions”) and that Mineral Products that may exist under the land area comprising the Mining Concessions are owned by the Company as the sole proprietor of the Mining Concessions.
J.
The General Assembly of the Ejido held on May 7, 2006, called and organized in accordance with the provisions of the Act, duly approved and authorized the execution of this Agreement.
K.
The General Assembly of the Ejido has duly appointed the board of directors of the Ejido appearing as its representatives herein and such representation and authority have not, as of the date hereof, been revoked or amended in any manner whatsoever.
II.
The Company represents and warrants to the Ejido that
A.
It is a limited liability partnership duly incorporated and in existence pursuant to the Business Corporations Act of Mexico, represented herein by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ acting in his capacity of General Director holding general powers of attorney for legal representation, acts of administration and domain, which as of the date hereof have not been revoked or amended in any manner whatsoever.
B.
It possesses the legal capacity required under Mexican law to acquire as proprietor:
(a)
mining concessions located within the territory of Mexico, in accordance with article 11 of the Mining Act, and
(b)
real estate property rights located outside the constitutionally- restricted area, in conformity with article 10-A of the Foreign Investment Act and article 8 of its Regulations.
C.
It is the sole proprietor of the Mining Concessions.
D.
The use, enjoyment and occupation of the Mining Occupation Land is required by the Company in order to carry out the Mining Activities (as defined here-below).
NOW THEREFORE, in consideration of the mutual warranties and representations herein contained, the parties have caused the execution of this Agreement as follows:
CLAUSES
CLAUSE 1
TEMPORARY OCCUPATION
1.1. The Ejido, with the prior and express consent from the General Assembly of the Ejido Members held on May 7, 2006 hereby grants to the Company, and the Company hereby acquires from the Ejido, the rights of use, enjoyment and occupation of the Mining Occupation Land (identified and described in schedule A attached hereto and made part hereof) for execution at the discretion of the Company of the Mining Activities (defined here-below) and the environmental reclamation required under applicable Mexican law, regulations and official norms.
1.2. The Company shall be authorized to carry out, directly or through its representatives, employees or contractors, within the Mining Occupation Land, the following activities (the “Mining Activities”):
Any work or activity conducted for purposes of: (a) identification of mineral deposits and quantification and evaluation of mineral resources to determine the economic feasibility of its recovery (b) preparation and development of the area comprising the mineral deposit for the recovery and extraction of Mineral Products and (c) refining, treatment, sale and marketing of Mineral Products; including, without limiting the generality of the foregoing:
A.
The construction of any building or structure, or the execution of any exploration work (such as, geological reconnaissance, sampling of rocks, soil, sediments and minerals, metallurgical testing, geological and geophysical mapping, trenching and other supporting exploration work, drilling and underground developments of any nature, construction of tunnels and other underground work) directed to identify mineral deposits andlor to evaluate and quantify ore deposits located in, on or under the surface area covering the Mining Concessions.
B.
The access, establishment of easements or the construction of passages necessary to perform the activities set out in paragraph a above; the use, modification, widening or closure of roads, pathways or other ways of transportation existing on the Mining Occupation Land, to permit the free transit of personnel, equipment, machinery, Mineral Products or other assets of the Company.
“Mineral Products” means all mineral substances set out in article 4 of the Mining Act.
C.
The construction, improvement, removal, mounting or dismounting of campsites, warehouses, workshops, offices or other facilities used to carry out the activities herein set out.
D.
The occupation, dismounting or removal of property owned by Ejido Members which occupation, dismounting or removal is required for the execution by the Company of the activities herein set out.
E.
The use of water, or the obtainment of water rights or water concessions, including the installation of water pipelines or electricity cables and the construction of any structure or building intended for the conduction of water or electricity.
F.
The treatment, mining and refining of Mineral Products, in any of its phases, including, but not limited to, the removal, recovery and extraction by any means of Mineral Products.
G.
The investigation of the feasibility of mining Mineral Products; the development of a mine on the surface area comprising the Mining Occupation Land; the sale and marketing of Mineral Products.
H.
The execution of any activity deemed by the Company to be necessary, appropriate or incidental to the above.
CLAUSE 2
TERM OF TEMPORARY OCCUPATION
2.1. This Agreement and the rights of use, enjoyment and occupation granted by the Ejido to the Company on the Mining Occupation Land shall be in force and effect for a term of thirty (30) years commencing from the date of signing of this Agreement. The term of this Agreement shall be discretionary to the Company and compulsory to the Ejido. The Company shall have the right to relinquish at any time its rights hereunder and to terminate this Agreement, with no responsibility to the Company, by delivery to the Ejido of a 30 day written notice to the Ejido.
CLAUSE 3
ANNUAL RENT
3.1. The Company shall pay to the Ejido an annual rent in consideration of the rights of use, enjoyment and occupation granted by the Ejido to the Company on the Mining Occupation Land (the “Annual Rent”). The Annual Rent shall be established by an appraisal issued by the Institute for the Administration Appraisal of National Assets (“INDABIN”) and it shall be paid by the Company to the Ejido for each twelve month period in consideration for the rights of use, enjoyment and occupation granted by the Ejido to the Company on the Mining Occupation Land. The Annual Rent shall be paid within thirty calendar days following the delivery by the Company to the Ejido of a notice of commencement of Commercial Production and on each annual anniversary of the date of such notice.
For purposes hereof, “Commercial Production” shall mean the operation of the Mining Occupation Land or any part thereof as a mine but does not include milling for the purposes of testing or milling by a pilot plant. Commercial Production shall be deemed to have commenced on the first day of the month following the first 30 consecutive days during which Mineral Products have been produced from the Mining Occupation Land at an average rate not less than 70% of the initial rated capacity of the facilities designed for the Mining Occupation Land.
3.2.
For avoidance of doubt, the Annual Rent shall not be payable prior to
the Company notifying the Ejido the commencement of Commercial
Production of Mineral Products on any portion of the Mining Occupation
Land.
3.3.
The Company shall, at its own expense and prior to delivery of the notice of Commercial Production, apply for, and obtain from the INDABIN the applicable appraisal. A certified true copy of the appraisal shall be attached to the notice of commencement of Commercial Production.
3.4
Prior to commencement of Commercial Production and the payment of the Annual Rent, the Company will provide community services to the Ejido for the improvement of the community infrastructure and the betterment of the community as a whole in an amount of not less than US$40,000 per year, the cost of which will be reported annually to the Ejido.
CLAUSE 4
OBLIGATIONS OF THE COMPANY
4.1.
The Company, its employees and representatives shall comply with any and all provisions imposed by mining, labour and environmental legislation to the execution of the Mining Activities on the Mining Occupation Land.
4.2. The Company, its employees and representatives shall be responsible for any sanction, penalty or judgement issued by competent authority in respect to any act carried out in violation of or in contravention with mining, labour or environmental legislation applicable to the Mining Activities conducted on the Mining Occupation Land after the date of signing of this Agreement.
4.3. The Company, its employees and representatives hereby agree to indemnify and hold the Ejido harmless from any loss, liability, claim, accusation, demand or penalty that may be issued to or assessed against the Ejido, its representatives or members in respect to any act carried out by the Company in violation of or in contravention with mining, labour or environmental legislation applicable to the Mining Activities conducted on the Mining Occupation Land after the date of signing of this Agreement.
4.4. In respect to the execution of the Mining Activities on the Mining Occupation Land, the Company shall be solely responsible for obtainment from the competent authorities all permits, authorizations, concessions or favourable resolutions (or, when mandated by law, to issue a notice) in order to authorize the said Company to:
A.
Carry out the Mining Activities in accordance with the environmental impact study to be submitted in conformity with legislation applicable to the protection of the environment.
B.
Build, operate or maintain any mill, processing plant, structure or building, and its components, that is necessary or required for the execution of the Mining Activities.
C.
Consume or use water, whether recurring from the mine adits, or to discharge residual waters as the case may be, in conformity with legislation applicable to the protection of the environment.
D.
Use, consume, purchase or store explosives, in conformity with the Federal Explosives and Firearms Act.
4.5. The Company shall restore and rehabilitate any loss or damage that may be caused to the soil or subsoil of the surface area comprising the Mining Occupation Land as a result of the execution and at the conclusion of the Mining Activities, as mandated by legislation applicable to the protection of the environment.
4.6. The Ejido, its representatives and members shall have, during the term of this Agreement, access to the surface area comprising the Mining Occupation Land. The parties recognize that Mining Activities are inherently dangerous, therefore, such access to be at the sole risk of the Ejido, its representatives or members, or their family members, entering the property and it shall not in any way impede, interrupt or delay the execution of the Mining Activities. The Company, its directors, officers, employees, agents or contractors shall not be liable for any damage, expense, injury or harm incurred by or to the Ejido, its members or representatives, and/or to their family members or their personal property, when such damage, expense, injury or harm is incurred at the time such persons are on the property or as a result of the execution of the Mining Activities.
4.7. The Ejido, its representatives and Ejido Members, and their family members, are required to obtain from the Company a prior written consent to enter andlor remain in any portion of the Mining Occupation Land where Mining Activities have been, are being or will be conducted, and within a radius of 100 (one hundred) metres of such area.
4.8. On termination of this Agreement the Company shall, within a term of two years following such termination, remove from the Mining Occupation Land any and all property, including any equipment, machinery, tool or device utilized during the execution or at the conclusion of the Mining Activities.
CLAUSE 5
OBLIGATIONS OF THE EJIDO
5.1. The Ejido hereby irrevocably grants to the Company all authorizations, consents and permits required by the Company:
A.
Pursuant to applicable environmental legislation, to obtain the approval of change of use of soil from forestry to mining, the approval of the corresponding environmental impact study, and all authorizations, consents and permits required by the Secretariat of the Environment and Natural Resources for the Company to carry out the Mining Activities.
B.
To drill holes and for the use and enjoyment of underground or surface water ways owned by the Mexican Nation and for all permits, licenses or authorizations to be issued in the name of the Company, without the requirement for the Company to acquire the ownership of the land.
C.
In accordance with laws and regulations applicable to the use of soil, hygiene, health, labour or social programs and any other legislation applicable to the activities of the Company on the Mining Occupation Land.
The provisions herein shall be deemed as the consent, authorization, approval or permit of the Ejido to the Company to carry out all acts set forth above; no additional consent, authorization, approval or permit of the Ejido shall be required.
5.2.
The Ejido shall procure and do all acts necessary to provide and maintain full access by the Company, its representatives and contractors, to the Mining Occupation Land as agreed upon herein. In the event such access is restricted, limited or otherwise impeded by any person or object, including any member or representative of the Ejido and/or their family members, the Ejido shall forthwith, but in any case within a term of five calendar days following a written request from the Company, do all acts that are necessary, required or prudent to comply with its obligations hereunder, including the removal from the Mining Occupation Land, by any legal means necessary, of any person or object that in the opinion of the Company is or will be restricting, limiting or impeding the full and unrestricted access by the Company in or to the Mining Occupation Land.
5.3.
The Ejido shall be responsible for any sanction, penalty or judgement issued by a competent authority in respect to any act carried out in violation of or in contravention with mining, labour or environmental legislation applicable to the Mining Activities conducted on the Mining Occupation Land prior to the date of signing of this Agreement.
5.4. The Ejido hereby agrees to indemnify and hold the Company harmless from any loss, liability, claim, accusation, demand or penalty that may be issued to or assessed against the Company, its employees or representatives in respect to any act carried out in violation of or in contravention with mining, labour or environmental legislation applicable to the Mining Activities conducted on the Mining Occupation Land prior to the date of signing of this Agreement.
CLAUSE 6
OPTION TO PURCHASE
6.1.
The Ejido hereby grants to the Company, and the Company acquires from the Ejido, the exclusive right and option to purchase any portion or all of the hectares comprising the Mining Occupation Land (the “Option”) on
payment to the Ejido of the price appraised under appraisal issued by the Administration and Appraisal of National Assets Institute (INDAABIN).
6.2.
Prior to exercise of the Option, the Company shall deliver to the Ejido a written notice its intention to exercise the Option and it shall attach to said notice the appraisal issued by the INDAABIN containing the appraised total purchase price (the “Notice to Purchase”). On receipt of the Notice to Purchase, the Company and the Ejido shall sign and notarially ratify a sale and purchase agreement (the “Sale and Purchase Agreement”) whereby the Ejido shall transfer to the Company, on payment of the prices appraised by the INDAABIN (Commission), the ownership of the portion of the Mining Occupation Land to be purchase by the Company, free and clear of any lien, charge, claim of others or encumbrance.
6.3.
Prior to the signing of the Sale and Purchase Agreement, the Ejido shall execute all acts required pursuant to the Agrarian Act and applicable civil law to legally dispose of the immovable rights subject matter of the Sale and Purchase Agreement.
6.4.
If before the Company exercises its right to purchase any or all of the hectares comprising the Mining Occupation Land the Ejido elects to sell or transfer, or has received a bona fide offer to purchase, the ownership of a portion or all of the surface area comprising the Mining Occupation Land, then it shall, within a term of ten calendar days following such election or receipt, as the case may be, deliver a notice in writing to the Company expressing the terms and conditions intended for sale or, as the case may be, the terms and conditions offered to purchase.
6.5.
Upon receipt of the notice, the Company shall have a term of 60 calendar days to express its election to purchase, in the same terms and conditions set out in such notice, the rights intended for sale or offered to purchase, as the case may be.
6.6.
II at the conclusion of the said term, the Company has not expressed its election to purchase the rights intended for sale or offered to purchase, then the Ejido shall be free to sell or transfer, in the same terms and conditions set out in the respective notice, the portion or all of the surface area of the Mining Occupation Land subject matter thereof.
6.7.
If within the term set out in 6.5 the Company notifies the Ejido of its election to purchase, in the same terms and conditions set out in the respective notice, the rights intended for sale or offered to purchase, as the case may be, then the parties shall, within a term of ten calendar day following such notice, sign and execute a sale and purchase agreement to effect the transfer of ownership to the Company of such rights.
6.8.
If pursuant to 6.6. the Ejido, its successors or assigns, at any time sell or transfer the ownership of any portion of the surface area comprising the Mining Occupation Land, then this Agreement shall continue to be in full force and effect for the remaining of the term set out in clause 4 above. The assignee, transferee or purchaser of such rights shall agree, at the time such assignment, transfer or purchase is effected, to be solely responsible (or jointly responsible with the Ejido, its successors or assigns in the case of a partial assignment, transfer or purchase) for compliance with any and all obligations entered into hereunder. A copy of this Agreement shall be appended to the instrument constating such assignment, transfer or purchase.
CLAUSE 7
LEGAL RELATIONSHIP
7.1.
The parties acknowledge that there is no labour relationship between or among themselves or between or among the employees or contractors of one of the parties in respect to the other party; therefore, the parties expressly agree that each party shall individually bear all obligations or responsibilities, if any, imposed on each of them under applicable labour and tax legislation in respect to such party’s employees or contractors. Further, the parties agree to indemnify and hold each other harmless from, and in respect of, any suit, demand or complaint claimed or filed before any administrative or judicial authority by one of the party’s employees or contractors against the other party.
CLAUSE 8
ASSIGNMENT
8.1.
The Company, its successor and assigns, shall have the right to assign or transfer to any person, at its own discretion, the rights and obligations hereunder.
8.2.
This Agreement witnesses and signifies the authorization of the Ejido, and the right of the Company, its successors and assigns, to assign or transfer to any person the rights and obligations set forth in this Agreement. No additional consent or approval from the Ejido, its representatives, its members or the General Assembly is required to exercise the rights contemplated herein.
CLAUSE 9
LIMITATIONS
9.1.
The parties shall act towards each other in good faith and cotperation in all matters connected herewith, provided that:
A.
Such relationship shall not impose upon either of them any duties or liabilities whatsoever except in accordance with this Agreement.
B.
This Agreement shall not be deemed to constitute or create a partnership between the parties; and,
C.
Neither party shall have any authority to act for or to assume any obligation or responsibility on behalf, on account or in representation of the other party, except as provided herein.
CLAUSE 10
TERMINATION
10.1.
This Agreement shall terminate by:
A.
The dissolution and liquidation of the Company.
B.
The conclusion of the term set forth in clause 4 of this Agreement;
C.
The acquisition by the Company of the Mining Occupation Land; if the Company acquires only a portion of such surface area, then this Agreement shall continue to be in full force and effect for the remaining portion of the Mining Occupation Land.
D.
The delivery by the Company to the Ejido of a notice of termination of this Agreement pursuant to clause 4; the Company shall not be obligated to justify prove or demonstrate a cause or reason whatsoever for delivering such notice of termination.
E.
The final determination of nullity, cancellation or termination of the rights attached in and to the Mining Concessions.
F.
The written agreement of the parties.
CLAUSE 11
GOVERNING LAW AND TRIBUNALS
11.1. This Agreement shall be construed and regulated by the provisions of the Act, the Mining Act and the Regulations, the Code of Commerce and the
Civil Code of the State of Chihuahua, Mexico. The parties hereto agree that the state and federal tribunals with competent jurisdiction in and for the City of Chihuahua, State of Chihuahua, Mexico shall have the authority to resolve any dispute, suit or claim arising under this Agreement. The parties hereby renounce to the jurisdiction of any other tribunal or court to whose jurisdiction they might have a right to, by virtue of their current or future domiciles.
CLAUSE 12
FORCE MAJEURE
12.1. The obligation to pay the Annual Rent shall be suspended when the execution of the Mining Activities is prevented, delayed or interrupted by an act of force majeure. Payment of the obligation shall be suspended for the period of duration of the act of force majeure. In case of force majeure, the terms for payment of the suspended obligation(s) shall be advanced by the number of days equal to the period of existence of the force majeure.
12.2. The parties acknowledge as acts of force majeure, the following: any act of God or human act, such as earthquakes, volcanic eruptions, hurricanes, fires, floods, storms, accidents, droughts, avalanches, uprisings, rebellions, revolutions, wars, strikes, illegal confinement, acts of authority, impossibility to access, or complete obstacle to, the mining lots covered by the Mining Concessions and, in general, any other act not related to the will of the parties that prevents or delays the execution of the Mining Activities.
12.3. In the event of force majeure, the Company shall, as prompt as reasonably possible, deliver a notice to the Ejido to inform it of the estimated period of time during which payment of the respective Annual Rental Fee is expected to be suspended. On disappearance of the force majeure, the Company shall notify the Ejido accordingly and it shall, as prompt as reasonably possible, proceed with compliance of the suspended obligation(s).
CLAUSE 13
NOTICES
13.1. Any notice or notification given or required to be given between the parties as a result of the application of this Agreement, including any notification required under judicial proceedings, shall be given in writing and personally delivered to the other party, or delivered by any way that assures undoubtedly its reception or notification and it shall be addressed to the latest domiciles set out by the parties under this Agreement, which domiciles are, until further notice is given, as follows:
If to the Ejido:
If to the Company:
EJIDO OCOBIACHI
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ S. de ▇.▇. de C.V.
Domicilio Conocido
Camino al Campestre no. 4302
Poblado de Ocobiachi
Col. Quintas Campestre
Municipio de Guazaparez
Chihuahua, Chih.
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇, ▇▇▇▇▇▇
Mexico
CLAUSE 14
SUCESSORS AND ASSIGNS
14.1. This Agreement is binding upon, and inures to the benefit of, the Ejido, the Company and their respective successors and assigns.
CLAUSE 15
ENTIRE AGREEMENT
15.1. This Agreement with its schedules and the documents delivered as set forth hereunder, constitute the entire understanding of the parties in respect to the subject matter hereof, and they cancel and supersede any other agreement, contract or letter of intent that they may have executed in respect to the said subject matter.
In witness whereof, the parties hereto after having read and understood the legal effects and validity of the premises set forth above, have caused this Agreement to be executed on the date and place above written.
THE “EJIDO”
THE EJIDO OCOBIACHI
BOARD OF DIRECTORS
SRES. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Secretary
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Treasurer
SUPERVISORY BOARD
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Presidente
THE “COMPANY”
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, S. de ▇. ▇. de C.V.
_____________________________________
PER: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
GENERAL MANAGER
Convenio de Ocupacion Temporal / ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Ejido Ocobiachi -33-
