Exhibit 10.1
Option Agreement
OPTION AGREEMENT
THIS AGREEMENT is dated for reference the 28th day of November, 2002.
BETWEEN:
XXXXX XXXXX
An Ontario resident with an address at
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0X0
(the "Optionor")
OF THE FIRST PART
AND:
BAYVIEW CORPORATION
a Nevada corporation with its registered address at
Xxxxx 000, 00 Xxxx Xxxxxxx Xxxxx
Xxxx, Xxxxxx 00000
("Bayview")
OF SECOND PART
WHEREAS:
A. The Optionor is the owner of an undivided 100% right, title and
interest in and to mineral claims described in this Agreement;
B. Bayview wishes to acquire the option to acquire a 85% interest in the
Optionor's property on the terms and subject to the conditions contained in
this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the mutual covenants and agreements hereinafter contained, the
parties hereto agree as follows:
1. DEFINITIONS
1.1 In this Agreement, the following terms will have the meaning set forth
below:
(A) "Exploration and Development" means any and all activities comprising
or undertaken in connection with the exploration and development of the
Property, the construction of a mine and mining facilities on or in
proximity to the Property and placing the Property into commercial
production;
(B) "Property" means and includes:
(i) the mining claims in the Sudbury Mining District, Ontario, Canada
listed in Schedule A to this Agreement; and
(ii) all rights and appurtenances pertaining to the mining claims listed in
Schedule A, including all water and water rights, rights of way, and
easements, both recorded and unrecorded, to which the Optionor is entitled;
(C) "Property Expenditures" means all reasonable and necessary monies
expended on or in connection with Exploration and Development as determined
in accordance with generally accepted accounting principles including,
without limiting the generality of the foregoing:
(i) the cost of entering upon, surveying, prospecting and drilling on the
Property;
(ii) the cost of any geophysical, geochemical and geological reports or
surveys relating to the Property;
(iii) all filing and other fees and charges necessary or advisable to
keep the Property in good standing with any regulatory authorities having
jurisdiction;
(iv) all rentals, royalties, taxes (exclusive of all income taxes and
mining taxes based on income and which are or may be assessed against any
of the parties hereto) and any assessments whatsoever, whether the same
constitute charges on the Property or arise as a result of the operation
thereon;
(v) the cost, including rent and finance charges, of all buildings,
machinery, tools, appliances and equipment and related capital items that
may be erected, installed and used from time to time in connection with
Exploration and Development;
(vi) the cost of construction and maintenance of camps required for
Exploration and Development;
(vii) the cost of transporting persons, supplies, machinery and
equipment in connection with Exploration and Development;
(viii) all wages and salaries of persons engaged in Exploration and
Development and any assessments or levies made under the authority of any
regulatory body having jurisdiction with respect to such persons or
supplying food, lodging and other reasonable needs for such persons;
(ix) all costs of consulting and other engineering services including
report preparation;
(x) the cost of compliance with all statutes, orders and regulations
respecting environmental reclamation, restoration and other like work
required as a result of conducting Exploration and Development; and
(xi) all costs of searching for, digging, working, sampling, transporting,
mining and procuring diamonds, other minerals, ores, and metals from and
out of the Property;
2. OPTION
2.1 The Optionor hereby grants to Bayview the exclusive right and option
to acquire an undivided 85% right, title and interest in and to the
Property (the "Option") for total consideration consisting of a 1% Net
Smelter Return attached as schedule "C" hereto, cash payments to the
Optionor totalling $8,500 US and the incurrence of Property Expenditures
totalling $203,800 US to be made as follows:
(A) upon execution of this Agreement, the payment to the Optionor of
the sum of $8,500 US;
(B by November 30, 2003, the incurrence of Property Expenditures in
the amount of $24,600 US;
(C) by November 30, 2004, the incurrence of Property Expenditures in
the further amount of $179,200 US for total aggregate Property
Expenditures of $203,800 by November 30, 2004, provided that any
Property Expenditures incurred prior to November 30,
2003 which are in excess of $24,600 will be applied to the further
required amount of $179,200.
2.2 Upon making the cash payments and Property Expenditures as specified
in Paragraph 2.1, Bayview shall have acquired an undivided 85% right, title
and interest in and to the Property.
2.3 This Agreement is an option only and the doing of any act or the
making of any payment by Bayview shall not obligate Bayview to do any
further acts or make any further payments.
3. TRANSFER OF TITLE
3.1 Upon execution of this Agreement, Bayview shall be entitled to record
this Agreement against title to the Property.
3.2 Upon making the cash payments and Property Expenditures as specified
in Paragraph 2.1, the Optionor shall deliver to Bayview a duly executed
xxxx of sale or quit claim deed and such other executed documents of
transfer as required, in the opinion of Bayview's lawyers, for the transfer
of an undivided 85% interest in the Property to Bayview.
4. JOINT VENTURE
4.1 Upon Bayview acquiring an interest in the Property pursuant to
paragraph 2.1, the Optionor and Bayview agree to join and participate in a
single purpose joint venture ( the "Joint Venture") for the purpose of
further exploring and developing and, if economically and politically
feasible, constructing and operating a mine on the Property. The Joint
Venture shall be governed by an agreement which shall be in the form of
joint venture agreement attached as Schedule B hereto.
5.
RIGHT OF ENTRY
5.1 During the currency of this Agreement, Bayview, its servants, agents
and workmen and any persons duly authorised by Bayview, shall have the
right of access to and from and to enter upon and take possession of and
prospect, explore and develop the Property in such manner as Bayview in its
sole discretion may deem advisable for the purpose of incurring Property
Expenditures as contemplated by Section 2, and shall have the right to
remove and ship therefrom ores, minerals, metals, or other products
recovered in any manner therefrom.
6. COVENANTS OF BAYVIEW
6.1 Bayview covenants and agrees that:
(A) during the term of this Agreement, Bayview shall keep the Property
clear of all liens, encumbrances and other charges and shall keep the
Optionor indemnified in respect thereof;
B) Bayview shall carry on all operations on the Property in a good and
workmanlike manner and in compliance with all applicable governmental
regulations and restrictions including but not limited to the posting of
any reclamation bonds as may be required by any governmental regulations or
regulatory authorities;
(C) during the term of the option herein, Bayview shall pay or cause to be
paid any rates, taxes, duties, royalties, workers' compensation or other
assessments or fees levied with respect to its operations thereon and in
particular Bayview shall pay the yearly claim maintenance payments
necessary to maintain the claims in good standing;
(D) Bayview shall maintain books of account in respect of its expenditures
and operations on the Property and, upon reasonable notice, shall make such
books available for inspection by representatives of the Optionor;
(E) Bayview shall allow any duly authorised agent or representative of the
Optionor to inspect the Property at reasonable times and intervals and upon
reasonable notice given to Bayview, provided however, that it is agreed and
understood that any such agent or representative shall be at his own risk
in respect of, and Bayview shall not be liable for, any injury incurred
while on the Property, howsoever caused;
(F) Bayview shall allow the Optionor access at reasonable times to all
maps, reports, sample results and other technical data prepared or obtained
by Bayview in connection with its operations on the Property;
(G) Bayview shall indemnify and save the Optionor harmless of and from any
and all costs, claims, loss and damages whatsoever incidental to or arising
out of any work or operations carried out by or on behalf of Bayview on the
Property, including any liability of an environmental nature.
7. REPRESENTATIONS AND WARRANTIES
7.1 The Optionor hereby represents and warrants that:
(A) the Property is in good standing with all regulatory authorities
having jurisdictions and all required claim maintenance payments have been
made;
(B) it has not done anything whereby the mineral claims comprising the
Property may be in any way encumbered;
(C) it has full corporate power and authority to enter into this Agreement
and the entering into of this Agreement does not conflict with any
applicable laws or with its charter documents or any contract or other
commitment to which it is party; and
(D) the execution of this Agreement and the performance of its terms have
been duly authorised by all necessary corporate actions including the
resolution of its Board of Directors.
7.2 Bayview hereby represents and warrants that:
(A) it has full corporate power and authority to enter into this Agreement
and the entering into of this Agreement does not conflict with any
applicable laws or with its charter documents or any contract or other
commitment to which it is party; and
(B) the execution of this Agreement and the performance of its terms have
been duly authorised by all necessary corporate actions including the
resolution of its Board of Directors.
8. ASSIGNMENT
8.1 With the consent of the other party, which consent shall not be
unreasonably withheld, Bayview and the Optionor has the right to assign all
or any part of its interest in this Agreement and or in the Property,
subject to the terms and conditions of this Agreement. It shall be a
condition precedent to any such assignment that the assignee of the
interest being transferred agrees to be bound by the terms of this
Agreement, insofar as they are applicable.
9. CONFIDENTIALITY OF INFORMATION
9.1 Each of Bayview and the Optionor shall treat all data, reports,
records and other information of any nature whatsoever relating to this
Agreement and the Property as confidential, except where such information
must be disclosed for public disclosure requirements of a public company.
10. TERMINATION
10.1 Until such time as Bayview has acquired an undivided 85% interest in
the Property pursuant to Section 2, this Agreement shall terminate upon any
of the following events:
(A) upon the failure of Bayview to make a payment or incur Property
Expenditures required by and within the time limits prescribed by Paragraph
2.1;
(B) in the event that Bayview, not being at the time in default under any
provision of this Agreement, gives 30 day's written notice to the Optionor
of the termination of this Agreement;
(C) in the event that Bayview shall fail to comply with any of its
obligations hereunder, other than the obligations contained in Paragraph
2.1, and subject to Paragraph 11.1, and within 30 days of receipt by
Bayview of written notice from the Optionor of such default, Bayview has
not:
(i) cured such default, or commenced proceedings to cure such default and
prosecuted same to completion without undue delay; or
(ii) given the Optionor notice that it denies that such default has
occurred.
(D) delivery of notice of termination by Bayview pursuant to Paragraph 2.1
in the event the Geological Report is not acceptable;
(E) the inability of Bayview to complete the private placement referred to
in Paragraph 2.1(c).
In the event that Bayview gives notice that it denies that a default has
occurred, Bayview shall not be deemed in default until the matter shall
have been determined finally through such means of dispute resolution as
such matter has been subjected to by either party.
10.2 Upon termination of this Agreement under Xxxxxxxxx 00.0, Xxxxxxx
shall:
(A) transfer any interest in title to the Property, in good standing to
the Optionor free and clear of all liens, charges, and encumbrances;
(B) turn over to the Optionor copies of all maps, reports, sample results,
contracts and other data and documentation in the possession of Bayview or,
to the extent within Bayview's control, in the possession of its agents,
employees or independent contractors, in connection with its operations on
the Property; and
(C) ensure that the Property is in a safe condition and complies with all
environmental and safety standards imposed by any duly authorised
regulatory authority.
10.3 Upon the termination of this Agreement under Xxxxxxxxx 00.0, Xxxxxxx
shall cease to be liable to the Optionor in debt, damages or otherwise save
for the performance of those of its obligations which theretofore should
have been performed, including those obligations in Paragraph 10.2.
10.4 Upon termination of this Agreement, Bayview shall vacate the Property
within a reasonable time after such termination, but shall have the right
of access to the Property for a period of six months thereafter for the
purpose of removing its chattels, machinery, equipment and fixtures.
11. FORCE MAJEURE
11.1 The time for performance of any act or making any payment or any
expenditure required under this Agreement shall be extended by the period
of any delay or inability to perform due to fire, strikes, labour
disturbances, riots, civil commotion, wars, acts of God, any present or
future law or governmental regulation, any shortages of labour, equipment
or materials, or any other cause not reasonably within the control of the
party in default, other than lack of finances.
12. REGULATORY APPROVAL
12.1 If this Agreement is subject to the prior approval of any securities
regulatory bodies, then the parties shall use their best efforts to obtain
such regulatory approvals.
13. NOTICES
13.1 Any notice, election, consent or other writing required or permitted
to be given hereunder shall be deemed to be sufficiently given if delivered
or mailed postage prepaid or if given by telegram, telex or telecopier,
addressed as follows:
In the case of the Optionor: Xxxxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Telecopier: (000) 000-0000
In the case of Bayview : Bayview Corporation
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX
Xxxxxx X0X 0X0
Telecopier: (000) 000-0000
and any such notice given as aforesaid shall be deemed to have been given
to the parties hereto if delivered, when delivered, or if mailed, on the
third business day following the date of mailing, or, if telegraphed,
telexed or telecopied, on the same day as the telegraphing, telexing or
telecopying thereof PROVIDED HOWEVER that during the period of any postal
interruption in Canada any notice given hereunder by mail shall be deemed
to have been given only as of the date of actual delivery of the same. Any
party may from time to time by notice in writing change its address for the
purposes of this Paragraph 13.1.
14. GENERAL TERMS AND CONDITIONS
14.1 The parties hereto hereby covenant and agree that they will execute
such further agreements, conveyances and assurances as may be requisite, or
which counsel for the parties may deem necessary to effectually carry out
the intent of this Agreement.
14.2 This Agreement shall constitute the entire agreement between the
parties with respect to the Property. No representations or inducements
have been made save as herein set forth. No changes, alterations or
modifications of this Agreement shall be binding upon either party until
and unless a memorandum in writing to such effect shall have been signed by
all parties hereto. This Agreement shall supersede all previous written,
oral or implied understandings between the parties with respect to the
matters covered hereby.
14.3 Time shall be of the essence of this Agreement.
14.4 The titles to the sections in this Agreement shall not be deemed to
form part of this Agreement but shall be regarded as having been used for
convenience of reference only.
14.5 Unless otherwise noted, all currency references contained in this
Agreement shall be deemed to be references to United States funds.
14.6 Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision shall be prohibited by or be invalid under
applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
14.7 The Schedules to this Agreement shall be construed with and as an
integral part of this Agreement to the same extent as if they were set
forth verbatim herein.
14.8 Defined terms contained in this Agreement shall have the same meanings
where used in the Schedules.
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14.9 This Agreement shall be governed by and interpreted in accordance with
the laws of British Columbia and the laws of Canada applicable therein.
14.10 This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
WITNESS WHEREOF this Agreement has been executed by the parties hereto as
of the day and year first above written.
XXXXX XXXXX
/s/ Xxxxx Xxxxx
______________________________
Signature of Authorised Signatory
Xxxxx Xxxxx
______________________________
Name of Authorised Signatory
President
______________________________
Position of Authorised Signatory
BAYVIEW CORPORATION
by its authorised signatory:
/s/ Xxxxx Xxxx
______________________________
Signature of Authorised Signatory
Xxxxx Xxxx
______________________________
Name of Authorised Signatory
President
______________________________
Position of Authorised Signatory
SCHEDULE "A"
PROPERTY DESCRIPTION
G.P.S. CO-ORDINATES: 5169500N and 521500E
SUDBURY MINING DISTRICT
ONTARIO
CANADA
List of Claims
CLAIM NUMBERS TOWNSHIP/AREA CURRENT EXPIRY DATE
3004254 - 11 UNITS XXXXXXXXX SEPTEMBER 10, 2004
3004255 - 2 UNITS XXXXXXXXX SEPTEMBER 10, 2004
SCHEDULE "B"
JOINT VENTURE AGREEMENT
EXPLORATION JOINT VENTURE AGREEMENT
THIS AGREEMENT made as of the ** day of **, 20**.
BETWEEN:
XXXXX XXXXX
an Ontario resident with an address at
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0X0
(the "Optionor")
OF THE FIRST PART
AND:
BAYVIEW CORPORATION
a Nevada corporation with its registered address at
Xxxxx 000, 00 Xxxx Xxxxxxx Xxxxx,
Xxxx, Xxxxxx 00000
("Bayview")
OF THE SECOND PART
WHEREAS:
A. Bayview owns a 85% and Xxxxx Xxxxx owns a 15% undivided right,
title and interest in and to the Property;
B. The parties wish to create a joint venture to carry out the
continued exploration of the Property on the terms and subject to the
conditions hereinafter set forth;
C. The parties have agreed that, if following the completion of such
exploration a Feasibility Report is prepared which recommends placing the
Property into commercial production, they will negotiate and settle a
further joint venture agreement for the development and placing of the
Property into commercial production;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises, and of the mutual covenants and agreements herein contained, the
parties hereto have agreed and do hereby agree as follows:
1. DEFINITIONS
1.1 In this Agreement, including the Recitals and Schedules hereto
the following words and expressions shall have the following meanings:
(a) "Affiliate" shall have the same meaning as under the Company Act
(British Columbia) as at the date hereof;
(b) "Agreement" means this Joint Venture Agreement as amended from
time to time;
(c) "Costs" means all items of outlay and expense whatsoever, both
direct and indirect incurred by or on behalf of the parties, in
connection with the Property, the exploration and development
thereof and expenses in respect of the Feasibility Report;
(d) "Feasibility Report" means a detailed written report of the
results of a comprehensive study on the economic feasibility of
placing the Property or a portion thereof into commercial
production and shall include a reasonable assessment of the
mineral ore reserves and their amenability to metallurgical
treatment, a description of the work, equipment and supplies
required to bring the Property or a portion thereof into
commercial production and the estimated cost thereof, a
description of the mining methods to be employed and a financial
appraisal of the proposed operations supported by an explanation
of the data used therein;
(e) "Interest" means the undivided beneficial percentage interest
from time to time of a party in the Joint Venture, the Property,
and Mineral Products, as set out hereunder;
(f) "Joint Venture" means the joint venture created pursuant to this
Agreement;
(g) "Management Committee" means the committee of representatives of
the parties to this Agreement constituted in accordance with the
provisions of article 5 to manage or supervise the management of
the business and affairs of the Joint Venture;
(h) "Mineral Products" means the end products derived from operating
the Property as a mine;
(i) "Net Profits" shall mean net profits calculated in accordance
with Schedule "B" hereto;
(j) "Operator" means the operator appointed pursuant to article 6;
(k) "Other Tenements" means all surface rights of and to any lands
within or outside the Property including surface held in fee or
under lease, licence, easement, right of way or other rights of
any kind (and all renewals, extensions and amendments thereof or
substitutions therefor) acquired by or on behalf of the parties
with respect to the Property;
(l) "Program" means a plan, including budgets, for the Project or any
part thereof as approved by the Management Committee pursuant to
this Agreement;
(m) "Project" means the exploration and development of the Property
and preparation and delivery of a Feasibility Report;
(n) "Property" means those certain mining claims and related rights
and interests set out and more particularly described in Schedule
"A" hereto and Other Tenements and shall include any renewal
thereof and any form of substitute or successor title thereto;
and
(o) "Royalty" shall mean a royalty on the Net Profits calculated and
paid in accordance with Schedule "B" hereto.
2. REPRESENTATIONS AND WARRANTIES
2.1 Bayview represents to Xxxxx Xxxxx that:
(a) it is the legal and beneficial owner of a 85% Interest free and
clear of all liens, charges and encumbrances; and
(b) save and except as set out herein, there is no adverse claim or
challenge against or to the ownership of or title to Bayview's
Interest or any portion thereof, nor is there any basis therefor,
and there are no outstanding agreements or options to acquire or
purchase Bayview's Interest or any portion thereof.
2.2 Xxxxx Xxxxx represents to Bayview that:
(a) it is the legal and beneficial owner of a 15% Interest free and
clear of all liens, charges and encumbrances; and
(b) save and except as set out herein, there is no adverse claim or
challenge against or to the ownership of or title to Xxxxx
Xxxxx'x Interest or any portion thereof, nor is there any basis
therefor, and there are no outstanding agreements or options to
acquire or purchase Xxxxx Xxxxx'x Interest or any portion
thereof.
2.3 Each of the parties represents to the other that:
(a) it is a company duly incorporated, organized and validly
subsisting under the laws of its incorporating jurisdiction;
(b) it has full power and authority to carry on its business and
enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement and to carry out
and perform all of its obligations hereunder;
(c) it has duly obtained all corporate authorizations for the
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated, and the
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with or result in any breach of any covenants or
agreements contained in, or constitute a default under, or result
in the creation of any encumbrance, lien or charge under the
provisions of its constating documents or any indenture,
agreement or other instrument whatsoever to which it is a party
or by which it is bound or to which it may be subject and will
not contravene any applicable laws.
2.4 The representations and warranties hereinbefore set out are
conditions on which the parties have relied in entering into this
Agreement, are to be construed as both conditions and warranties and shall,
regardless of any investigation which may have been made by or on behalf of
any party as to the accuracy of such representations and warranties,
survive the closing of the transactions contemplated hereby and each of the
parties will indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach of
any representation or warranty contained in this Agreement and each party
shall be entitled, in addition to any other remedy to which it may be
entitled, to set off any such loss, damage or costs suffered by it as a
result of any such breach against any payment required to be made by it to
the other party hereunder.
3. PURPOSE AND CREATION OF THE JOINT VENTURE
3.1 The parties agree each with the other to use their best efforts
to explore and develop the Property with the goal of eventually putting the
Property into commercial production should a Feasibility Report
recommending commercial production be obtained and a decision to commence
commercial production be made, which Feasibility Report and decision have
not, at the date of this Agreement, been obtained or made and for this
purpose hereby agree to associate and participate in a single purpose joint
venture to carry out all such acts which are necessary or appropriate,
directly or indirectly, to carry out the Project.
3.2 The parties have not created a partnership and nothing contained
in this Agreement shall in any manner whatsoever constitute a party the
partner, agent or legal representative of any other party or create any
fiduciary relationship between them for any purpose whatsoever. No party
shall have any authority to act for or to assume any obligations or
responsibility on behalf of any other party except as may be, from time to
time, agreed upon in writing between the parties or as otherwise expressly
provided.
3.3 The rights and obligations of each party shall be in every case
several and not joint or joint and several.
3.4 Beneficial ownership of the Property shall remain in each party
in proportion to its respective Interest and any legal title to the
Property held by any party shall be subject to this Agreement. All
property held, acquired or contributed by or on behalf of the parties under
or pursuant to this Agreement shall be beneficially owned by the parties as
tenants in common in proportion to their respective Interests.
3.5 Each party shall make available its Interest exclusively for the
purposes of the Project and, in particular, each party agrees to grant a
mortgage, charge, lien or other encumbrance on, or any security interest
in, its Interest to and in favour of any lender to facilitate financing of
the Project or any portion thereof.
3.6 The rights and obligations of the parties created under this
Agreement shall be strictly limited to the Project and shall not be
extended by implication or otherwise, except with the unanimous written
consent of the parties.
3.7 Except as may be otherwise expressly provided in this Agreement,
nothing herein shall restrict in any way the freedom of any party, except
with respect to its Interest, to conduct as it sees fit any business or
activity whatsoever, including the development or application of any
process, and the exploration for, development, mining, extraction,
production, handling, processing or any treatment, transportation or
marketing of any ore, mineral or other product for any other purpose,
without any accountability to any other party.
3.8 Each party shall do all things and execute all documents
necessary in order to maintain the Property and the Project in good
standing provided that all Costs need only be met by each party in
proportion to its Interest.
3.9 Except as may be otherwise expressly specified in this Agreement,
each party, in proportion to its Interest, shall indemnify and hold
harmless each other party and each director, officer, employee, agent and
representative of each other party, from and against any claim of or
liability to any third person asserted on the ground that action taken
under this Agreement has resulted in or will result in any loss or damage
to such third person to the extent, but only to the extent, that such claim
or liability is paid by such other party in the amount in excess of that
amount payable by reason of such other party's Interest, but the foregoing
shall not prejudice any claim of any party against the Operator.
3.10 Each party covenants and agrees with the other:
(a) to perform or cause to be performed its obligations and
commitments under this Agreement and, without limiting the
generality of the foregoing, to pay Costs in proportion to its
Interest except as may be otherwise provided in article 4 hereof;
(b) not to engage either alone or in association with others in any
activity in respect of the Property or the Project except as
provided or authorized by this Agreement.
4. DILUTION
4.1 Upon formation of the Joint Venture, Bayview shall be deemed to
have incurred Costs of $213,800 and Xxxxx Xxxxx to have incurred Costs of
$32,070.
4.2 The respective Interests of the parties shall be subject to
variation from time to time in the event:
(a) of failure by a party to pay its proportionate share of Costs;
(b) subject to section 8.6 hereof, of the election by a party not to
participate in a Program; or
(c) subject to section 8.6 hereof, of the election by a party to pay
less than its proportionate share of Costs in respect of a
Program adopted by the Management Committee.
4.3 Upon the happening of any of the events set forth in subsection
4.2 hereof, each party's Interest shall be varied to equal the product
obtained by multiplying 100% by a fraction of which the numerator shall be
the amount of Costs paid by such party and of which the denominator shall
be the total amount of Costs paid by all parties. For the purposes of this
section, the amount of Costs paid by a party shall include the amount of
Costs deemed to have been paid by that party as set forth in section 4.1.
4.4 In the event that a party's Interest is reduced to 5% or less by
the operation of section 4.3 hereof, such party shall forfeit its Interest
to the other party and shall receive as consideration therefor a Royalty
equal to 2% of Net Profits payable within 60 days after the end of each
calendar quarter. If, as a result of such forfeiture, one party has an
Interest equal to 100% the Joint Venture shall terminate.
5. MANAGEMENT COMMITTEE
5.1 A Management Committee, consisting of one representative of each
party, and one or more alternate representatives, shall be constituted and
appointed forthwith after the formation of the Joint Venture. The
Management Committee shall manage, or supervise the management of, the
business and affairs of the Joint Venture and shall exercise all such
powers and do all such acts as the Joint Venture may exercise and do. The
Management Committee shall meet within 15 days of its constitution and may
otherwise meet at such places as it thinks fit for the dispatch of
business, adjourn and otherwise regulate its meetings and proceedings as
the members thereof deem fit. The Chairman of all meetings shall be a
representative of the Operator. Matters decided at any meeting of the
Management Committee shall be decided by a simple majority of votes with
each party's representatives being entitled to cast that number of votes
which is equal to that party's Interest, and, in the case of an equality of
votes, the dispute shall be referred to arbitration pursuant to article 20.
Unless agreed to in writing by the parties hereto, all meetings of the
Management Committee shall be held in Vancouver, British Columbia. Any
meetings may, if both parties so consent, be held by conference telephone.
5.2 A quorum for any meeting of the Management Committee shall
consist of a representative or representatives of a party or parties whose
Interests aggregate equal to or in excess of 95%. No business other than
the election of a chairman, if any, and the adjournment or termination of
the meeting shall be dealt with if a quorum is not present at the
commencement of the meeting but the quorum need not be present throughout
the meeting. A meeting at which a quorum is not present shall be adjourned
to the same time and place one week later at which adjourned meeting a
quorum shall be one representative of a party.
5.3 A meeting of the Management Committee at which a quorum is
present shall be competent to exercise all or any of the authorities,
powers and discretion bestowed upon the Management Committee in this
Agreement.
5.4 No questions submitted to the Management Committee need be
seconded and the chairman, if any, of the meeting shall be entitled to
submit the questions.
5.5 The decision on any matter evidenced by the consent in writing of
the representatives of all parties shall be as valid as if it had been
decided at a duly called and held meeting of the Management Committee.
Each written consent may be signed in counterparts each consented to in
writing by one or more representatives which together shall be deemed to
constitute one consent.
5.6 At the time of any decision by the Management Committee to adopt
a Program, the parties shall, subject to the provisions of article 8
hereof, pay their proportionate share of the estimated Costs of such
Program by depositing the same into the interest bearing bank account
opened and maintained pursuant to section 5.7 hereof.
5.7 The Operator shall open and maintain an interest bearing bank
account with a Canadian Chartered bank in the name of the Joint Venture and
shall use the funds on deposit therein for the purposes of the Joint
Venture. The Operator shall appoint signing officers on the said account
as shall be required and shall advise the parties of the particulars of the
said account.
5.8 Each of the parties hereby agree that any interest earned on any
sums deposited in the bank account opened and maintained pursuant to
section 5.7 hereof shall be shared in proportion to their respective
Interests.
5.9 If the Operator fails to do so, any party (the "Paying Party")
may pay any reasonable Costs due to maintain the Property in good standing
and the other party shall, in proportion to its Interest and within 15 days
of being given notice of such payment, reimburse the Paying Party for such
payment, failing such reimbursement the party not paying shall forfeit its
Interest to the Paying Party and this Agreement shall terminate.
5.10 At any time during the currency of this Agreement the Management
Committee may cause a Feasibility Report to be prepared by a substantial
and well recognized Canadian engineering firm in such form as the
Management Committee may require. The Management Committee shall,
forthwith upon receipt of a Feasibility Report, provide each of the parties
with a copy thereof. Upon request of any party and at reasonable intervals
and times the parties shall meet in order to discuss the Feasibility
Report.
6. OPERATOR
6.1 The initial Operator shall be Xxxxx Xxxxx, which shall continue
as operator until changed pursuant to section 8.2 or by a decision of the
Management Committee with parties representing Interests of 75% or more
voting in favour. If the Operator has failed to perform in a manner that
is consistent with good mineral exploration and development practice or is
in default of its duties and responsibilities under this Agreement, and the
Management Committee or the other party has given to the Operator written
notice setting forth particulars of the Operator's default and the Operator
has not within 30 days of such notice commenced to remedy the default and
thereafter to proceed continuously and diligently to complete all required
remedial action the other party shall become the Operator.
6.2 The Operator may at any time on 60 days' notice to the Management
Committee resign as Operator, in which event the Management Committee shall
select another party or person to be Operator upon the 30th day after
receipt of the Operator's notice of resignation or such sooner date as the
Management Committee may establish and give notice of to the resigning
Operator. The resigning Operator shall thereupon be released and
discharged from all its duties and obligations as Operator on the earlier
of those dates save only as to those duties and obligations that it
theretofore should have performed.
6.3 Upon the Operator making a voluntary or involuntary assignment
into bankruptcy or taking advantage of any legislation for the winding-up
or liquidation of the affairs of insolvent or bankrupt companies the
Operator shall automatically cease to be the Operator and the other party
or its nominee appointed as Operator.
6.4 The new Operator shall assume all of the rights, duties,
obligations and status of the Operator as provided in this Agreement, other
than the previous Operator's Interest, if any, without obligation to retain
or hire any of the employees of the former Operator or to indemnify the
former Operator for any costs or expenses which the previous Operator will
incur as a result of the termination of employment of any of its employees
resulting from this change of Operator, and shall continue to act as
Operator until its replacement or resignation.
6.5 The Operator shall be paid by the Joint Venture, as compensation
for general overhead expenses which the Operator may incur, an amount equal
to 10% of all Costs in each year but only 5% of Costs paid by the Operator
under any contract involving payments by it in excess of $100,000 in one
year.
7. POWERS, DUTIES AND OBLIGATIONS OF OPERATOR
7.1 Subject to the control and direction of the Management Committee,
the Operator shall have full right, power and authority to do everything
necessary or desirable to carry out a Program and the Project and to
determine the manner of exploration and development of the Property and,
without limiting the generality of the foregoing, the right, power and
authority to:
(a) regulate access to the Property subject only to the right of
representatives of the parties to have access to the Property at
all reasonable times for the purpose of inspecting work being
done thereon but at their own risk and expense;
(b) employ and engage such employees, agents and independent
contractors as it may consider necessary or advisable to carry
out its duties and obligations hereunder and in this connection
to delegate any of its powers and rights to perform its duties
and obligations hereunder, but the Operator shall not enter into
contractual relationships with a party except on terms which are
commercially competitive;
(c) execute all documents, deeds and instruments, do or cause to be
done all such acts and things and give all such assurances as may
be necessary to maintain good and valid title to the Property and
each party hereby irrevocably constitutes the Operator its true
and lawful attorney to give effect to the foregoing and hereby
agrees to indemnify and save the Operator harmless from any and
all costs, loss or damage sustained or incurred without gross
negligence or bad faith by the Operator directly or indirectly as
a result of its exercise of its powers pursuant to this
subsection;
(d) conduct such title examination and cure such title defects as may
be advisable in the reasonable judgment of the Operator.
7.2 The Operator shall have the following duties and obligations
during the term hereof:
(a) to diligently manage, direct and control all exploration and
development operations in and under the Property in a prudent and
workmanlike manner and in compliance with all applicable laws,
rules, orders and regulations;
(b) to prepare and deliver to each of the parties during the periods
of active field work, quarterly progress reports of the work in
progress, on or before the day which is 45 days following each
calendar quarter with respect to work done in such quarter and on
or before March 31st of every year comprehensive annual reports
covering the activities hereunder and the results obtained during
the 12 month period ending on December 31 immediately preceding;
(c) to prepare and deliver to each of the parties copies of all
assays, maps and drill logs immediately upon their preparation or
receipt;
(d) subject to the terms and conditions of this Agreement, to keep
the Property in good standing, free and clear of all liens,
charges and encumbrances of every character arising from
operations (except for those which are in effect on the date of
this Agreement or are created pursuant to this Agreement, liens
for taxes not yet due, other inchoate liens and liens contested
in good faith by the Operator) and to proceed with all diligence
to contest or discharge any lien that is filed by reason of the
Operator's failure to perform its obligations hereunder;
(e) to maintain true and correct books, accounts and records of
operations hereunder separate and apart from any other books,
accounts and records maintained by the Operator;
(f) to permit one representative of the parties, appointed in
writing, at all reasonable times and at their expense to inspect,
audit and copy the Operator's accounts and records relating to
the Project for any fiscal year of the Operator within nine
months following the end of such fiscal year;
(g) to obtain and maintain and cause any contractor engaged hereunder
to obtain and maintain during any period in which active work is
carried out hereunder such insurance coverage as the Management
Committee deems advisable;
(h) to permit the parties or their representatives, appointed in
writing, at all reasonable times, at their own expense and risk,
reasonable access to the Property and all data derived from
carrying out a Program;
(i) to open and maintain on behalf of the Joint Venture such bank
account or bank accounts as the Management Committee may direct
with a Canadian chartered bank;
(j) to prosecute and defend, but not to initiate without the consent
of the Management Committee, all litigation or administrative
proceedings arising out of the Property, or Project;
(k) to transact, undertake and perform all transactions, contracts,
employments, purchases, operations, negotiations with third
parties and any other matter or thing undertaken by or on behalf
of the Joint Venture hereunder in the Operator's name and to
promptly pay all expenditures incurred in connection therewith
when due; and
(l) to maintain in good standing those mineral claims comprised in
the Property by the doing and filing of all assessment work or
the making of payments in lieu thereof and by the payment of all
taxes and other like charges and payments.
7.3 Subject to any specific provisions of this Agreement, the
Operator, in carrying out its duties and obligations hereunder, shall at
all times be subject to the direction and control of the Management
Committee and shall perform its duties hereunder in accordance with the
instructions and directions as from time to time communicated to it by the
Management Committee and shall make all reports to the Management Committee
except where otherwise specifically provided herein.
7.4 The Operator shall commence and diligently complete the Project
and without limiting the generality of the foregoing, may retain an
independent consulting geologist acceptable to all parties to prepare a
report in respect of the Project, the results thereof, the conclusions
derived therefrom and the recommendation as to whether or not further work
should be conducted on the Property.
8. PROGRAMS
8.1 Costs shall only be incurred under and pursuant to Programs
prepared by the Operator, approved by the Management Committee and
delivered to the parties as provided in this article. Any Feasibility
Report shall be prepared pursuant to a separate Program.
8.2 The Operator shall prepare and submit to the parties a Program
within 180 days of the completion of the previous Program. If the Operator
does not prepare a Program within the time limited, then the other party
shall have the right to prepare a Program for submission to the other party
at which time the party submitting the Program shall become the Operator.
8.3 Within 30 days of the receipt by the parties of a Program, each
party shall give written notice to the Operator stating whether or not they
elect to contribute their proportionate share of Costs of such Program or
requesting the Operator to revise the Program provided that each party may
only make such requests once in respect of each Program. Subject to
subsection 8.6, failure by either of the parties to give notice pursuant to
this subsection within such 30 day period shall be deemed an election by
that party not to contribute to such Program.
8.4 If a party elects or is deemed to have elected not to contribute
its proportionate share of the Costs of a Program, the other party may give
notice in writing to the Operator stating that it will contribute all
expenditures under or pursuant to such Program and the Operator will
proceed with such Program and thereafter the Interests of the parties shall
be adjusted in accordance with article 4. The Operator will not proceed
with any program, which is not fully subscribed.
8.5 If the parties elect to contribute their proportionate share of
the Costs of a Program, the Operator will then proceed with the Program.
8.6 If either party elects or is deemed to have elected not to
contribute to a Program its Interest will not be subject to adjustment
thereunder if, within 60 days of such election or deemed election, it
elects to pay to the contributing party 150% of what would otherwise have
been its contribution to the Costs of such Program, but any amount so paid
in excess of what would otherwise have been its contribution to such
Program shall be deemed not to be a contribution to Costs by the party
making it.
8.7 An election by a party to contribute to the Costs of a Program
shall make that party liable to pay its proportionate share of the Costs
actually incurred under or pursuant to the Program including Program
Overruns, as hereinafter defined, of up to but not exceeding 10%.
8.8 After having elected to contribute its proportionate share of the
Costs of a Program which is proceeded with, a party shall, within 15 days
after being requested in writing to do so by the Operator, pay such portion
of its share of Costs as the Operator may require but the Operator shall
not require payment of any funds in advance if the party provides the
Operator with reasonable assurance and evidence that it has secured
financing by way of the issuance of "flow-through" shares sufficient to pay
its proportionate share of the Costs of a Program and such financing
requires that party to incur the Costs before funds are advanced to the
party. At any other time the Operator shall not require payment of funds
more than one month in advance.
8.9 If it appears that Costs will exceed by greater than 10% those
estimated under a Program the Operator shall immediately give written
notice to the party or parties contributing to that Program outlining the
nature and extent of the additional costs and expenses ("Program
Overruns"). If Program Overruns are approved by the party or parties
contributing to that Program, then within 15 days after the receipt of a
written request from the Operator, the party or parties contributing to
that Program shall provide the Operator with their respective shares of
such Program Overruns. If Program Overruns are not approved by the party
or parties contributing to that Program, the Operator shall have the right
to curtail or abandon the portion of such Program relating to the Program
Overruns.
8.10 If either party at any time fails to pay its proportionate share
of Costs in accordance with subsections 8.8 or 8.9, the Operator may give
written notice to that party demanding payment, and if the party has not
paid such amount within 15 days of the receipt of such notice, that party
shall:
(a) be deemed to be in default under subsection 8.8 or 8.9 as
applicable; and
(b) forfeit its Interest to the other party and shall receive as
consideration therefore a Royalty equal to 2% of Net Profits
payable within 60 days after the end of each calendar quarter.
If, as a result of such forfeiture, one party has an Interest
equal to 100% the Joint Venture shall terminate.
9. INFORMATION AND DATA
9.1 At all times during the subsistence of this Agreement the duly
authorized representatives of each party shall have access to the Property
and the Project at its and their sole risk and expense and at reasonable
intervals and times, and shall further have access at all reasonable times
to all technical records and other factual engineering data and information
relating to the Property and the Project in the possession of the
Management Committee or the Operator. In exercising the right of access to
the Property or the Project the representatives of a party shall abide by
the rules and regulations laid down by the Management Committee and by the
Operator relating to matters of safety and efficiency. If any
representative of a party is not a director, senior officer or employee of
a party, the party shall so advise the Operator so that the Operator may
require the representative, before giving him access to the Property or the
Project or to data or information relating thereto, to sign an undertaking
in favour of the Joint Venture, in form and substance satisfactory to the
Operator, to maintain confidentiality to the same extent as each party is
required to do under section 9.2 hereof.
9.2 All records, reports, accounts and other documents referred to
herein with respect to the Property and the Project and all information and
data concerning or derived from the Property and the Project shall be kept
confidential and each party shall take or cause to be taken such reasonable
precautions as may be necessary to prevent the disclosure thereof to any
person other than each party, the Operator, an Affiliate, their respective
legal, accounting and financial or other professional advisors, and any
financial institution or other person having made, making or negotiating
loans to one or more of the foregoing or any trustee for any such person,
or as may be required by securities or corporate laws and regulations or by
the policies of any securities commission or stock exchange, or in
connection with the filing of an offering memorandum, rights offering
circular, prospectus or statement of material facts by a party, an
Affiliate or the Operator or to a prospective assignee as permitted
hereunder, or as may be required in the performance of obligations under
this Agreement without prior consent of all parties, which consent shall
not be unreasonably withheld.
10. PARTITION
10.1 No party shall, during the term of this Agreement, exercise any
right to apply for any partition of the Property or for sale thereof in
lieu of partition.
11. TAXATION
11.1 Each party on whose behalf any Costs have been incurred shall be
entitled to claim all tax benefits, write-offs and deductions with respect
thereto.
12. RIGHT OF FIRST REFUSAL
12.1 Save and except as provided in section 3.5 and article 4 hereof,
neither party shall transfer, convey, assign, mortgage or grant an option
in respect of or grant a right to purchase or in any manner transfer or
alienate all or any portion of its Interest or rights under this Agreement
otherwise than in accordance with this article.
12.2 Nothing in this article shall prevent:
(a) a sale by a party of all of its Interest or an assignment of all
its rights under this Agreement to an Affiliate provided that
such Affiliate first complies with the provisions of section
12.10 and agrees with the other party in writing to retransfer
such Interest to the originally assigning party before ceasing to
be an Affiliate of such party;
(b) a variation pursuant to section 4.3; or
(c) a disposition pursuant to an amalgamation or corporate
reorganization which will have the effect in law of the
amalgamated or surviving company possessing all the property,
rights and interests and being subject to all the debts,
liabilities and obligations of each amalgamating or predecessor
company.
12.3 Should a party (the "transferring party") intend to dispose of
all or any portion of its Interest or rights under this Agreement it shall
first give notice in writing to the other parties (the "other parties") of
such intention together with the terms and conditions on which the
transferring party intends to dispose of its Interest or a portion thereof
or rights under this Agreement.
12.4 If a party (the "transferring party") receives any offer to
dispose of all or any portion of its Interest or rights under this
Agreement which it intends to accept, the transferring party shall not
accept the same unless and until it has first offered to sell such Interest
or rights to the other parties (the "other parties") on the same terms and
conditions as in the offer received and the same has not been accepted by
the other parties in accordance with section 12.6.
12.5 Any communication of an intention to sell pursuant to section
12.3 and 12.4 (the "Offer") shall be in writing delivered in accordance
with article 14 and shall:
(a) set out in reasonable detail all of the terms and conditions of
any intended sale;
(b) if it is made pursuant to section 12.3, include a photocopy of
the Offer; and
(c) if it is made pursuant to section 12.4, clearly identify the
offering party and include such information as is known by the
transferring party about such offering party;
and such communication will be deemed to constitute an Offer by the
transferring party to the other parties to sell the transferring party's
Interest or its rights (or a portion thereof as the case may be) under this
Agreement to the other parties on the terms and conditions set out in such
Offer. For greater certainty it is agreed and understood that any Offer
hereunder shall deal only with the disposition of the Interest or rights of
the transferring party hereunder and not with any other interest, right or
property of the transferring party and such disposition shall be made
solely for a monetary consideration.
12.6 Any Offer made as contemplated in section 12.5 shall be open for
acceptance by the other parties for a period of 60 days from the date of
receipt of the Offer by the other parties.
12.7 If the other parties accept the Offer within the period provided
for in section 12.6, such acceptance shall constitute a binding agreement
of purchase and sale between the transferring party and the other parties,
in proportion to their Interests, for the Interest or its rights (or a
portion thereof as the case may be) under this Agreement on the terms and
conditions set out in such Offer.
12.8 If the other parties do not accept the Offer within the period
provided for in section 12.6, the transferring party may complete a sale
and purchase of its Interest or a portion thereof on terms and conditions
no less favourable to the transferring party than those set out in the
Offer and, in the case of an Offer under section 12.4, only to the party
making the original offer to the transferring party and in any event such
sale and purchase shall be completed within nine months from the expiration
of the right of the other parties to accept such Offer or the transferring
party must again comply with the provisions of this article.
12.9 If the other parties do accept the Offer within the period
provided for in section 12.6 but fail to close the transaction contemplated
thereby within 90 days following receipt of such Offer, the transferring
party may complete a sale and purchase of its Interest or a portion thereof
on any terms and conditions but in any event such sale and purchase shall
be completed within nine months from the expiration of the right of the
other parties to accept such Offer or the transferring party must again
comply with the provisions of this article.
12.10 While any Offer is outstanding no other Offer may be made until
the first mentioned Offer is disposed of and any sale resulting therefrom
completed or abandoned in accordance with the provisions of this article.
12.11 Before the completion of any sale by the transferring party of
its Interest or rights or any portion thereof under this Agreement, the
purchasing party shall enter into an agreement with the parties agreeing
not to sell except on the same terms and conditions as set out in this
Agreement.
13 FORCE MAJEURE
13.12 No party will be liable for its failure to perform any of
its obligations under this Agreement due to a cause beyond its reasonable
control (except those caused by its own lack of funds) including, but not
limited to acts of God, fire, flood, explosion, strikes, lockouts or other
industrial disturbances, laws, rules and regulations or orders of any duly
constituted governmental authority or non-availability of materials or
transportation (each an "Intervening Event").
13.13 All time limits imposed by this Agreement will be extended
by a period equivalent to the period of delay resulting from an Intervening
Event.
13.14 A party relying on the provisions of section 13.1 will take
all reasonable steps to eliminate any Intervening Event and, if possible,
will perform its obligations under this Agreement as far as practical, but
nothing herein will require such party to settle or adjust any labour
dispute or to question or to test the validity of any law, rule, regulation
or order of any duly constituted governmental authority or to complete its
obligations under this Agreement if an Intervening Event renders completion
impossible.
14 NOTICE
14.15 Any notice, direction, cheque or other instrument required
or permitted to be given under this Agreement shall be in writing and may
be given by delivery or by sending by telecopier, in each case addressed to
the intended recipient at the address of the respective party set out on
the front page hereof.
14.16 Any notice, direction, cheque or other instrument aforesaid
will, if delivered, be deemed to have been given and received on the day it
was delivered, and, if sent by telecopier, be deemed to have been given or
received on the day it was so sent.
14.17 Any party may at any time give to the other notice in
writing of any change of address of the party giving such notice and from
and after the giving of such notice the address or addresses therein
specified will be deemed to be the address of such party for the purposes
of giving notice hereunder.
15 WAIVER
15.18 If any provision of this Agreement shall fail to be strictly
enforced or any party shall consent to any action by any other party or
shall waive any provision as set out herein, such action by such party
shall not be construed as a waiver thereof other than at the specific time
that such waiver or failure to enforce takes place and shall at no time be
construed as a consent, waiver or excuse for any failure to perform and act
in accordance with this Agreement at any past or future occasion.
16 FURTHER ASSURANCES
16.19 Each of the parties hereto shall from time to time and at
all times do all such further acts and execute and deliver all further
deeds and documents as shall be reasonably required in order to fully
perform and carry out the terms of this Agreement. For greater certainty
this section shall not be construed as imposing any obligation on any party
to provide guarantees.
17 USE OF NAME
17.20 No party shall, except when required by this Agreement or by
any law, by-law, ordinance, rule, order or regulation, use, suffer or
permit to be used, directly or indirectly, the name of any other party for
any purpose related to the Property or the Project.
18 ENTIRE AGREEMENT
18.21 This Agreement embodies the entire agreement and
understanding among the parties hereto and supersedes all prior agreements
and undertakings, whether oral or written, relative to the subject matter
hereof.
19 AMENDMENT
19.22 This Agreement may not be changed orally but only by an
agreement in writing, executed by the party or parties against which
enforcement, waiver, change, modification or discharge is sought.
20 ARBITRATION
20.23 If any question, difference or dispute shall arise between
the parties or any of them in respect of any matter arising under this
Agreement or in relation to the construction hereof the same shall be
determined by the award of three arbitrators to be named as follows:
(a) the party or parties sharing one side of this dispute shall name
an arbitrator and give notice thereof to the party or parties
sharing the other side of the dispute;
(b) the party or parties sharing the other side of the dispute shall,
within 14 days of receipt of the notice, name an arbitrator; and
(c) the two arbitrators so named shall, within 15 days of the naming
of the latter of them, select a third arbitrator.
The decision of the majority of these arbitrators shall be made
within 30 days after the selection of the latter of them. The expense of
the arbitration shall be borne by the parties to the dispute as determined
by the arbitrators. If the parties on either side of the dispute fail to
name their arbitrator within the time limited or proceed with the
arbitration, the arbitrator named may decide the question. The arbitration
shall be conducted in accordance with the provisions of the Commercial
Arbitration Act (British Columbia) and the decision of the arbitrator or a
majority of the arbitrators, as the case may be, shall be conclusive and
binding upon all the parties.
21 RIGHT TO AUDIT
21.24 Any party acquiring a Royalty pursuant to this Agreement
shall have the right to audit at its expense the books and records in
respect of such Royalty of the Operator or the other party, if it is not
the Operator in respect of such Royalty.
22 TIME
22.25 Unless earlier terminated by agreement of all parties or as
a result of one party acquiring a 100% Interest, the Joint Venture and this
Agreement shall remain in full force and effect for so long as any part of
the Property or Project is held in accordance with this Agreement.
Termination of the Agreement shall not, however, relieve any party from any
obligations theretofore accrued but unsatisfied.
23 RULE AGAINST PERPETUITIES
23.26 If any right, power or interest of any party in any Property
under this Agreement would violate the rule against perpetuities, then such
right, power or interest shall terminate at the expiration of 20 years
after the death of the last survivor of all the lineal descendants of her
Majesty, Queen Xxxxxxxxx XX of the United Kingdom, living on the date of
this Agreement.
24 DOCUMENT RETENTION ON TERMINATION
24.27 Prior to the distribution of the Property or the Project or
the net revenues received on the disposal thereof on termination of this
Agreement, the Management Committee shall meet and may approve a procedure
for the retention, maintenance and disposal of documents maintained by the
Management Committee (the "Documents") and shall appoint such party as may
consent thereto to ensure that all proper steps are taken to implement and
maintain that procedure. If a quorum is not present at the meeting or if
the Management Committee fails to approve a procedure as aforesaid, the
Operator, if a party, otherwise the party holding the largest Interest as
at the day immediately preceding the date the Management Committee was
called to meet, shall retain, maintain and dispose of the Documents
according to such procedure, in compliance with all applicable laws, as it
deems fit. The party entrusted with the retention, and expenses incidental
thereto, shall be entitled to receive payment of those costs and expenses
prior to any distribution being made of the Property and Project or the net
revenues received on the disposal thereof.
25 ENUREMENT
25.28 This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted
assigns.
26 GOVERNING LAW
26.29 This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of British Columbia.
27 SEVERABILITY
27.30 If any one or more of the provisions contained herein should
be invalid, illegal or unenforceable in any respect in any jurisdiction,
the validity, legality and enforceability of such provision shall not in
any way be affected or impaired thereby in any other jurisdiction and the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
28 NUMBER AND GENDER
28.31 Words used herein importing the singular number only shall
include the plural, and vice versa, and words importing the masculine
gender shall include the feminine and neuter genders, and vice versa, and
words importing persons shall include firms and corporations.
29 HEADINGS
29.32 The division of this Agreement into articles and sections
and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement.
30 TIME OF THE ESSENCE
30.33 Time shall be of the essence in the performance of this
Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day, month and year first above written.
XXXXX XXXXX
______________________________
Signature of Authorised Signatory
______________________________
Name of Authorised Signatory
______________________________
Position of Authorised Signatory
BAYVIEW CORPORATION
by its authorised signatory:
______________________________
Signature of Authorised Signatory
______________________________
Name of Authorised Signatory
______________________________
Position of Authorised Signatory
SCHEDULE "A"
to that certain Joint Venture Agreement between Xxxxx Xxxxx and Bayview
Corporation made as of the * day of *, 20*
THE PROPERTY
G.P.S. CO-ORDINATES: 5169500N and 521500E
SUDBURY MINING DISTRICT
ONTARIO
CANADA
List of Claims
CLAIM NUMBERS TOWNSHIP/AREA CURRENT EXPIRY DATE
3004254 - 11 UNITS XXXXXXXXX SEPTEMBER 10, 2004
3004255 - 2 UNITS XXXXXXXXX SEPTEMBER 10, 2004
SCHEDULE "B"
To that agreement dated as of the * day of *, 20* between * and *.
1. "Net Profits" means the aggregate of:
(a) all revenues from the sale or other disposition of ores, metals
or minerals mined or extracted from the Property or any portion
thereof and any concentrates produced therefrom;
(b) all revenues from the operation, sale or other disposition of any
Facilities the cost of which is included in the definition of
"Operating Expenses", "Capital Expenses" or "Exploration
Expenses"; and
(c) Working Capital deducted in the calculation of Net Profits for
the prior period,
less (without duplication) Working Capital, Operating Expenses, Capital
Expenses and Exploration Expenses.
2. "Working Capital" means the amount reasonably necessary to
provide for the operation of the mining operation on the Property and for
the operation and maintenance of the Facilities for a period of six months.
3. "Operating Expenses" means all costs, expenses, obligations,
liabilities and charges of whatsoever nature or kind incurred or chargeable
directly or indirectly in connection with commercial production from the
Property and in connection with the maintenance and operation of the
Facilities, all in accordance with generally accepted accounting
principles, consistently applied, including, without limiting the
generality of the foregoing, all amounts payable in connection with mining,
handling, processing, refining, transporting and marketing of ore,
concentrates, metals, minerals and other products produced from the
Property, all amounts payable for the operation and maintenance of the
Facilities including the replacement of items which by their nature require
periodic replacement, all taxes (other than income taxes), royalties and
other imposts and all amounts payable or chargeable in respect of
reasonable overhead and administrative services.
4. "Capital Expenses" means all expenses, obligations and
liabilities of whatsoever kind (being of a capital nature in accordance
with generally accepted accounting principles) incurred or chargeable,
directly or indirectly, with respect to the development, acquisition,
redevelopment, modernization and expansion of the Property and the
Facilities, including, without limiting the generality of the foregoing,
interest thereon from the time so incurred or chargeable at a rate per
annum from time to time equal to the "prime rate" of the Royal Bank of
Canada plus 2% per annum, but does not include Operating Expenses nor
Exploration Expenses.
5. "Exploration Expenses" means all costs, expenses, obligations,
liabilities and charges of whatsoever nature or kind incurred or
chargeable, directly or indirectly, in connection with the exploration and
development of the Property all determined in accordance with generally
accepted accounting principles including, without limiting the generality
of the foregoing, all costs reasonably attributable, in accordance with
generally accepted accounting principles, to the design, planning, testing,
financing, administration, marketing, engineering, legal, accounting,
transportation and other incidental functions associated with the
exploration and mining operation contemplated by this Agreement and with
the Facilities, but does not include Operating Expenses nor Capital
Expenses.
6. "Facilities" means all plant, equipment, structures, roads, rail
lines, storage and transport facilities, housing and service structures,
real property or interest therein, whether on the Property or not, acquired
or constructed exclusively for the mining operation on the Property
contemplated by this Agreement.
7. Installments of the Royalty payable shall be paid by the Operator
as follows:
(a) within 45 days after the end of each of the first three calendar
quarters in each fiscal year and within 60 days of the end of the
last calendar quarter in each year, the Operator shall pay to the
royalty holder an amount equal to 25% of the estimated Royalty,
if any, for the fiscal year, adjusted if necessary after the
first quarter of any fiscal year to reflect any change during the
fiscal year in estimated Royalty; and
(b) within 120 days after the end of the calendar year, the balance,
if any, of Royalty payable in respect of the fiscal year last
completed.
Should the Operator not pay the royalty holder the installment of
the Royalty payable within the time specified then such unpaid installment
of Royalty shall bear interest equal to the "prime rate" of the Royal Bank
of Canada plus 2% per annum calculated from the last day of the calendar
quarter in which the liability for the payment of the installment of
Royalty arose.
8. The Operator shall, within 45 days after the end of each calendar
quarter, furnish to the royalty holder quarterly unaudited statements
respecting operations on the Property, together with a statement showing
the calculation of Royalty for the calendar quarter last completed.
9. Within 120 days after the end of each calendar year, the accounts
of the Operator relating to operations on the Property and the statement of
operations, which shall include the statement of calculation of Royalty for
the year last completed, shall be audited by the auditors of the Operator,
at its expense. The royalty holder shall have 45 days after receipt of
such statements to question the accuracy thereof in writing and, failing
such objection, the statements shall be deemed to be correct and
unimpeachable thereafter.
10. If the audited financial statements furnished pursuant to
paragraph 9 disclose any overpayment of Royalty by the Operator during the
year, the amount of the overpayment shall be deducted from future
installments of Royalty payable hereunder.
11. If the audited financial statements furnished pursuant to
paragraph 9 disclose any underpayment of Royalty by the Operator during the
year, the amount thereof shall be paid to the royalty holder forthwith
after determination thereof.
12. The Operator agrees to maintain, for each mining operation on the
Property, up-to-date and complete records relating to the production and
sale of minerals, ore, bullion and other product from the Property,
including accounts, records, statements and returns relating to treatment
and smelting arrangements of such product, and the royalty holder or its
agents shall have the right at all reasonable times, including for a period
of 12 months following the expiration or termination of this Agreement, to
inspect such records, statements and returns and make copies thereof at its
own expense for the purpose of verifying the amount of Royalty payments to
be made by the Operator to the royalty holder pursuant hereto. The royalty
holder shall have the right, at its own expense, to have such accounts
audited by independent auditors once each year.
SCHEDULE "C"
NET SMELTER RETURNS
For the purposes of this agreement, the term "Net Smelter Returns" shall
mean the net proceeds actually paid to Bayview from the sale by Bayview of
minerals mined and removed from the Property, after deduction of the
following:
(a) smelting costs, treatment charges and penalties including, but not
being limited to, metal losses, penalties for impurities and charges for
refining, selling and handling by the smelter, refinery or other purchaser;
provided, however, in the case of leaching operations or other solution
mining or beneficiation techniques, where the metal being treated is
precipitated or otherwise directly derived from such xxxxx solution, all
processing and recovery costs incurred by Bayview, beyond the point at
which the metal being treated is in solution, shall be considered as
treatment charges;
(b) costs of handling, transporting and insuring ores, minerals and other
materials or concentrates from the Property or from a concentrator, whether
situated on or off the Property, to a smelter, refinery or other place of
treatment; and
(c) ad valorem taxes and taxes based upon production, but not income
taxes.
In the event Bayview commingles minerals from the Property with minerals
from other properties, Bayview shall establish procedures, in accordance
with sound mining and metallurgical techniques, for determining the
proportional amount of the total recoverable metal content in the
commingled minerals attributable to the input from each of the properties
by calculating the same on a metallurgical basis, in accordance with
sampling schedules and mining efficiency experience, so that production
royalties applicable to minerals produced from the Property may reasonably
be determined.
