OPTION AGREEMENT
EXHIBIT
10.1
THIS
AGREEMENT is
dated
for reference as of the 28th
day of
June, 2006.
AMONG:
JOURNEY
RESOURCES CORPORATION, a
company
duly organized pursuant to the laws of the Province of British Columbia and
having an office at #0000 - 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
X0X
0X0
(“Journey”,
and collectively with Jazz, the “Optionors”)
OF
THE
FIRST PART
AND:
MINERALES
JAZZ S.A. DE C.V., a
corporation duly organized pursuant to the laws of Mexico and having an office
at Xxxxxxx xxx Xxx Xx. 0000 Xxxxxxx 5, Xxxx Xxxxxxx, Xxxxxxxx, Xxx XXXXXX
00000
(“Jazz”,
and collectively with Journey, the “Optionors”)
OF
THE
SECOND PART
AND:
WITS
BASIN PRECIOUS MINERALS INC.,
a
company duly organized pursuant to the laws of the State of Minnesota and having
an office at 900 IDS Center, 00 Xxxxx 0xx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx,
00000
(the
“Optionee”)
OF
THE
THIRD PART
WHEREAS:
(A) The
Optionors are the recorded and beneficial owners of an undivided 100% interest
in and to certain mineral concessions situated in Xxxxxxxx State, Mexico to
be
known as the Xxxxxx Mine Concession, as detailed in the specific description
of
the mineral concessions in Schedule “A” attached hereto (herein called the
“Property”);
and
(B) The
Optionors have agreed to grant an exclusive option to the Optionee to acquire
up
to a 50% undivided interest in and to the Property by paying certain
consideration and by incurring certain exploration Expenditures on the Property
upon the terms and conditions herein;
NOW
THEREFORE THIS AGREEMENT WITNESSES
that in
consideration of the covenants and agreements hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency which is
hereby acknowledged, the parties agree as follows:
PART
1
DEFINITIONS
1.1 In
this
Agreement, except as otherwise expressly provided or as the context otherwise
requires:
(a) “Area
of Common Interest”
means,
subject to Part 15, the area included within two (2) kilometres of the
boundaries of the Property, but excluding any third party mineral claims in
existence as of the Effective Date;
(b) “Effective
Date”
means
the date first above written;
(c) “Expenditures”
means
all direct or indirect costs and expenses incurred by the Optionee in respect
of
prospecting and exploring the Property after the date of this Agreement pursuant
to §2.2 hereof. The certificate of the Controller or other financial officer of
the Optionee, together with a statement of Expenditures in reasonable detail
shall be prima facie evidence of such Expenditures;
(d) “Force
Majeure”
has
the
meaning set forth in Part 11;
(e) “Joint
Venture”
means
the joint venture to be formed between the Optionors and the Optionee in respect
of the Property upon exercise of the Option and which is more particularly
described in Part 6;
(f) “Joint
Venture Agreement”
means
the Joint Venture Agreement containing, but not limited to,
terms
and conditions as set out in Part 6 to be entered into between the Optionee
and
the Optionors if the Optionee exercises this Option;
(g) “Option”
means
the exclusive right herein granted by the Optionors to the Optionee to permit
the Optionee to acquire up to a 50% undivided interest in and to the
Property;
(h) “Option
Period”
means
the period from the
Effective
Date
to and
including the earliest of:
(i) the
date
of exercise of the Option, or
(ii) the
termination hereof pursuant to Part 14;
-2-
(i) “Property”
means
the mineral concessions described in Schedule “A” (the “Property”) as they may
be augmented pursuant to Part 15 (such augmenting claims or interests being
referred to herein as the “Additional Property” and included as part of the
Property), and all mining leases and other mining interests derived from any
such claims, and a reference herein to a mineral claim comprised in the Property
includes any mineral leases or other interests into which such mineral claim
may
have been converted and Property includes all Property Rights;
(j) “Property
Rights”
means
all licenses, permits, easements, rights-of-way, surface or water rights and
other rights, approvals obtained by either of the parties either before or
after
the date of this Agreement and necessary or desirable for the development of
the
Property, or for the purpose of placing the Property into production or
continuing production;
(k) “Registrable
Securities”
means
the Shares, and all shares of common stock issued or issuable in respect of
the
Shares by virtue of any stock split, stock dividend, recapitalization or similar
event, excluding Shares which have been (a) registered under the Securities
Act
of 1933 (the “Securities Act”) pursuant to an effective registration statement
filed thereunder and disposed of in accordance with the registration statement
covering them or (b) publicly sold pursuant to Rule 144 promulgated under the
Securities Act;
(l) “SEC”
means
the United States Securities and Exchange Commission; and
(m) “Shares” means
theshares
of
common
shares
in
the capitalstock
of the
Optionee which are issuable by the Optionee under this Agreement;
PART
2
GRANT
AND EXERCISE OF OPTION
2.1 Subject
to the terms of this Agreement, the Optionors hereby grant to the Optionee
the
sole and exclusive right and option (the “Option”) to acquire up to a 50%
interest in and to the Property, such 50% interest to be free and clear of
all
liens, charges, encumbrances, security interests and adverse claims arising
from
or through the Optionors, and subject to the laws applicable to the
Property.
2.2 In
order
to exercise the Option, the
Optionee must:
|
(a)
|
issue
500,000 Shares
|
|
(b)
|
on
or before December 31, 2006, incur Expenditures
in
the aggregate amount of USD$500,000
pursuant to a work program commenced and operated by the Optionors,
as
outlined in the Blakestead Technical Report dated October 18, 2004
and
revised March 10, 2005;
|
| (c) | on or before
January 15, 2007, issue an
additional 500,000 Shares |
| (d) | on or before September 30, 2007, incur additional Expenditures in the aggregate amount of USD$500,000 pursuant to a secondary work program commenced and operated by the Optionors, as recommended by the Optionors’ consultants. |
-3-
All
Shares of the Optionee issuable to Journey hereunder,
shall
have
piggy back rights and shall be the subject of a registration statement with
the
SEC, within sixty (60) days of the issuance of such Shares, or within such
time
as is reasonably practical and mutually agreed.
PART
3
VESTING
OF INTEREST
3.1 Upon
complying with all of the requirements set forth in §2.2,
the
Optionee will immediately be vested in and be deemed to legally and beneficially
own a 50% interest in the Property,
and a
Joint Venture between the Optionors and the Optionee will be deemed to have
been
formed with terms and conditions of a Joint Venture Agreement to be negotiated
in good faith upon terms and conditions as described in Part 6.
3.2 Upon
the
Optionee satisfying only
the
obligations set forth in §2.2(a) and§2.2(b)
above,
the
Optionee will immediately be vested in and be deemed to legally and beneficially
own a 25% interest in the Property,
and a
Joint Venture between the Optionors and the
Optionee will be deemed to have been formed with terms and conditions of a
Joint
Venture Agreement to be negotiated in good faith upon terms and conditions
as
described in Part 6.
PART
4
TITLE
TRANSFER
4.1 Upon
the
Optionee exercising the Option
by
satisfying all of the requirements set forth in §2.2,
the
Optionors shall execute such documentation as the Optionee may prepare and
reasonably request be executed under the laws of Mexico to
record
to the extent possible, the respective interests of each of the parties in
the
Property.
4.2 Upon
the
Optionee satisfying the obligations set forth in §2.2(a) and §2.2(b), the
Optionors shall execute such documentation as the Optionee may prepare and
reasonably request be executed under the laws of Mexico to record to the extent
possible, the respective interests of each of the parties in the
Property.
PART
5
OPERATOR’S
FEE
5.1 The
Optionors in their capacity as operators of the work programs during the Option
Period, to be conducted pursuant to §2.2, may charge a fee equal to ten percent
(10%) of Expenditures.
-4-
5.2
Such
operator fee shall cover all of the Optionors’ home office overhead
costs
and
all
general and administrative expenses including telephone, faxes, and direct
management
salaries
and wages.
PART
6
FORMATION
OF JOINT VENTURE
6.1
If
the
Optionee satisfies all of the obligations set forth in
§2.2,
the
Optionors and Optionee (each a “Participant”) shall be deemed to have formed a
Joint Venture
for the
purpose of carrying out further exploration, development and production work
on
the Property, and shall negotiate in good faith the comprehensive terms of
a
Joint Venture Agreement, which shall include but not be limited to the general
terms contained in this Part 6.
6.2 The
project shall be run on a 50%/50% basis or a 75%/25% basis (“Participating
Interest”), whichever is applicable in accordance with the
terms
hereunder, with both Participants contributing to all costs in operating
the Joint Venture in proportion
to its percentage of undivided Participating Interest. The aggregate
amount of Expenditures
on the
project at the point of execution of the Joint Venture Agreement will be deemed
to be the current value of the project (the “PV”).
The
PV will be updated each time an additional
expenditure
is made.
(a) if,
at
the time of formation of the Joint Venture, the Optionee has satisfied only
those obligations set forth in §2.2(a)
and §2.2(b), the Participants shall have the following initial Participating
Interests in the Joint Venture:
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Party
|
|
Participating
Interest
|
|
Deemed
Exploration Expenditures
|
|
||
|
Optionee
|
|
|
25
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%
|
|
25%
of PV
|
|
|
Optionors
|
|
|
75
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%
|
|
75%
of PV
|
|
(b) if,
at
the time of formation of the Joint Venture, the Optionee has satisfied all
of
the requirements set forth in §2.2,
the
Participants shall have the following initial Participating Interests in the
Joint Venture:
-5-
|
Party
|
Participating
Interest
|
Deemed
Exploration Expenditures
|
|||||
|
Optionee
|
50
|
%
|
50%
of PV
|
||||
|
Optionors
|
50
|
%
|
50%
of PV
|
||||
6.3
Direction
of the Joint Venture,
including all
operations on and in connection with the Property,
shall be
managed by the
management
committee (the “Management
Committee”)
comprised of one representative of the Optionors and one representative of
the
Optionee. All decisions of the Management Committee shall be made by simple
majority of the votes cast. The representative of a Participant in the
Management Committee shall have such number of votes as equals such party’s
Participating Interest at the time of the vote. The
party
with the most Interest in the project shall have the deciding vote. In the
case
where the parties have an equal interest, the representative of the Operator
shall have the deciding vote. The party with the deciding vote is the
“Manager”
and
“Operator”.
6.4
A
Management Committee meeting must be held quarterly with at least one
representative from each of the Optionors
and Optionee present at the meeting
to form
a quorum. The Operator shall present a project update and budget
at each
quarterly.
Meetings may
be held
in person or by telephone.
6.5
A
management
fee
shall be paid based on a percentage of Expenditures, as follows:
|
(a)
|
to
Optionors during the Option Period:
10%;
|
|
(b)
|
to
Manager after Joint Venture formation: 5%
for all qualified exploration expenditures incurred;
and
|
|
(c)
|
to
Manager after full feasibility report accepted: 5% for
all qualified expenditures during construction, development and operations
of the mine.
|
The
management fee shall cover all Manager’s office overhead
costs
and
all
general and administrative expenses including telephone, faxes, and direct
management salaries
and
wages.
6.6 The
Optionors, until the Joint Venture Agreement is entered into, and the Manager
after the Joint Venture Agreement
is entered into may,
at
its
discretion from time to time,
invite
the non-managing party to contribute to the agreed upon
budget
and participate in the then
current work program.
When this occurs,
the
non-managing party will invoice the Manager
for the additional contributed amounts
and no
management fee will
be
applied to these funds.
-6-
6.7 Funding
of the project will be as follows:
| (a) |
each
party will contribute to all costs in proportion to
its percentage of undivided Property interest (“Interest”)
from time to time
as
determined by the Management Committee;
|
| (b) |
each
Participant will have fifteen
(15)
days from the Management Committee’s approval date
of
each quarterly budget
to
elect to fund their respective share of the estimated capital costs
or
exploration costs. 50% of these funds must be provided prior to the
expenditure commitment. The
other 50% shall be provided once the Manager gives evidence of the
expenditure;
|
| (c) | if either Participant elects not to contribute their share of the capital costs or exploration costs of the project, then the other Participant has the right to contribute to the non-contributing Participant’s share of capital costs or exploration costs to the project resulting in a diluted ownership Interest of the non-contributing Participant, using the capital costs or exploration costs of the project as the denominator for dilution calculation purposes; |
| (d) | if the non-contributing Participant first elected to contribute their share of capital costs or exploration costs to the project and fails to do so for whatever reason, then this Participant is considered to be delinquent. In this case, an accelerated dilution formula will apply by using 50% of the capital costs or exploration costs of the feasibility study as the denominator for dilution calculation purposes; |
| (e) | if at any time either Participant’s working Interest in the project is reduced below 10%, then their interest will automatically convert to a 5% net project interest (the “NPI”); and |
| (f) | the Operator shall be entitled to include in each budget, in addition to the amounts to be actually expended, the reasonably estimated cost of satisfying continuing obligations relating to environmental protection, rehabilitation, reclamation and de-commissioning. |
6.7 The
Property
shall
be
registered in the name of
each
Participant with each Participant’s Interest noted in such registration, or
as
required
under Mexican law.
6.8
The
Joint
Venture Agreement will supersede this Agreement, provided that the
provisions
of Part
9, as well as all rights and liabilities of each party in existence on the
date
on which the Joint Venture Agreement is entered into,
shall
continue thereafter.
6.9
In
the
event the parties are unable to negotiate the terms of the Joint Venture
Agreement, the parties agree to refer the determination of the terms of such
Agreement
not
agreed upon
to
binding arbitration as contemplated by Part 13.
-7-
PART
7
ASSIGNMENT
OF OPTION
7.1 Subject
to §7.2, each party shall have the right to assign, transfer, convey or
otherwise dispose of all or part of its rights and interests in this
Agreement,
provided that as a condition precedent to such assignment, (i) the assignee
shall execute a counterpart of this Agreement and thereby agree to be bound
by
the contractual terms hereof in the same manner and to the same extent as though
a party hereto in the first instance; (ii) the assignor shall not be relieved
or
discharged of any of its obligations or liabilities hereunder and the other
parties may continue to look to it for the performance thereof, and (iii) the
assignor will subject any further assignment, transfer, conveyance or
disposition of its rights and interests in this Agreement to
the
restrictions set out in this §7.1.
7.2 If
the
Optionee wishes to assign, transfer, convey or otherwise dispose of all or
part
of its rights and interests in this Agreement pursuant
to §7.1, it may do so only with the
consent
of
the Optionors, such consent not to be unreasonably withheld.
PART
8
RIGHT
OF ENTRY
8.1 Throughout
the Option Period, the Directors and Officers of the Optionors and its servants,
agents and independent contractors, will have the sole and exclusive right
in
respect of the Property to:
|
(a)
|
enter
thereon;
|
|
(b)
|
have
exclusive and quiet possession
thereof;
|
|
(c)
|
do
such prospecting, exploration, development and/or other mining work
thereon and thereunder as the Optionors in their sole discretion
may
determine advisable;
|
|
(d)
|
bring
upon and erect upon the Property buildings, plant, machinery and
equipment
as the Optionors may deem advisable;
and
|
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(e)
|
remove
therefrom and dispose of reasonable quantities of ores, mineral and
metals
for the purpose of obtaining assays or making other
tests.
|
-8-
PART
9
OBLIGATIONS
OF THE PARTIES DURING OPTION PERIOD
9.1 During
the Option Period the Optionors will:
|
(a)
|
maintain
the Property in good standing by the doing of the performance of
all
actions which may be necessary in that regard and in order to keep
such
mineral claims free and clear of all liens and other charges arising
from
the Optionors’ activities thereon except those at the time contested in
good faith by the Optionors,remove therefrom and dispose of
reasonable quantities of ores, mineral and metals for the purpose
of
obtaining assays or making other tests.
|
| (b) | permit the directors, officers, employees and designated consultants of the Optionee, at their own risk, access to the Property at all reasonable times, and providing the Optionee agrees to indemnify the Optionors against and to save the Optionors harmless from all costs, claims, liabilities and expenses that may be incurred or suffered as a result of any injury (including injury causing death) to the Optionee and their respective employees or designated consultants while on the Property; |
| (c) | while exploration and development is carried out, furnish the Optionee with quarterly progress reports and with a final report within ninety (90) days following the conclusion of each work program which will be deemed to occur upon the verification of final assays. The final report shall show the exploration and development performed and the results obtained and shall be accompanied by a statement of costs and copies of pertinent plans, assay maps, drill records and other factual engineering data. All information and data concerning or derived from the exploration and development shall be kept confidential except as permitted under this Agreement; |
| (d) | deliver to the Optionors on or before six (6) months after each anniversary hereof, a report (including up-to-date maps if there are any) describing the results of work done in the last completed expenditure year, together with reasonable details of Expenditures made, |
| (e) | do all work on the Property in a good and workmanlike fashion and in accordance with all applicable laws, regulations, orders and ordinances of any governmental authority and file for all available assessment credits, and |
| (f) | indemnify and save the Optionee harmless in respect of any and all costs, claims, liabilities and expenses arising out of the Optionors’ activities on the Property. |
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9.2
|
During
the Option Period the Optionee
will:
|
|
(a)
|
Fulfill
the payment and expenditure requirements as set forth in §2.2
in
a timely manner
and within the time period prescribed;
and
|
| (b) | indemnify the Optionors against and save the Optionors harmless from any and all costs, claims, liabilities and expenses that may be incurred or suffered as a result of any injury (including injury causing death) to the Optionee and its directors, officers, respective employees or designated consultants while on the Property. |
-9-
PART
10
REPRESENTATIONS
AND WARRANTIES
10.1 The
Optionors jointly and severally represent and warrant to the Optionee
that:
| (a) | the Optionors have not entered into and are not aware of any other agreements in respect of the Property; |
|
(b)
|
the
mineral interests comprised in the Property have, to the best of
the
Optionors’ knowledge been duly and validly staked, recorded and issued
pursuant to all applicable laws and regulations in Mexico and to
the best
of its knowledge are in good standing;
|
|
(c)
|
all
rentals, taxes, duties, royalties, assessments, charges or fees and
other
assessments and levies pertaining to the Property and required to
be paid
by law or regulation have been fully paid as of the Effective
Date;
|
|
(d)
|
there
are not any suits, actions, prosecutions, investigations or proceedings,
actual, pending or threatened, against or affecting the Optionors
that
relate to or has an adverse effect on the
Property;
|
|
(e)
|
any
and all previous work conducted on the Property was conducted in
accordance with all applicable environmental laws, orders and rulings,
and
there are no outstanding assessments or liabilities relating to past
work
conducted on the Property which are now, or in the future may be,
payable
by any party;
|
|
(f)
|
each
of the Optionors has full power and absolute authority to grant to
the
Optionee the rights provided in this
Agreement;
|
|
(g)
|
they
have obtained all necessary corporate authorization for the execution
of
this Agreement and the performance of this Agreement by them;
and
|
|
(h)
|
this
Agreement constitutes a legal, valid and binding obligation of each
of the
Optionors; and
|
| (i) | the Optionors have all necessary permits and authorizations under applicable law to carry on operations. |
10.2 The
Optionee represents and warrants to the Optionors that:
|
(a)
|
the
execution and delivery of this Agreement and the exercise by the
Optionee
of the rights granted to it under this Agreement will not conflict
with or
result in a breach of or default under any agreement or other instrument
of obligation to which the Optionee is a party or by which it may
be
bound;
|
|
(b)
|
it has obtained all necessary corporate authorization for the execution of this Agreement; and |
|
(c)
|
this Agreement constitutes a legal, valid and binding obligation of the Optionee. |
-10-
10.3 The
representations and warranties contained in §10.1 are provided for the exclusive
benefit of the Optionee and a breach of any one or more of them may be waived
by
the Optionee in writing in whole or in part at any time without prejudice to
its
rights in respect of any other breach of the same or any other representation
or
warranty.
10.4 The
representations and warranties contained in §10.2 are provided for the exclusive
benefit of the Optionors and a breach of any one or more of them may be waived
by each of the Optionors in whole or in part at any time without prejudice
to
their rights in respect of any other breach of the same or any other
representation or warranty.
PART
11
FORCE
MAJEURE
11.1 If
the
Optionee is at any time either during the Option Period prevented or delayed
in
complying with the Expenditure
requirement provisions of this Agreement in §2.2 by reason of strikes,
walk-outs, labour shortages, power shortages, fuel shortages, fires, wars,
acts
of God, governmental regulations restricting normal operations, shipping delays
or any other reason or reasons beyond the control of the Optionee (and for
greater certainty excluding factors related to a lack of funding), the time
limited for the performance by the Optionee of its obligations hereunder will
be
extended by a period of time equal in length to the period of each such
prevention or delay, provided however that nothing herein will discharge the
Optionee from its obligation to timely pay the share consideration under §2.2(a)
or §2.2(c).
11.2 The
Optionee will within seven
(7)
days
of a force majeure event as set forth in §11.1
give
notice to the Optionors of such
event
and
upon
cessation of such event will furnish the Optionors with notice to that effect
together with particulars of the number of days by which the obligations of
the
Optionee hereunder have been extended by virtue of such event of force majeure
and all preceding events of force majeure.
PART
12
CONFIDENTIALITY
12.1 Subject
to §12.2
all
information received or obtained by the Optionee or the Optionors hereunder
or
pursuant hereto shall be kept confidential and no part thereof may be disclosed
or published without the prior written consent of the other except such
information as may be required to be disclosed or published by law or
regulation; provided that either party may disclose information to any person
or
persons with whom it proposes to contract pursuant to Part 7 and have agreed
to
hold the same in confidence, it being agreed that prior to such disclosure,
the
non-disclosing party shall receive notice thereof and a copy of the
confidentiality agreement executed by the person or persons with whom the
disclosing party proposes to contract pursuant to Part 7.
-11-
12.2 Confidential
information shall not include the following:
(a) information
that, at the time of disclosure, is in the public domain;
(b) information
that, after disclosure, is published or otherwise becomes part of the public
domain through no fault of the recipient;
(c) information
that the recipient can show already was in the possession of the recipient
at
the time of disclosure; or
(d) information
that the recipient can show was received by it after the time of disclosure,
from a third party who was under no obligation of confidence to the disclosing
party at the time of disclosure.
12.3 Except
as
required by law or regulatory authority, neither party shall make any public
announcements or statements concerning this Agreement or the Property without
the prior approval of the other, not to be unreasonably withheld.
12.4 The
text
of any public announcements or statements including news releases which a party
intends to make pursuant to the exception in §12.3 shall be made available to
the other party not less than twenty-four
(24)
hours
prior to publication and the disclosing party shall limit or amend such
disclosure as may be requested by the non-disclosing parties to the extent
such
limitation or amendment allows the disclosing party to meet its legal
obligations. If either of the Optionors or their affiliates (including parent
corporations) are identified in such public announcement or statement it shall
not be released without the consent of the relevant Optionor in writing. Neither
party may issue a release containing a factual error identified by the other
party.
PART
13
ARBITRATION
13.1 All
questions or matters in dispute with respect to the interpretation of this
Agreement will, insofar as lawfully possible, be submitted to arbitration
pursuant to the terms hereof using “final offer” arbitration
procedures.
13.2 It
will
be a condition precedent to the right of any party to submit any matter to
arbitration pursuant to the provisions hereof, that any party intending to
refer
any matter to arbitration will have given not less than ten
(10)
days’
prior written notice of its intention so to do to the other party together
with
particulars of the matter in dispute.
13.3 On
the
expiration of such ten
(10)
day period,
the
party who gave such notice may proceed to commence procedure in furtherance
of
arbitration as provided in this Part 13.
13.4 The
party
desiring arbitration (“First Party”) will nominate in writing three (3)
proposed
arbitrators, and will notify the other party (“Second Party”) of such nominees,
and the other party will, within ten
(10)
days
after receiving such notice, either choose one (1)
of
the
three
(3)
or
recommend three (3)
nominees
of its own. All nominees of either party must hold accreditation as either
a
lawyer, accountant or mining engineer
with a
minimum of ten (10) years’ experience in their given profession.
If the
First Party fails to choose one of the Second Party’s nominees,
then all
six (6)
names
shall be placed into a hat and one name shall be randomly chosen by the
president of the First Party and that person,
if
he/she is prepared to act,
shall be
the nominee. Except as specifically otherwise provided in this Part 13,
the
arbitration herein provided for will be conducted in accordance with the
Commercial
Arbitration Act
(British
Columbia). The parties shall thereupon each be obligated to proffer to the
arbitrator within twenty-one
(21)
days of
his/her appointment a proposed written solution to the dispute and the
arbitrator shall within ten
(10)
days of
receiving such proposals choose one of them without altering it except with
the
consent of both parties.
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13.5 The
expense of the arbitration will be paid as specified in the award.
13.6 The
parties agree
that the award of the arbitrator will be final and binding upon each of
them.
PART
14
DEFAULT
AND TERMINATION
14.1 The
Optionors may terminate this Agreement in the event of a material
breach
of
any term or condition of this Agreement by the Optionee, which material
breach
is
not corrected within thirty
(30)
days of
the receipt by the Optionee of written
notice
which describes such breach in reasonable detail.
14.2 If
this
Agreement is terminated, the Optionee shall:
|
(a)
|
forthwith
discharge all amounts due and owing to Optionors and third parties in
connection with the Operations;
|
| (b) | within 180 days deliver to the Optionors copies of all reports, maps, plans, photographs and drill logs of the Optionee relating to the Property, provided that the Optionee does not make any representation or warranty concerning the accuracy or completeness thereof; and |
| (c) | within the said 180 days remove from the Property any machinery, buildings, structures, facilities, equipment and all other Property of every nature and description erected, placed or situated thereon by the Optionee; any Property not so removed at the end of the 180 day period shall, at the written option of the Optionors delivered to the Optionee, become the Property of the Optionors. |
14.3 If
the
Optionee is prevented from or delayed in performing its obligations in
§14.2(b)or §14.2(c)
by a
force
majeure event as set forth in §11.1,
the
relevant period of 180 days referred to therein shall be extended by the period
of the
force
majeure event.
-00-
XXXX
00
XXXX
XX XXXXXX INTEREST
15.1 There
shall exist an area of common interest within the area included within two
(2)
kilometres of the boundaries of the Property (as detailed in the specific
description of the mineral concessions attached hereto as Schedule “A”), but
excluding any third party mineral claims existing as of the Effective Date.
If
either party (or permitted assignee hereof) acquires any mineral rights within
such area by staking or by the granting of such additional prospecting permits,
they shall, at the election of the other party (made by it within twenty
(20)
days of
written notice), be made part of the Property for all purposes and may be
referred
to as
Additional Property.
PART
16
REGISTRATION
RIGHTS
16.1 Subject
to the terms, conditions and limitations set forth herein, following the date
that the Optionee is required to make an issuance of Shares under this Agreement
(an “Issuance Date”), the Optionee will use commercially reasonable efforts to
file one or more registration statements with the SEC in the appropriate form
(each a “Resale Registration Statement”) within sixty
(60)
days
following such Issuance Date (a “Filing Date”) to allow the resale of the
Registrable Securities under the Securities Act, and use its commercially
reasonable efforts to
have
such Resale Registration Statement declared effective by the SEC as soon as
practicable following the Filing Date and, in any event, prior to the date
which
is 180 days after each applicable Issuance Date.
16.2 If,
following an Issuance Date, the Optionee shall determine to prepare and file
with the SEC a registration statement relating to an offering of common stock
for its own account under the Securities Act
(an
“Optionee Registration Statement”), then the Optionee shall send to the
Optionors written notice, at least twenty
(20)
business
days prior to the filing of such registration statement, of such determination
and that all or part of such Registrable Securities then held by the Optionors
may be included in such registration statement at the Optionors’ request. And
if, within fifteen
(15)
business
days after delivery of such notice, the Optionors shall so request in writing,
the Optionee shall include in such registration statement the resale of the
Registrable Securities requested by the
Optionors to be so included. Such written notice shall state the intended method
of disposition of the Registrable Securities by the Optionors.
PART
17
NOTICES
17.1 Each
notice, demand or other communication required or permitted to be given under
this Agreement (“Notice”) to the Optionors or the Optionee by the other shall be
in writing and will be sent by personal delivery, fax or prepaid registered
mail
to the addresses of the parties as follows:
-14-
|
(a)
|
if
to the Optionors:
|
#0000
-
000 Xxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0
Facsimile:
[(000)
000-0000]
Attention:
[Xxxx
Xxx]
|
(b)
|
if
to the Optionee:
|
900
IDS
Center, 00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx,
Xxxxxxxxx, XXX 00000
Facsimile:
[(000)
000-0000]
Attention:
[X.
Xxxxx White]
17.2 The
date
of receipt of such Notice will be the date of delivery or fax thereof if
delivered or faxed during business hours, or, if given by registered mail as
aforesaid, will be deemed conclusively to be the third day after the same will
have been so mailed except in the case of interruption of postal services for
any reason whatever, in which case the date of receipt will be the date on
which
the Notice is actually received by the addressee.
17.3 Either
party may at any time and from time to time notify the other party in writing
of
a change of address and the new address to which Notices will be given to it
thereafter until further change.
PART
18
GENERAL
18.1 This
Agreement is subject to the approval of the Board of Directors of each of the
Optionors and the Optionee, and acceptance of the TSX Venture Exchange if
required.
18.2 This
Agreement will supersede and replace any other agreement or arrangement, whether
oral or written, heretofore existing between the parties in respect of the
subject matter of this Agreement.
18.3 No
consent or waiver expressed or implied by either party in respect of any breach
or default by the other in the performance of such other of its obligations
hereunder will be deemed or construed to be a consent to or a waiver of any
other breach or default.
18.4 The
parties will promptly execute or cause to be executed all documents, deeds,
conveyances and other instruments of further assurance which may be reasonably
necessary or advisable to carry out fully the intent of this Agreement or to
record wherever appropriate the respective interests from time to time of the
parties in the Property.
18.5 This
Agreement
will inure
to the
benefit of and be binding upon the parties and their respective successors
and
assigns, subject to the conditions hereof.
-15-
18.6 This
Agreement will be construed in accordance with the laws of the Province of
British Columbia and the laws of Canada applicable therein.
18.7 All
sums
of money referred to herein are expressed in United States
currency.
18.8 The
headings appearing in this Agreement are for general information and reference
only and this Agreement will not be construed by reference to such
headings.
18.9 In
interpreting this Agreement and Schedule “A” hereto attached, where the context
so requires, the singular will include the plural, and the masculine will
include the feminine, the neuter, and vice versa.
18.10 Nothing
herein will constitute or be taken to constitute the parties as partners or
create any fiduciary relationship between them.
18.11 No
modification, alteration or waiver of the terms herein contained will be binding
unless the same is in writing, dated subsequently hereto, and fully executed
by
the parties.
18.12
This Agreement may be executed in counterpart and by
facsimile.
IN
WITNESS WHEREOF
this
Agreement has been executed on behalf of the Optionors and the Optionee by
their
duly authorized officers on the 28th day of June, 2006.
Per: /s/
X.
Xxxxx White
Authorized
Signatory
JOURNEY
RESOURCES CORPORATION
Per: /s/
Xxxx Xxx
Authorized
Signatory
MINERALES
JAZZ S.A. DE C.V.
Per: /s/
Xxxx Xxx
Authorized
Signatory
-16-
SCHEDULE
“A”
Mineral
Concessions Comprising The Property
The
Xxxxxx Mine Concession located in Xxxxxxxx State, Mexico.
The
concession constitutes 5,022 contiguous hectares(1),
centered on UTM coordinates 431,330m E, 1,987,020m N (WGS 84, Zone 14), or
-99.6485 degrees E, 17.9704 degrees N. The property is held under Exploitation
concession (Number 164151, Exp. No. 5929, issued March 5, 1979).
Minerales
Jazz S.A. de C.V. (a wholly owned subsidiary of Journey Resources Corporation)
acquired 100% interest in the property from Minera LMX, Minera Chilpancingo,
S.A. de C.V. and the underlying owner, Xx. Xxxxx Xxxxxxx xx Xxxxxx, in
2004.
(1)
Amended
to include the additionally held claims in the area of interest, notwithstanding
that they may be held at this time under the name of a third party. Such
additional claims are currently in the process of being transferred into the
name of Minerales Jazz S.A. de C.V.
