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EXHIBIT 10.8
MANAGEMENT AGREEMENT
THIS AGREEMENT is made and dated for reference effective as of the
1st day of February, 1998
BETWEEN:
AZCO MINING INC., a company duly incorporated under the laws of the
State of Delaware, USA, and having an executive office and an address
for notice and delivery located at Suite 1250, 999 West Hastings
Street, Vancouver, British Columbia, V6C 2W2
(the "Company");
OF THE FIRST PART
AND:
ALAN LINDSAY AND ASSOCIATES LTD. a company duly incorporated under
the laws of the Province of British Columbia and having an address
for notice and delivery located at c/o 2550, 555 West Hastings
Street, Vancouver, B.C. V6B 4N5
("ALA" and also "Consultant");
OF THE SECOND PART
(the Company and the Consultant being hereinafter singularly also
referred to as a "Party" and collectively referred to as the
"Parties" as the context so requires).
WHEREAS:
A. The Company is a reporting company duly incorporated under the laws
of the State of Delaware, USA, and is a "reporting issuer" for the purposes of
the Securities Acts of the Provinces of British Columbia and Ontario;
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B. The Company is involved in the principal business of the acquisition,
exploration and development of mineral resource properties of merit;
C. ALA is a non-reporting company duly incorporated under the laws of
the Province of British Columbia and is wholly owned and controlled by Mr. Alan
Lindsay ("Lindsay");
D. Mr. Lindsay is a highly experienced businessman and company manager
who has acted as an officer and director of the Company and has been acting for
ALA in accordance with contract between ALA and the Company by agreement dated
May 1, 1989 (the "May Agreement");
E. ALA has not received substantial review of the terms of the May
Agreement since its inception and, in light of the diligent service historically
and presently provided, the parties have agreed to re-negotiate to effect more
competitive terms;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and provisos herein contained, THE PARTIES HERETO AGREE AS
FOLLOWS:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the following words
and phrases shall have the following meanings:
(a) "Agreement" means this Agreement as from time to time
supplemented or amended;
(b) "Base Fee" means that compensation set forth in section
"5.1" below;
(c) "Board of Directors" or "Board" means the Board of
Directors of the Company as duly constituted from time to
time;
(d) "Effective Date" has the meaning ascribed to it in section
"4.1" hereinbelow;
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(e) "Indemnified Party" has the meaning ascribed to it in
section "8.1" hereinbelow;
(f) "Non-Renewal Notice" has the meaning ascribed to it in
section "4.2" hereinbelow;
(g) "Regulatory Approval" means the acceptance for filing, if
required, of the transactions contemplated by this
Agreement by the Regulatory Authorities;
(h) "Regulatory Authorities" means The Toronto Stock Exchange,
The American Stock Exchange and such other regulatory
agencies who have jurisdiction over the affairs of the
Company and/or the Consultant including, without
limitation, and where applicable, the British Columbia
Securities Commission, the Ontario Securities Commission,
the United States Securities and Exchange Commission and
all regulatory authorities from whom any such
authorization, approval or other action is required to be
obtained or to be made in connection with the transactions
contemplated by this Agreement;
(i) "Term" has the meaning ascribed to it in section "4.1"
hereinbelow; and
(j) "Termination Fee" has the meaning ascribed to it in
section "4.4 below.
1.2 INTERPRETATION. For the purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires,:
(a) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole
and not to any particular Article, section or other
subdivision of this Agreement;
(b) the headings are for convenience only and do not form a
part of this Agreement nor are they intended to interpret,
define or limit the scope or extent of this or any
provision of this Agreement;
(c) any reference to an entity shall include and shall be
deemed to be a reference to any entity that is a successor
to such entity; and
(d) words in the singular include the plural and words in the
masculine gender include the feminine and neuter genders,
and vice versa.
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ARTICLE II
REPLACEMENT OF THE MAY AGREEMENT
2.1 REPLACEMENT OF THE MAY AGREEMENT. This Agreement substitutes for and
replaces, in its entirety, the May Agreement, together with all prior
discussions, negotiations, understandings, amendments and intervening agreements
subsequent to the May Agreement and preceding this Agreement.
ARTICLE III
SERVICES AND DUTIES OF THE CONSULTANT
3.1 GENERAL SERVICES. During the Term (as hereinafter defined) of this
Agreement the Consultant will provide the Company with such general corporate,
administrative, financial and investor relations management services as is
considered necessary or advisable by ALA and Lindsay for the due and proper
management of the Company to achieve the goals and needs of the Company as
determined by the policies and proceedings of management and the Board of
Directors (collectively, the "General Services).
3.2 SPECIFIC SERVICES. Without limiting the generality of the General
Services to be provided as set forth in section "3.1" hereinabove, it is hereby
acknowledged and agreed that the Consultant will provide the following specific
services:
(a) supervision of the hiring of competent personnel as are
required for the efficient operation of the Company's
business;
(b) the management and supervision of the performance of
personnel and of the operation of various business
enterprises of the Company as approved by the Board;
(c) the identification of business opportunities for the
Company, the conduct of due diligence, and assistance in
the negotiation and conclusion of contracts for such
opportunities;
(d) assistance in the coordination and administration of all
development programs of the Company together with all
capital funding projects and resources which are
necessarily incidental thereto;
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(e) assistance in the coordination of the preparation and
dissemination of business plans and financial and investor
relations reports for the Company;
(f) assistance in the liaison with and the setting up of
corporate alliances for the Company with major companies
and customers, the Company's auditors, the Company's
solicitors and the Company's affiliated companies and
business partners; and
(g) such other activities as are necessary or incidental to
the officer's position and director's role occupied by Mr.
Lindsay, from time to time, if any.
3.3 COMPANY SUPPORT. It is hereby acknowledged that the Consultant is
contracting to provide one person to provide the services at this time, who
presently is Mr. Lindsay, but that the Consultant may provide another person in
lieu of Mr. Lindsay, so long as such person is competent to perform those tasks
or can so perform them under the supervision of Mr. Lindsay and such person has
been approved by the Board. In the event that the services to be provided to the
Company exceed the amount of time provided by this Agreement as basic retainer
or reasonably exceed the capacity of the Consultant's personnel then, at the
Consultant's requirement, the Company shall pay for the employment of additional
personnel, either directly or by contract through the consultant, to perform the
tasks requiring additional personnel and as specified by the Consultant and at a
rate determined by the Board.
ARTICLE IV
TERM, RENEWAL AND TERMINATION
4.1 TERM. The Term of this Agreement (the "Term") is for a period of
approximately 36 months commencing on February 1, 1998 (the "Effective Date")
and terminating February 1, 2001, subject to the terms hereafter set forth.
4.2 RENEWAL. This Agreement shall renew automatically for subsequent one
year periods if not specifically terminated in accordance with the following
provisions. Either Party hereto agrees to notify the other Party hereto in
writing at least 90 calendar days prior to the end of the Term of its intent not
to renew this Agreement (the "Non-Renewal Notice"). Should both Parties fail to
provide a Non-Renewal Notice this Agreement shall automatically renew. Such
renewal or month-to-month arrangement shall be on the same terms and conditions
contained herein unless modified and agreed to in writing by the Parties.
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4.3 TERMINATION. Notwithstanding any other provision of this Agreement,
this Agreement may be terminated by either Party upon written notice to the
other Party if:
(a) the other Party fails to cure a material breach of any
provision of this Agreement within 30 calendar days from
its receipt of written notice from said Party (unless such
breach cannot be reasonably cured within said 30 calendar
days and the other Party is actively pursuing curing of
said breach); or
(b) the other Party commits fraud or serious neglect or
misconduct in the discharge of its respective duties
hereunder or under the law; or
(c) the other Party becomes adjudged bankrupt or a petition
for reorganization or arrangement under any law relating
to bankruptcy, and where any such petition is not
dismissed;
but that the Consultant shall have the right to receive the Termination Fee
regardless of the reason for termination, subject to any rights of set-off in
the event of damages for fraud or misconduct.
4.4 TERMINATION FEE. In the event that this Agreement is terminated, or
fails to renew due to failure of agreement after the issuance of a Non-Renewal
Notice, the Consultant shall receive a termination fee (the "Termination Fee")
equal to the sum of:
(a) buy-out of any outstanding stock options for a price equal to the
average market price of the Company's shares on the Toronto Stock
Exchange multiplied by the number of shares under option and less the
exercise price thereof or, at the Consultant's election and subject
to Regulatory Approval, extension of the option for a year after
termination; plus
(b) the greater of:
(i) the aggregate remaining Base Fee for the unexpired
remainder of the Term; or
(ii) an annual Base Fee (Base Fee multiplied by twelve)
plus one month of Base Fee for each year, or portion
thereof, served after the Effective Date.
4.5 DISABILITY OR DEATH. In the event that the Consultant is unable to
provide the Services due to protracted disability or sickness or the death of
its principal, it may, at any time, declare such to the Company and may
terminate this Agreement as a without fault termination and the Termination Fee
shall be payable. The Company may elect to effect such termination, and shall
pay the Termination Fee, in the case of death of the
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Consultant's principal or in the event that sickness or disability has continued
for a period in excess of 120 days.
ARTICLE V
COMPENSATION OF THE CONSULTANT
5.1 BASE FEE. The Consultant shall be compensated on a monthly basis from
the Effective Date of this Agreement by a basic monthly retainer fee of U.S. $
15,000 (the "Base Fee"), being $180,000 US annualized, which shall compensate
the Consultant for the provision of the Services as required. The Consultant's
personnel shall also receive an allowance for equivalent benefits enjoyed by
Company personnel.
5.2 BASE FEE ADJUSTMENT. The Base Fee may be renegotiated annually at the
request of either Party. In the event that the Parties cannot agree then the
Base Fee shall be increased by the greater of 5% or the amount of the cost of
living index increase as published by the Canadian Federal government in its
final annual publication of such reports..
5.3 REIMBURSEMENT OF EXPENSES. The Consultant shall be funded for or
reimbursed for all reasonable expenses incurred, or to be incurred, by the
Consultant for the benefit of the Company.
5.4 VACATION. The Consultant shall be entitled to grant its appointed
personnel up to six weeks paid vacation per year.
ARTICLE VI
ADDITIONAL OBLIGATIONS OF THE CONSULTANT
6.1 NO CONFLICT. During this Agreement the Consultant will not engage in
any business which reasonably may detract from, compete with or conflict with
the Consultant's duties and obligations to the Company as set forth in this
Agreement without disclosure to the Board of Directors of the Company and will
not do so if the Board of Directors objects.
6.2 CONFIDENTIALITY. The Consultant will not, except as authorized or
required by the Consultant's duties hereunder, reveal or divulge to any person
or companies any information concerning the organization, business, finances,
transactions or other affairs of the Company, or of any of its subsidiaries,
which may come to the Consultant's knowledge during the continuance of this
Agreement, and the Consultant
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will keep in complete secrecy all confidential information entrusted to the
Consultant and will not use or attempt to use any such information in any manner
which may injure or cause loss either directly or indirectly to the Company's
business. This restriction will continue to apply after the termination of this
Agreement without limit in point of time but will cease to apply to information
or knowledge which may come into the public domain.
6.3 COMPLIANCE WITH APPLICABLE LAWS. The Consultant will comply with all
Canadian, U.S. and foreign laws, whether federal, provincial or state,
applicable to the Consultant's duties hereunder and, in addition, hereby
represents and warrants that any information which the Consultant may provide to
any person or company hereunder will be accurate and complete in all material
respects and not misleading, and will not omit to state any fact or information
which would be material to such person or company.
ARTICLE VII
REPORTING BY THE CONSULTANT
7.1 REPORTING. So often as may be required by the Board of Director, the
Consultant will provide to the Board of Directors of the Company such
information concerning the results of the Consultant's General Services and
activities hereunder as the Board of Directors of the Company may reasonably
require.
ARTICLE VIII
INDEMNIFICATION AND LEGAL PROCEEDINGS
8.1 INDEMNIFICATION. The Company shall maintain appropriate liability
insurance for its officers, directors, personnel and consultants to which the
Consultant and its personnel shall be made party. The Consultant and its
personnel (the "Indemnified Party") shall be indemnified and funded on a current
basis for all losses, damages, legal expenses, and any other expenses or costs
of any nature which may be occasioned by their service with the Company. Inter
alia, this indemnity shall apply to all manner of actions, proceedings, or
prosecutions, whether civil, regulatory, or criminal, to which the Indemnified
Party may be subject due in whole or in part to the Services provided herein or
by virtue of any office held. This indemnity shall apply both during and after
its Term for all matters arising during the Term, and any extension, until any
limitation period has expired in respect to any action which might be
contemplated. The Company shall not refuse coverage for any purpose or reason
and a strict presumption of innocence shall be applied and the Company may only
seek refund of any coverage in the case of finding of fraud or criminal
culpability, after exhaustion of all appeals. The Company shall diligently seek
and support any such court approvals for the within indemnity as the Indemnified
Party may require. The Company shall pay all such retainers and trust
requirements as counsel for the Indemnified Party may require and shall pay all
accounts
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of counsel as they come due and such accounts shall be rendered in the name of
the Company and, further, should the Company fail to pay any reasonable account,
it shall attorn to all such actions, summary judgments, and garnishing orders as
such counsel may consider fit to enforce and receive payment of its account. The
Company shall not seek to settle or compromise any action without the approval
of the Indemnified Party. The Company warrants it shall employ due diligence and
good faith and seek the best interests of the Indemnified Party as defendants in
any action or prosecution. The Indemnified Party shall permit the Company to
consult with their counsel and to be informed of any matters thereof, subject
only to any requirements for legal privilege purposes.
8.2 CLAIM OF INDEMNIFICATION. The Parties hereto agree to waive any right
they might have of first requiring the Indemnified Party to proceed against or
enforce any other right, power, remedy, security or claim payment from any other
person before claiming this indemnity.
8.3 NOTICE OF CLAIM. In case any action is brought against an Indemnified
Party in respect of which indemnity may be sought, the Indemnified Party will
give the Company prompt written notice of any such action of which the
Indemnified Party has knowledge. Failure by the Indemnified Party to so notify
shall not relieve the Company of its obligation of indemnification hereunder
unless (and only to the extent that) such failure results in a forfeiture of
substantive rights or defenses.
ARTICLE IX
FORCE MAJEURE
9.1 EVENTS. If either Party hereto is at any time either during this
Agreement or thereafter prevented or delayed in complying with any provisions of
this Agreement by reason of strikes, walk-outs, labour shortages, power
shortages, fires, wars, acts of God, earthquakes, storms, floods, explosions,
accidents, protests or demonstrations by environmental lobbyists or native
rights groups, delays in transportation, breakdown of machinery, inability to
obtain necessary materials in the open market, unavailability of equipment,
governmental regulations restricting normal operations, shipping delays or any
other reason or reasons beyond the control of that Party, then the time limited
for the performance by that Party of its respective obligations hereunder shall
be extended by a period of time equal in length to the period of each such
prevention or delay.
9.2 NOTICE. A Party shall within seven calendar days give notice to the
other Party of each event of force majeure under section "9.1" hereinabove, and
upon cessation of such event shall furnish the other Party with notice of that
event together with particulars of the number of days by which the obligations
of that Party hereunder have been extended by virtue of such event of force
majeure and all preceding events of force majeure.
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ARTICLE X
ARBITRATION
10.1 MATTERS FOR ARBITRATION. Except for matters of indemnity or in the
case of urgency to prevent material harm to a substantive right or asset, the
Parties agree that all questions or matters in dispute with respect to this
Agreement shall be submitted to arbitration pursuant to the terms hereof. This
provision shall not prejudice a Party from seeking court order or assistance to
garnish or secure sums or to seek summary remedy for such matters as counsel may
consider amenable to summary proceedings.
10.2 NOTICE. It shall 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 shall have given not less
than 10 business days' prior written notice of its intention to do so to the
other Party together with particulars of the matter in dispute. On the
expiration of such 10 business days the Party who gave such notice may proceed
to refer the dispute to arbitration as provided for in section "10.3"
hereinbelow.
10.3 APPOINTMENTS. The Party desiring arbitration shall appoint one
arbitrator, and shall notify the other Party of such appointment, and the other
Party shall, within 10 business days after receiving such notice, appoint an
arbitrator, and the two arbitrators so named, before proceeding to act, shall,
within 10 business days of the appointment of the last appointed arbitrator,
unanimously agree on the appointment of a third arbitrator, to act with them and
be chairman of the arbitration herein provided for. If the other Party shall
fail to appoint an arbitrator within 10 business days after receiving notice of
the appointment of the first arbitrator, and if the two arbitrators appointed by
the Parties shall be unable to agree on the appointment of the chairman, the
chairman shall be appointed in accordance with the Arbitration Act of the
Province of British Columbia (the "Arbitration Act"). Except as specifically
otherwise provided in this section, the arbitration herein provided for shall be
conducted in accordance with such Arbitration Act. The chairman, or in the case
where only one arbitrator is appointed, the single arbitrator, shall fix a time
and place for the purpose of hearing the evidence and representations of the
Parties, and he shall preside over the arbitration and determine all questions
of procedure not provided for by the Arbitration Act or this section. After
hearing any evidence and representations that the Parties may submit, the single
arbitrator, or the arbitrators, as the case may be, shall make an award and
reduce the same to writing, and deliver one copy thereof to each of the Parties.
The expense of the arbitration shall be paid as specified in the award.
10.4 AWARD. The Parties agree that the award of a majority of the
arbitrators, or in the case of a single arbitrator, of such arbitrator, shall be
final and binding upon each of them.
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ARTICLE XI
NOTICE
11.1 NOTICE. Each notice, demand or other communication required or
permitted to be given under this Agreement shall be in writing and shall be sent
by prepaid registered mail deposited in a recognized post office and addressed
to the Party entitled to receive the same, or delivered to such Party, at the
address for such Party specified on the front page of this Agreement. The date
of receipt of such notice, demand or other communication shall be the date of
delivery thereof if delivered, or, if given by registered mail as aforesaid,
shall be deemed conclusively to be the third day after the same shall have been
so mailed, except in the case of interruption of postal services for any reason
whatsoever, in which case the date of receipt shall be the date on which the
notice, demand or other communication is actually received by the addressee.
11.2 CHANGE OF ADDRESS. 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 notice shall be given to it thereafter until further change.
ARTICLE XII
GENERAL PROVISIONS
12.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement to
date between the Parties hereto and supersedes every previous agreement,
expectation, negotiation, representation or understanding, whether oral or
written, express or implied, statutory or otherwise, between the Parties with
respect to the subject matter of this Agreement.
12.2 NO RELATIONSHIP OF EMPLOYER-EMPLOYEE. Nothing contained in this
Agreement shall be construed as creating the relationship of employer and
employee as between the Company and the Consultant.
12.3 NO ASSIGNMENT. This Agreement may not be assigned by either Party
except with the prior written consent of the other Party.
12.4 WARRANTY OF GOOD FAITH. The Parties hereto warrant each to the other
to conduct their duties and obligations hereof in good faith and with due
diligence and to employ all reasonable endeavours to fully comply with and
conduct the terms and conditions of this Agreement.
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12.5 REGULATORY AUTHORITIES. This Agreement is subject to prior Regulatory
Approval, if required, of each of the Regulatory Authorities.
12.6 FURTHER ASSURANCES. The Parties will from time to time after the
execution of this Agreement make, do, execute or cause or permit to be made,
done or executed, all such further and other acts, deeds, things, devices and
assurances in law whatsoever as may be required to carry out the true intention
and to give full force and effect to this Agreement.
12.7 REPRESENTATION AND COSTS. It is hereby acknowledged by each of the
Parties hereto that, as between the Company and the Consultant herein, Devlin
Jensen, Barristers and Solicitors, acts solely for the Company, and that the
Consultant has been advised by Devlin Jensen to obtain independent legal advice
with respect to the Consultant's review and execution of this Agreement.
12.8 APPLICABLE LAW. The situs of this Agreement is Vancouver, British
Columbia, and for all purposes this Agreement will be governed exclusively by
and construed and enforced in accordance with the laws prevailing in the
Province of British Columbia.
12.9 SEVERABILITY AND CONSTRUCTION. Each Article, section, paragraph, term
and provision of this Agreement, and any portion thereof, shall be considered
severable, and if, for any reason, any portion of this Agreement is determined
to be invalid, contrary to or in conflict with any applicable present or future
law, rule or regulation in a final unappealable ruling issued by any court,
agency or tribunal with valid jurisdiction in a proceeding to which any Party
hereto is a party, that ruling shall not impair the operation of, or have any
other effect upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the Parties and continue to
be given full force and effect as of the date upon which the ruling becomes
final).
12.10 CAPTIONS. The captions, section numbers and Article numbers appearing
in this Agreement and the index hereto are inserted for convenience of reference
only and shall in no way define, limit, construe or describe the scope or intent
of this Agreement nor in any way affect this Agreement.
12.11 NO PARTNERSHIP OR AGENCY. The Parties have not created a partnership
or agency and nothing contained in this Agreement shall in any manner whatsoever
constitute any Party the partner, agent or legal representative of the other
Party, except as specifically herein provided.
12.12 CONSENTS AND WAIVERS. No consent or waiver expressed or implied by
either Party in respect of any breach or default by the other in the performance
by such other of its obligations hereunder shall:
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(a) be valid unless it is in writing and stated to be a
consent or waiver pursuant to this section;
(b) be relied upon as a consent to or waiver of any other
breach or default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or
waiver pursuant to this section in any other or subsequent
instance.
IN WITNESS WHEREOF the Parties hereto have hereunto set
their respective hands and seals in the presence of their duly authorized
signatories effective as at the date first above written.
The CORPORATE SEAL of )
AZCO MINING INC. )
was hereunto affixed in the presence of: )
)
)
- ------------------------------------------- ) (C/S)
Authorized Signatory )
The CORPORATE SEAL of )
ALAN LINDSAY AND )
ASSOCIATES LTD. )
was hereunto affixed in the presence of: )
)
)
- ------------------------------------------- ) (C/S)
Authorized Signatory )
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