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EXHIBIT 10.16__________
MINERAL PROPERTY OPTION AGREEMENT
BETWEEN:
MINERA CORTEZ RESOURCES LTD.
AND:
AZCO MINING INC.
DEVLIN JENSEN
Barristers and Solicitors
P.O. Box 12077
Harbour Centre Tower
Suite 2550, 555 West Hastings Street
Vancouver, British Columbia, V6B 4N5
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MINERAL PROPERTY OPTION AGREEMENT
THIS MINERAL PROPERTY OPTION AGREEMENT is made and dated for
reference effective as of the 20th day of May, 1999.
BETWEEN:
MINERA CORTEZ RESOURCES LTD., AND ON BEHALF OF ITS MEXICAN
SUBSIDIARY, a company duly incorporated under the laws of the
Province of British Columbia and having an address for notice and
delivery located at Suite 5640 Marine Drive, West Vancouver,
British Columbia, V7W 2R6
(the "Optionor");
OF THE FIRST PART
AND:
AZCO MINING INC., a company duly incorporated under the laws of
the State of Delaware, U.S.A., and having an address for notice
and delivery located at Suite 1250, 999 West Hastings Street,
Vancouver, British Columbia V6C 2W2
(the "Optionee");
OF THE SECOND PART
(the Optionor and the Optionee being hereinafter singularly also
referred to as a "Party" and collectively referred to as the
"Parties" as the context so requires).
WHEREAS:
A. The Optionor, through its Mexican subsidiary, is the beneficial owner of
certain mineral property interests which are located in the State of Sonora,
Mexico (collectively, the "Property"), and which mineral interests comprising
the Property are more particularly described in Schedule "A" which is attached
hereto and which forms a material part hereof;
B. The Optionor has herein agreed to grant an option to the Optionee (the
"Option") to acquire an undivided one hundred percent (100%) legal and
beneficial interest in and to the mineral property interests comprising the
Property; and
C. The Parties hereto have agreed to enter into this Agreement which clarifies
their respective duties and obligations with respect to the Property and the
Option granted thereon on the terms and conditions herein contained;
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NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of
the mutual covenants and provisos herein contained, THE PARTIES HERETO AGREE AS
FOLLOWS:
ARTICLE 1
DEFINITIONS, SCHEDULES AND INTERPRETATION
1.1 DEFINITIONS. For the 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 Mineral Property Option Agreement as
entered into between the Parties hereto, together with any
amendments thereto and any Schedules as attached thereto;
(b) "Arbitration Act" means the Commercial Arbitration Act of the
Province of British Columbia, R.S.B.C. 1996, as amended from time
to time, as set forth in Article "12" hereinbelow;
(c) "Cash Payment" has the meaning ascribed to it in section "2.2"
hereinbelow;
(d) "Closing" has the meaning ascribed to it in section "6.1"
hereinbelow and includes, without limitation, the closing of each
of the transactions contemplated hereby which shall occur after
the conditions precedent set out in Article "5" hereinbelow have
been satisfied in their entirety;
(e) "Closing Date" has the meaning ascribed to it in section "6.1"
hereinbelow;
(f) "Confidential Information" has the meaning ascribed to it in
section "10.1" hereinbelow;
(g) "Defaulting Party" and "Non-Defaulting Party" have the meanings
ascribed to them in section "13.1" hereinbelow;
(h) "Effective Date" means the date of acceptance for filing of the
transactions contemplated by this Agreement by the Regulatory
Authorities;
(i) "Escrow Agent" means Devlin Jensen, Barristers and Solicitors, or
such other mutually agreeable escrow agent as may be selected by
the Parties hereto either prior to or after the Execution Date
and who agrees to be bound by the terms and conditions of this
Agreement;
(j) "Exchange" means The Toronto Stock Exchange;
(k) "Execution Date" means the actual date of the complete execution
of this Agreement and any amendments thereto as set forth on the
front page of this Agreement;
(l) "Option" has the meaning ascribed to it in recital "B"
hereinabove as effected in the manner as set forth in Article "2"
hereinbelow;
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(m) "Optionee" means Azco Mining Inc., a company duly incorporated
pursuant to the laws of the State of Delaware, U.S.A., or any
successor company, however formed, whether as a result of merger,
amalgamation or other action;
(n) "Option Period" has the meaning as set forth in section "2.1"
hereinbelow;
(o) "Option Price" has the meaning ascribed to it in section "2.2"
hereinbelow;
(p) "Optionor" means Minera Cortez Resources Ltd., a company duly
incorporated pursuant to the laws of the Province of British
Columbia, or any successor company, however formed, whether as a
result of merger, amalgamation or other action, or any subsidiary
of the Optionor;
(q) "Party" or "Parties" means the Optionor and/or the Optionee
hereto, together with their respective successors and permitted
assigns as the context so requires;
(r) "person" or "persons" means an individual, corporation,
partnership, party, trust, fund, association and any other
organized group of persons and the personal or other legal
representative of a person to whom the context can apply
according to law;
(s) "Property" has the meaning ascribed to it in recital "A."
hereinabove; and which mineral interests comprising the Property
are particularly described in Schedule "A" which is attached
hereto together with any other claim or property interests of the
Parties hereto which are incorporated into the Property by the
terms of this Agreement;
(t) "Property Documentation" means any and all technical records and
other factual engineering data and information relating to the
mineral interests comprising the Property and including, without
limitation, all plans, maps, agreements and records which are in
the possession or control of any Party hereto;
(u) "Property Rights" means all mineral licenses and all prioritized
and protocoled applications for exploration licenses, permits,
easements, rights-of-way, certificates, exclusive prospecting
orders and other approvals obtained by either of the Parties
either before or after the Execution Date of this Agreement and
necessary for the exploration and development of any of the
mineral interests comprising the Property;
(v) "Regulatory Approval" means the acceptance for filing of the
transactions contemplated by this Agreement by the Regulatory
Authorities;
(w) "Regulatory Authorities" means the Exchange and such other
regulatory bodies and agencies who have jurisdiction over the
affairs of any of the Parties hereto and including, without
limitation, 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;
(x) "Securities Act" means the Securities Act of the Province of
British Columbia, S.B.C. 1985, as amended from time to time,
together with the Rules and Regulations to the Securities Act;
(y) "Subject Removal Date" has the meaning ascribed to it in section
"5.1" hereinbelow;
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(z) "subsidiary" means any company or companies of which more than
50% of the outstanding shares carrying votes at all times
(provided that the ownership of such shares confers the right at
all times to elect at least a majority of the board of directors
of such company or companies) are for the time being owned by or
held for a company and/or any other company in like relation to
the company, and includes any company in like relation to the
subsidiary;
(aa) "Trading Shares" has the meaning ascribed to it in section "2.2"
hereinbelow; and
(ab) "Transfer Documents" has the meaning as set forth in section
"7.2" hereinbelow.
1.2 SCHEDULES. For the purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the following shall represent
the Schedule which is attached to this Agreement and which forms a material part
hereof:
Schedule Description
Schedule "A": Property
1.3 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 permitted 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.
ARTICLE 2
GRANT, MAINTENANCE, EXERCISE AND TERMINATION OF THE OPTION
2.1 GRANT OF THE OPTION. Subject to the terms and conditions hereof and based
upon the representations, warranties and covenants contained in Articles "3" and
"4" hereinbelow and the prior satisfaction of the conditions precedent which are
set forth in Article "5" hereinbelow, the Optionor hereby agrees to give and
grant to the Optionee the sole and exclusive right and option to acquire an
undivided one hundred percent (100%) legal and beneficial interest in and to the
mineral interests comprising the Property (again the "Option") and, in order to
maintain the Option in good standing and in full force and effect, the Optionee
hereby agrees to exercise the Option on or before the Closing Date (as
hereinafter determined) (which period in time from the Execution Date herein to
the Closing Date is referred to as the "Option Period") for the Cash Payment and
the Trading Share issuance to be paid and issued in accordance with section
"2.2" hereinbelow, and, in consideration therefor, the Optionor does hereby
undertake for the Optionor, together with the Optionor's agents, advisors and
subsidiaries, that they will not until the earlier of the Closing Date or the
termination of this Agreement approach other potential optionees,
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make, invite, entertain or accept any offer for the sale of any of the mineral
interests comprising the Property, or disclose any of the terms of this
Agreement, without the Optionee's prior written consent.
2.2 CONSIDERATION FOR AND MAINTENANCE OF THE OPTION. In order to keep the right
and Option granted to the Optionee in respect of the Property in good standing
and in force and effect during the Option Period the Optionee shall be obligated
to pay and issue the following Cash Payment and Trading Share issuance
(collectively, the "Option Price") to and for the order of the Optionor in the
following manner:
(a) Cash Payment: pay to the order and direction of the Optionor the
sum of U.S. $20,000 (the "Cash Payment") on or before two
calendar days from the Effective Date of this Agreement; and
(b) Trading Share Issuance: issue to the Optionor a total of 30,000
fully paid and non-assessable trading common shares in the
capital of the Optionee (each a "Trading Share"), at a deemed
issuance price of U.S. $1.00 per Trading Share, on or before two
calendar days from the Effective Date of this Agreement.
2.3 RESALE RESTRICTIONS. The Optionor hereby acknowledges and agrees that the
Optionee makes no representations as to any resale or other restriction
affecting the Trading Shares, and that it is presently contemplated that the
Trading Shares will be issued by the Optionee to the Optionor in reliance upon
the registration and prospectus exemptions contained in sections 45(2)(19) and
74(2)(18) of the Securities Act which will impose a trading restriction in the
Province of British Columbia on the Trading Shares for a period of at least 12
months from their date of issuance. In addition, the obligation of the Optionee
to issue the Trading Shares pursuant to section "2.2" hereinabove is subject to
the Optionee being satisfied that an exemption from applicable registration and
prospectus requirements is available under the securities laws of the Province
of British Columbia and the United States in respect of the Optionor, and the
Optionee shall be relieved of any obligation whatsoever to issue Trading Shares
in respect of the Optionor where the Optionee reasonably determines that a
suitable exemption is not available to it.
2.4 TERMINATION OF THE OPTION. The Option shall terminate upon two calendar
days' prior written notice being first being provided by the Optionor to the
Optionee:
(a) if the Optionee fails to make the required Cash Payment to the
order and direction of the Optionor in accordance with paragraph
"2.2(a)" hereinabove within the time period specified in
paragraph "2.2(a)"; or
(b) if the Optionee fails to make the required Trading Share issuance
to the Optionor in accordance with paragraph "2.2(b)" hereinabove
within the time periods specified in paragraph "2.2(b)".
2.5 TERMINATION BY THE OPTIONEE. Prior to the exercise of the Option the
Optionee may terminate the Option by providing a notice of termination to the
Optionor in writing of its desire to do so at least two calendar days prior to
its decision to do so. After such two calendar days' period the Optionee shall
have no further obligations, financial or otherwise, under this Agreement,
except that the provisions of section "2.7" hereinbelow shall become immediately
applicable to the Optionee upon providing the said notice of termination to the
Optionor.
2.6 NO INTEREST IN THE PROPERTY. If the Option is so terminated in accordance
with either of sections "2.4" or "2.5" hereinabove the Optionee shall have no
interest in and to any of
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the mineral interests comprising the Property, and the provisions of section
"2.7" hereinbelow shall become immediately applicable to the Optionee.
2.7 OBLIGATIONS ON TERMINATION. If the Option is terminated otherwise than upon
the exercise thereof pursuant to this Article, then the Optionee shall deliver
at no cost to the Optionor within 30 calendar days of such termination copies of
all reports, maps, assay results and other relevant technical data compiled by
or in the possession of the Optionee with respect to the mineral interests
comprising the Property and not theretofore already furnished to the Optionor.
2.8 DEEMED EXERCISE OF THE OPTION. At such time as the Optionee has made each of
the required Cash Payment and Trading Share issuance in accordance with section
"2.2" hereinabove, within the Option Period and the time periods as specified in
section "2.2", then the Option shall be deemed to have been exercised by the
Optionee, and the Optionee shall have thereby, in accordance with the terms and
conditions of this Agreement and without any further act required on its behalf,
acquired an undivided one hundred percent (100%) legal and beneficial interest
in and to the mineral property interests comprising the Property.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE OPTIONOR
3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE OPTIONOR. In order to
induce the Optionee to enter into and consummate this Agreement, the Optionor
hereby represents to, warrants to and covenants with the Optionee, with the
intent that the Optionee will rely thereon in entering into this Agreement and
in concluding the transactions contemplated herein, that, to the best of the
knowledge, information and belief of the Optionor, after having made due
inquiry:
(a) the Optionor is qualified to do business in those jurisdictions
where it is necessary to fulfill the Optionor's obligations under
this Agreement, and the Optionor has the full power and authority
to enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement;
(b) the Optionor has the requisite power, authority and capacity to
fulfill the Optionor's obligations under this Agreement;
(c) the execution and delivery of this Agreement and the agreements
contemplated hereby have been duly authorized by all necessary
action on the Optionor's part;
(d) this Agreement constitutes a legal, valid and binding obligation
of the Optionor enforceable against the Optionor in accordance
with its terms, except as enforcement may be limited by laws of
general application affecting the rights of creditors;
(e) prior to the Subject Removal Date the Optionor will have obtained
all authorizations, approvals, including Regulatory Approval, or
waivers that may be necessary or desirable in connection with the
transactions contemplated in this Agreement, and other actions
by, and have made all filings with, any 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 herein, and all such
authorizations, approvals and other actions will be in full force
and effect, and all such filings will have been accepted by the
Optionor who will be in compliance with, and have not committed
any breach of,
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any securities laws, regulations or policies of any Regulatory
Authority to which either the Optionor or any of the mineral
interests comprising the Property may be subject;
(f) except for Regulatory Approval of this Agreement by the
appropriate Regulatory Authorities, there are no other consents,
approvals or conditions precedent to the performance of this
Agreement which have not been obtained;
(g) the Optionor is not in breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which the Optionor is
subject or which apply to the Optionor;
(h) no proceedings are pending for, and the Optionor is unaware of,
any basis for the institution of any proceedings leading to the
placing of the Optionor in bankruptcy or subject to any other
laws governing the affairs of insolvent persons;
(i) the Optionor acknowledges that the Trading Shares will be issued,
and reserved for issuance where applicable, under certain
exemptions from the registration and prospectus filing
requirements otherwise applicable under the Securities Act, and
that, as a result, the Optionor may be restricted from using most
of the remedies that would otherwise be available to the Optionor
and will not receive information that would otherwise be required
to be provided to the Optionor, and the Optionee is relieved from
certain obligations that would otherwise apply to the Optionee,
in either case, under applicable securities legislation;
(j) the Optionor has not received, nor has the Optionor requested or
does the Optionor require to receive, any offering memorandum or
similar document describing the business and affairs of the
Optionee in order to assist the Optionor in entering into this
Agreement and in consummating the transactions contemplated
herein;
(k) the Optionor acknowledges and agrees that the Trading Shares have
not been and will not be qualified or registered under the
securities laws of the Province of British Columbia or under any
federal or state laws of the United States and, as such, the
Optionor may be restricted from selling or transferring such
Trading Shares under applicable law;
(l) the Optionor will not take any action which may require the
Optionee to register with any applicable securities regulatory
authority or to file a prospectus under applicable securities
laws in respect of this Agreement or the transactions
contemplated herein;
(m) the Optionor is resident in the jurisdiction as set forth on the
front page of this Agreement, and that all negotiations and other
acts in furtherance of the execution and delivery of this
Agreement by the Optionor in connection with the transactions
contemplated herein have taken place and will take place solely
in such jurisdiction or the Province of British Columbia;
(n) the Optionor, through its Mexican subsidiary, is authorized to
hold the legal and beneficial right to explore and develop each
of the mineral interests comprising the Property and all Property
Rights held by the Optionor, through its Mexican subsidiary, in
and to the mineral interests comprising the Property;
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(o) the Optionor, through its Mexican subsidiary, beneficially holds
all of the mineral interests comprising the Property free and
clear of all liens, charges and claims of others;
(p) no other person, firm or corporation has any written or oral
agreement, option, understanding or commitment, or any right or
privilege capable of becoming an agreement, for the purchase from
the Optionor of any interest in and to any of the mineral
interests comprising the Property;
(q) the mineral interests comprising the Property have been duly and
validly located and recorded in a good and minerlike manner
pursuant to applicable mining laws;
(r) all permits and licenses covering the mineral interests
comprising the Property have been duly and validly issued
pursuant to applicable mining laws and are in good standing by
the proper doing and filing of assessment work and the payment of
all fees, taxes and rentals in accordance with the requirements
of applicable mining laws and the performance of all other
actions necessary in that regard;
(s) all conditions on and relating to the mineral interests
comprising the Property and the operations conducted thereon by
or on behalf of the Optionor, through its Mexican subsidiary, are
in compliance with all applicable laws, regulations or orders and
including, without limitation, all laws relating to environmental
matters, waste disposal and storage and reclamation;
(t) there are no outstanding orders or directions relating to
environmental matters requiring any work, repairs, construction
or capital expenditures with respect to any of the mineral
interests comprising the Property and the conduct of the
operations related thereto, nor has the Optionor received any
notice of same;
(u) there is no adverse claim or challenge against or to the
ownership of or title to any of the mineral interests comprising
the Property or which may impede the development of any of the
mineral interests comprising the Property, nor, to the best of
the knowledge, information and belief of the Optionor, after
having made due inquiry, is there any basis for any potential
claim or challenge, and, to the best of the knowledge,
information and belief of the Optionor, after having made due
inquiry, no person has any royalty, net profits or other
interests whatsoever in any production from any of the mineral
interests comprising the Property;
(v) there are no actions, suits, proceedings or investigations
(whether or not purportedly against or on behalf of the
Optionor), pending or threatened, which may affect, without
limitation, the rights of the Optionor to transfer any interest
in and to the mineral interests comprising the Property to the
Optionee at law or in equity, or before or by any federal, state,
provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, and, without limitation, there are no claims or
potential claims under any relevant family relations legislation
or other equivalent legislation affecting any of the mineral
interests comprising the Property. In addition, the Optionor is
not now aware of any existing ground on which any such action,
suit or proceeding might be commenced with any reasonable
likelihood of success;
(w) the Optionor has delivered to the Optionee all Property
Documentation in the Optionor's possession or control relating to
the mineral interests comprising the Property together with
copies of all permits, permit applications and applications
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for exploration and exploitation rights respecting any of the
mineral interests comprising the Property;
(x) the Optionor is not, nor until or at the Closing Date will the
Optionor be, in breach of any provision or condition of, nor has
the Optionor done or omitted to do anything that, with or without
the giving of notice or lapse or both, would constitute a breach
of any provision or condition of, or give rise to any right to
terminate or cancel or accelerate the maturity of any payment
under, any deed of trust, contract, certificate, consent, permit,
license or other instrument to which the Optionor is a party, by
which the Optionor is bound or from which the Optionor derives
benefit, any judgment, decree, order, rule or regulation of any
court or governmental authority to which the Optionor is subject,
or any statute or regulation applicable to the Optionor, to an
extent that, in the aggregate, has a material adverse affect on
either the Optionor or on any of the mineral interests comprising
the Property;
(y) the Optionor will give to the Optionee, within at least two
calendar days prior to the Closing Date, by written notice,
particulars of:
(i) each occurrence within the Optionor's knowledge after the
Execution Date of this Agreement that, if it had occurred
before the Execution Date, would have been contrary to any
of the Optionor's representations or warranties contained
herein; and
(ii) each occurrence or omission within the Optionor's
knowledge after the Execution Date that constitutes a
breach of any of the Optionor's covenants contained in
this Agreement;
(z) the making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and
compliance with the terms hereof does not and will not:
(i) conflict with or result in a breach of or violate any of
the terms, conditions or provisions of any law, judgment,
order, injunction, decree, regulation or ruling of any
court or governmental authority, domestic or foreign, to
which the Optionor is subject, or constitute or result in
a default under any agreement, contract or commitment to
which the Optionor is a party;
(ii) give to any party the right of termination, cancellation
or acceleration in or with respect to any agreement,
contract or commitment to which the Optionor is a party;
(iii) give to any government or governmental authority, or any
municipality or any subdivision thereof, including any
governmental department, commission, bureau, board or
administration agency, any right of termination,
cancellation or suspension of, or constitute a breach of
or result in a default under, any permit, license, control
or authority issued to the Optionor which is necessary or
desirable in connection with the conduct and operations of
the Optionor's business and the ownership or leasing of
the Optionor's business assets; or
(iv) constitute a default by the Optionor, or any event which,
with the giving of notice or lapse of time or both, might
constitute an event of default, under any agreement,
contract, indenture or other instrument relating to any
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indebtedness of the Optionor which would give any party to
that agreement, contract, indenture or other instrument
the right to accelerate the maturity for the payment of
any amount payable under that agreement, contract,
indenture or other instrument;
(aa) neither this Agreement nor any other document, certificate or
statement furnished to the Optionee by or on behalf of the
Optionor in connection with the transactions contemplated hereby
knowingly or negligently contains any untrue or incomplete
statement of material fact or omits to state a material fact
necessary in order to make the statements therein not misleading
which would likely affect the decision of the Optionee to enter
into this Agreement; and
(ab) the Optionor is not aware of any fact or circumstance which has
not been disclosed to the Optionee which should be disclosed in
order to prevent the representations, warranties and covenants
contained in this section from being misleading or which would
likely affect the decision of the Optionee to enter into this
Agreement.
3.2 CONTINUITY OF THE REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE OPTIONOR.
The representations, warranties and covenants by the Optionor contained in this
Article "3", or in any certificates or documents delivered pursuant to the
provisions of this Agreement or in connection with the transactions contemplated
hereby, will be true at and as of the Closing Date as though such
representations, warranties and covenants were made at and as of such time.
Notwithstanding any investigations or inquiries made by the Optionee or by the
Optionee's professional advisors prior to the Closing Date, or the waiver of any
condition by the Optionee, the representations, warranties and covenants of the
Optionor contained in this Article "3" shall survive the Closing Date and shall
continue in full force and effect for a period of 90 calendar days from the
Closing Date; provided, however, that the Optionor shall not be responsible for
the breach of any representation, warranty or covenant of the Optionor contained
herein caused by any act or omission of the Optionee prior to the Execution Date
hereof of which the Optionor was unaware or as a result of any action taken by
the Optionee after the Execution Date. In the event that any of the said
representations, warranties or covenants are found by a court of competent
jurisdiction to be incorrect and such incorrectness results in any loss or
damage sustained directly or indirectly by the Optionee, then the Optionor will
pay the amount of such loss or damage to the Optionee within 30 calendar days of
receiving notice of judgment therefor; provided, however, that the Optionee will
not be entitled to make any claim unless the loss or damage suffered may exceed
the amount of U.S. $1,000.
ARTICLE 4
WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE OPTIONEE
4.1 WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE OPTIONEE. In order to
induce the Optionor to enter into and consummate this Agreement, the Optionee
hereby warrants to, represents to and covenants with the Optionor, with the
intent that the Optionor will rely thereon in entering into this Agreement and
in concluding the transactions contemplated herein, that, to the best of the
knowledge, information and belief of the Optionee, after having made due
inquiry:
(a) the Optionee is a corporation duly incorporated under the laws of
the State of Delaware, U.S.A., is validly existing and is in good
standing with respect to all statutory filings required by the
State of Delaware;
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(b) the Optionee is qualified to do business in those jurisdictions
where it is necessary to fulfill the Optionee's obligations under
this Agreement, and the Optionee has the full power and authority
to enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement;
(c) the execution and delivery of this Agreement and the agreements
contemplated hereby has been duly authorized by all necessary
corporate action on the Optionee's part;
(d) prior to the Subject Removal Date the Optionee will have obtained
all authorizations, approvals, including Regulatory Approval, or
waivers that may be necessary or desirable in connection with the
transactions contemplated in this Agreement, and other actions
by, and have made all filings with, any 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 herein, and all such
authorizations, approvals and other actions will be in full force
and effect, and all such filings will have been accepted by the
Optionee who will be in compliance with, and have not committed
any breach of, any securities laws, regulations or policies of
any Regulatory Authority to which the Optionee may be subject;
(e) except for Regulatory Approval of this Agreement by the
appropriate Regulatory Authorities, there are no other consents,
approvals or conditions precedent to the performance of this
Agreement which have not been obtained;
(f) this Agreement constitutes a legal, valid and binding obligation
of the Optionee enforceable against the Optionee in accordance
with its terms, except as enforcement may be limited by laws of
general application affecting the rights of creditors;
(g) all of the issued and outstanding shares of the Optionee are
listed and posted for trading on the Exchange, and the Optionee
is not in material default of any of the terms and conditions of
its listing agreement with the Exchange or of any of the rules
and policies of the Exchange;
(h) the Optionee will allot and issue the Trading Shares during the
Option Period and in accordance with section "2.2" hereinabove as
fully paid and non-assessable in the capital of the Optionee,
free and clear of all actual or threatened liens, charges,
options, encumbrances, voting agreements, voting trusts, demands,
limitations and restrictions of any nature whatsoever, other than
hold periods or other restrictions imposed under applicable
securities legislation or by securities regulatory authorities,
including the Exchange;
(i) the Optionee is not aware of any court order which restricts or
prevents the issuance by the Optionee of any shares from
treasury;
(j) the shares in the capital of the Optionee are not subject to or
affected by any actual or, to the knowledge of the Optionee,
pending or threatened cease trading, compliance or denial of use
of exemptions orders of, or action, investigation or proceeding
by or before, any securities regulatory authority, court,
administrative agency or other tribunal;
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(k) the making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and
compliance with the terms hereof does not and will not:
(i) conflict with or result in a breach of or violate any of
the terms, conditions or provisions of the incorporation
documents of the Optionee;
(ii) conflict with or result in a breach of or violate any of
the terms, conditions or provisions of any law, judgment,
order, injunction, decree, regulation or ruling of any
court or governmental authority, domestic or foreign, to
which the Optionee is subject, or constitute or result in
a default under any agreement, contract or commitment to
which the Optionee is a party;
(iii) give to any party the right of termination, cancellation
or acceleration in or with respect to any agreement,
contract or commitment to which the Optionee is a party;
(iv) give to any government or governmental authority, or any
municipality or any subdivision thereof, including any
governmental department, commission, bureau, board or
administration agency, any right of termination,
cancellation or suspension of, or constitute a breach of
or result in a default under, any permit, license, control
or authority issued to the Optionee which is necessary or
desirable in connection with the conduct and operations of
the Optionee's business and the ownership or leasing of
the Optionee's business assets; or
(v) constitute a default by the Optionee or any event which,
with the giving of notice or lapse of time or both, might
constitute an event of default, under any agreement,
contract, indenture or other instrument relating to any
indebtedness of the Optionee which would give any party to
that agreement, contract, indenture or other instrument
the right to accelerate the maturity for the payment of
any amount payable under that agreement, contract,
indenture or other instrument;
(l) neither this Agreement nor any other document, certificate or
statement furnished to the Optionor by or on behalf of the
Optionee in connection with the transactions contemplated hereby
knowingly or negligently contains any untrue or incomplete
statement of material fact or omits to state a material fact
necessary in order to make the statements therein not misleading;
and
(m) the Optionee is not aware of any fact or circumstance which has
not been disclosed to the Optionor which should be disclosed in
order to prevent the representations, warranties and covenants
contained in this section from being misleading or which would
likely affect the decision of the Optionor to enter into this
Agreement.
4.2 CONTINUITY OF THE REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE OPTIONEE.
The representations, warranties and covenants of the Optionee contained in this
Article "4", or in any certificates or documents delivered pursuant to the
provisions of this Agreement or in connection with the transactions contemplated
hereby, will be true at and as of the Closing Date as though such
representations, warranties and covenants were made at and as of such time.
Notwithstanding any investigations or inquiries made by the Optionor or by the
Optionor's professional advisors prior to the Closing Date, or the waiver of any
condition by the Optionor, the representations, warranties and covenants of the
Optionee contained in this Article
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"4" shall survive the Closing Date and shall continue in full force and effect
for a period of 90 calendar days from the Closing Date; provided, however, that
the Optionee shall not be responsible for the breach of any representation,
warranty or covenant of the Optionee contained herein caused by any act or
omission of the Optionor prior to the Execution Date hereof of which the
Optionee was unaware or as a result of any action taken by the Optionor after
the Execution Date. In the event that any of the said representations,
warranties or covenants are found by a court of competent jurisdiction to be
incorrect and such incorrectness results in any loss or damage sustained
directly or indirectly by the Optionor, then the Optionee will pay the amount of
such loss or damage to the Optionor within 30 calendar days of receiving notice
of judgment therefor; provided, however, that the Optionor will not be entitled
to make any claim unless the loss or damage suffered may exceed the amount of
$1,000.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
5.1 THE OPTIONOR'S CONDITIONS PRECEDENT. The rights, duties and obligations of
the Optionor under this Agreement are subject to the following conditions
precedent for the exclusive benefit of the Optionor fulfilled in all material
aspects in the reasonable opinion of the Optionor or to be waived by the
Optionor as soon as possible after the Execution Date, however, unless
specifically indicated as otherwise, not later than 10 calendar days after the
Execution Date (such date being the "Subject Removal Date"):
(a) the representations, warranties and covenants of the Optionee
contained herein shall be true and correct as of and on the
Subject Removal Date;
(b) the Optionee shall have complied with all warranties,
representations, covenants and agreements herein agreed to be
performed or caused to be performed by the Optionee on or before
the Subject Removal Date;
(c) the Optionee will have obtained all authorizations, approvals,
including Regulatory Approval, or waivers that may be necessary
or desirable in connection with the transactions contemplated in
this Agreement, and other actions by, and have made all filings
with, any 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 herein, and all such authorizations, approvals and
other actions will be in full force and effect, and all such
filings will have been accepted by the Optionee who will be in
compliance with, and have not committed any breach of, any
securities laws, regulations or policies of any Regulatory
Authority to which the Optionee may be subject;
(d) all matters which, in the opinion of counsel for the Optionor,
are material in connection with the transactions contemplated by
this Agreement shall be subject to the favourable opinion of such
counsel, and all relevant records and information shall be
supplied to such counsel for that purpose;
(e) no material loss or destruction of or damage to the Optionee
shall have occurred since the Execution Date; and
(f) no action or proceeding at law or in equity shall be pending or
threatened by any person, company, firm, governmental authority,
regulatory body or agency to enjoin or prohibit:
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(i) the purchase or transfer of any interest in and to the
mineral interests comprising the Property as contemplated
by this Agreement or the right of the Optionor to dispose
of any interest in and to any of the mineral interests
comprising the Property; or
(ii) the right of the Optionee to conduct the Optionee's
operations and carry on, in the normal course, the
Optionee's business and operations as the Optionee has
carried on in the past.
5.2 THE OPTIONOR'S WAIVER OF CONDITIONS PRECEDENT. The conditions precedent set
forth in section "5.1" hereinabove are for the exclusive benefit of the Optionor
and may be waived by the Optionor in writing and in whole or in part at any time
after the Execution Date, however, unless specifically indicated as otherwise,
not later than five calendar days prior to the Subject Removal Date.
5.3 THE OPTIONEE'S CONDITIONS PRECEDENT. The rights, duties and obligations of
the Optionee under this Agreement are subject to the following conditions
precedent for the exclusive benefit of the Optionee fulfilled in all material
aspects in the reasonable opinion of the Optionee or to be waived by the
Optionee as soon as possible after the Execution Date, however, unless
specifically indicated as otherwise, not later than five calendar days prior to
the Subject Removal Date:
(a) the representations, warranties and covenants of the Optionor
contained herein shall be true and correct as of and on the
Subject Removal Date;
(b) the Optionor shall have complied with all warranties,
representations, covenants and agreements herein agreed to be
performed or caused to be performed by the Optionor on or before
the Subject Removal Date;
(c) the Optionor will have obtained all authorizations, approvals,
including Regulatory Approval, or waivers that may be necessary
or desirable in connection with the transactions contemplated in
this Agreement, and other actions by, and have made all filings
with, any 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 herein, and all such authorizations, approvals and
other actions will be in full force and effect, and all such
filings will have been accepted by the Optionor who will be in
compliance with, and have not committed any breach of, any
securities laws, regulations or policies of any Regulatory
Authority to which the Optionor may be subject;
(d) all matters which, in the opinion of counsel for the Optionee,
are material in connection with the transactions contemplated by
this Agreement shall be subject to the favourable opinion of such
counsel, and all relevant records and information shall be
supplied to such counsel for that purpose;
(e) no material loss or destruction of or damage to any of the
mineral interests comprising the Property shall have occurred
since the Execution Date;
(f) no action or proceeding at law or in equity shall be pending or
threatened by any person, company, firm, governmental authority,
regulatory body or agency to enjoin or prohibit:
(i) the sale or transfer of any interest in and to the mineral
interests comprising the Property as contemplated by this
Agreement or the right of
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the Optionee to acquire any interest in and to any of
the mineral interests comprising the Property; or
(ii) the right of the Optionee to conduct the Optionee's
operations and carry on, in the normal course, the
Optionee's business and operations as the Optionee has
carried on in the past.
(g) the delivery to the Optionee by the Optionor, on a confidential
basis, of all Property Documentation and including, without
limitation,:
(i) a copy of all material contracts, agreements, reports and
title information of any nature respecting any of the
mineral interests comprising the Property; and
(ii) details of any lawsuits, claims or potential claims
relating to any of the mineral interests comprising the
Property of which the Optionor is aware and the Optionee
is unaware; and
(h) the completion by the Optionee and by the Optionee's professional
advisors of a thorough due diligence and operations review of the
mineral property interests comprising the Property, of the
business and operations of the Optionor and of the
transferability of the mineral interests comprising the Property
as contemplated by this Agreement, to the sole and absolute
satisfaction of the Optionee.
5.4 OPTIONEE'S WAIVER OF CONDITIONS PRECEDENT. The conditions precedent set
forth in section "5.3" hereinabove are for the exclusive benefit of the Optionee
and may be waived by the Optionee in writing and in whole or in part at any
after the Execution Date, however, unless specifically indicated as otherwise,
not later than five calendar days prior to the Subject Removal Date.
ARTICLE 6
CLOSING AND EVENTS OF CLOSING
6.1 CLOSING AND CLOSING DATE. Subject to the prior and due and complete exercise
of the Option by the Optionee in accordance with Article "2" hereinabove, the
closing (the "Closing") of the within purchase and delivery of an undivided one
hundred percent (100%) legal and beneficial interest in and to the mineral
interests comprising the Property, as contemplated in the manner as set forth in
Article "2" hereinabove, together with all of the transactions contemplated by
this Agreement, shall occur on the day which is two calendar days following the
due and complete exercise of the Option by the Optionee in accordance with
section "2.2" hereinabove (the "Closing Date"), or on such earlier or later
Closing Date as may be agreed to in advance and in writing by each of the
Parties hereto, and will be closed at the offices of the Devlin Jensen,
Barristers and Solicitors (herein the "Escrow Agent"), at Suite 2550, 555 West
Hastings Street, Vancouver, British Columbia, V6B 4N5, at 2:00 p.m. (Vancouver
time) on the Closing Date.
6.2 LATEST CLOSING DATE. If the Closing Date has not occurred by 5:00 p.m.
(Vancouver time) on June 10, 1999 this Agreement will be terminated and
unenforceable unless the Parties hereto agree in writing to grant an extension
of the Closing Date.
6.3 DOCUMENTS TO BE DELIVERED BY THE OPTIONOR PRIOR TO THE CLOSING DATE. Not
later than two calendar days prior to the Closing Date, and in addition to the
documentation which is required by the agreements and conditions precedent which
are set forth in Articles "2"
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and "5" hereinabove, the Optionor shall also execute and deliver, or cause to be
delivered, to the Escrow Agent all such other documents, resolutions and
instruments as may be necessary, in the opinion of counsel for the Optionee,
acting reasonably, to complete all of the transactions contemplated by this
Agreement and including, without limitation, the necessary transfer of an
undivided one hundred percent (100%) legal and beneficial interest in and to the
mineral interests comprising the Property to the Optionee free and clear of all
liens, charges and encumbrances, and in particular including, but not being
limited to, the following materials:
(a) all documentation as may be necessary and as may be required by
the solicitors for the Optionee, acting reasonably, to ensure
that an undivided one hundred percent (100%) legal and beneficial
interest in and to the mineral interests comprising the Property
has been duly transferred and assigned and is registerable in the
name of and for the benefit of the Optionee under the laws of
Mexico;
(b) all necessary deeds, conveyances, bills of sale, assurances,
transfers, assignments and consents, including all necessary
consents and approvals, and any other documents necessary or
reasonably required to effectively transfer an undivided one
hundred percent (100%) legal and beneficial registerable interest
in and to the mineral interests comprising the Property to the
Optionee with good and marketable title, free and clear of all
mortgages, liens, charges, pledges, claims, security interests or
encumbrances whatsoever;
(c) all necessary consents and approvals in writing to the completion
of the transactions contemplated herein and including, without
limitation, Regulatory Approval from all Regulatory Authorities
having jurisdiction over either the Optionor or any of the
mineral interests comprising the Property;
(d) any remaining Property Documentation; and
(e) all such other documents and instruments as the Optionee and the
Optionee's solicitors may reasonably require.
6.4 DOCUMENTS TO BE DELIVERED BY THE OPTIONEE PRIOR TO THE CLOSING DATE. Not
later than two calendar days prior to the Closing Date, and in addition to the
documentation which is required by the agreements and conditions precedent which
are set forth in Articles "2" and "5" hereinabove , the Optionee shall also
execute and deliver, or cause to be delivered, to the Escrow Agent all such
other documents, resolutions and instruments as are necessary, in the opinion of
counsel for the Optionor, acting reasonably, to complete all of the transactions
contemplated by this Agreement and including, without limitation, effectively
accepting the transfer to the Optionee of an undivided one hundred percent
(100%) legal and beneficial interest in and to the mineral interests comprising
the Property free and clear of all liens, charges and encumbrances, and in
particular including, but not being limited to, the following materials:
(a) a certified copy of the resolutions of the directors of the
Optionee providing for the approval of the terms and conditions
of this Agreement and all of the transactions contemplated
hereby;
(b) all necessary consents and approvals in writing to the completion
of the transactions contemplated herein and including, without
limitation, Regulatory Approval from all Regulatory Authorities
having jurisdiction over the Optionee; and
(c) all such other documents and instruments as the Optionor and the
Optionor's solicitors may reasonably require.
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ARTICLE 7
APPOINTMENT OF ESCROW AGENT AND TRANSFER DOCUMENTS
7.1 APPOINTMENT OF ESCROW AGENT. The Parties hereto hereby acknowledge and
appoint the Escrow Agent as escrow agent herein.
7.2 ESCROW OF TRANSFER DOCUMENTS. Subject to and in accordance with the terms
and conditions hereof and the requirements of Articles "2", "5" and "6"
hereinabove, and without in any manner limiting the obligations of each of the
Parties hereto as contained therein and hereinabove, it is hereby acknowledged
and confirmed by the Parties hereto that each of the Parties will execute,
deliver, or cause to be delivered, all such documentation as may be required by
the requirements of Articles "2", "5" and "6" hereinabove (herein, collectively,
the "Transfer Documents") and deposit the same with the Escrow Agent, or with
such other mutually agreeable escrow agent, together with a copy of this
Agreement, there to be held in escrow for release by the Escrow Agent to the
Parties in accordance with the strict terms and provisions of Articles "2" and
"6" hereinabove.
7.3 RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign from its duties and
responsibilities if it gives each of the Parties hereto two calendar days'
written notice in advance. Upon receipt of notice of the Escrow Agent's
intention to resign the Parties shall, within two calendar days, select a
replacement escrow agent and jointly advise the Escrow Agent in writing to
deliver the Transfer Documents to the replacement escrow agent. If the Parties
fail to agree on a replacement escrow agent within two calendar days of such
notice, the replacement escrow agent shall be selected by a Judge of the Supreme
Court of the Province of British Columbia upon application by any Party hereto.
The Escrow Agent shall continue to be bound by this Agreement until the
replacement escrow agent has been selected and the Escrow Agent receives and
complies with the joint instructions of the Parties to deliver the Transfer
Documents to the replacement escrow agent. The Parties agree to enter into an
escrow agreement substantially in the same form of this Agreement with the
replacement escrow agent.
7.4 INSTRUCTIONS TO ESCROW AGENT. Instructions given to the Escrow Agent
pursuant to this Agreement shall be given by duly authorized signatories of the
respective Parties hereto.
7.5 NO OTHER DUTIES OR OBLIGATIONS. The Escrow Agent shall have no duties or
obligations other than those specifically set forth in this Article.
7.6 NO OBLIGATION TO TAKE LEGAL ACTION. The Escrow Agent shall not be obligated
to take any legal action hereunder which might, in its judgment, involve any
expense or liability unless it shall have been furnished with a reasonable
indemnity by all of the Parties hereto together with such other third parties as
the Escrow Agent may require in its sole and absolute discretion.
7.7 NOT BOUND TO ANY OTHER AGREEMENTS. The Escrow Agent is not bound in any way
by any other contract or agreement between the Parties hereto whether or not it
has knowledge thereof or of its terms and conditions and its only duty,
liability and responsibility shall be to hold and deal with the Transfer
Documents as herein directed.
7.8 NOTICE. The Escrow Agent shall be entitled to assume that any notice and
evidence received by it pursuant to these instructions from anyone has been duly
executed by the Party by whom it purports to have been signed and that the text
of any notice and evidence is accurate and the truth. The Escrow Agent shall not
be obliged to inquire into the sufficiency or authority of the text or any
signatures appearing on such notice or evidence.
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7.9 INDEMNITY. The Parties hereto, jointly and severally, covenant and agree to
indemnify the Escrow Agent and to hold it harmless against any loss, liability
or expense incurred, without negligence or bad faith on its part, arising out of
or in connection with the administration of its duties hereunder and including,
without limitation, the costs and expenses of defending itself against any claim
or liability arising therefrom.
7.10 NOT REQUIRED TO TAKE ANY ACTION. In the event of any disagreement between
any of the Parties hereto to these instructions or between them or either or any
of them and any other person resulting in adverse claims or demands being made
in connection with the Transfer Documents, or in the event that the Escrow Agent
should take action hereunder, it may, at its option, refuse to comply with any
claims or demands on it, or refuse to take any other action hereunder, so long
as such disagreement continues or such doubt exists and, in any such event, it
shall not be or become liable in any way or to any person for its failure or
refusal to act and it shall be entitled to continue so to refrain from acting
until:
(a) the rights of all Parties shall have been fully and finally
adjudicated by a court of competent jurisdiction; or
(b) all differences shall have been adjusted and all doubt resolved
by agreement among all of the interested persons and it shall
have been notified thereof in writing signed by all such persons.
ARTICLE 8
DUE DILIGENCE INVESTIGATION
8.1 DUE DILIGENCE. Each of the Parties hereto shall forthwith conduct such
further due diligence examination of the other Parties hereto as it deems
appropriate.
8.2 CONFIDENTIALITY. Each Party may in a reasonable manner carry out such
investigations and due diligence as to the other Parties hereto, at all times
subject to the confidentiality provisions of Articles "9" and "10" hereinbelow,
as each Party deems necessary. In that regard the Parties agree that each shall
have full and complete access to, if and where applicable, the other Parties'
respective books, records, financial statements and other documents, articles of
incorporation, by-laws, minutes of Board of Directors' meetings and its
committees, investment agreements, material contracts and as well as such other
documents and materials as the Parties hereto, or their respective solicitors,
may deem reasonable and necessary to conduct an adequate due diligence
investigation of each Party and its respective operations and financial
condition prior to the Closing.
ARTICLE 9
NON-DISCLOSURE
9.1 NON-DISCLOSURE. Subject to the provisions of section "9.3" hereinbelow, the
Parties hereto, for themselves and, if and where applicable, their officers,
directors, shareholders, consultants, employees and agents, agree that they each
will not disseminate or disclose, or knowingly allow, permit or cause others to
disseminate or disclose to third parties who are not subject to express or
implied covenants of confidentiality, without the other Parties' express written
consent, either: (i) the fact or existence of this Agreement or discussions
and/or negotiations between them involving, inter alia, possible business
transactions; (ii) the possible substance or content of those discussions; (iii)
the possible terms and conditions of any proposed transaction; (iv) any
statements or representations (whether verbal or written) made by either
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Party in the course of or in connection with those discussions; or (v) any
written material generated by or on behalf of any Party and such contacts, other
than such disclosure as may be required under applicable securities legislation
or regulations, pursuant to any order of a court or on a "need to know" basis to
each of the Parties' respective professional advisors.
9.2 DOCUMENTATION. Any document or written material generated by either Party
hereto in the course of, or in connection with, the due diligence investigations
conducted pursuant to this Agreement shall be marked "Confidential" and shall be
treated by each Party as a trade secret of the other Parties. Upon termination
of this Agreement prior to Closing all copies of any and all documents obtained
by any Party from any other Party herein, whether or not marked "Confidential",
shall be returned to the other Parties forthwith.
9.3 PUBLIC ANNOUNCEMENTS. Notwithstanding the provisions of this Article, the
Parties hereto agree to make such public announcements of this Agreement
promptly upon its execution in accordance with the requirements of applicable
securities legislation and regulations.
ARTICLE 10
PROPRIETARY INFORMATION
10.1 CONFIDENTIAL INFORMATION. Each Party hereto acknowledges that any and all
information which a Party may obtain from, or have disclosed to it, about the
other Parties constitutes valuable trade secrets and proprietary confidential
information of the other Parties (collectively, the "Confidential Information").
No such Confidential Information shall be published by any Party without the
prior written consent of the other Parties hereto; however, such consent in
respect of the reporting of factual data shall not be unreasonably withheld and
shall not be withheld in respect of information required to be publicly
disclosed pursuant to applicable securities or corporation laws. Furthermore,
each Party hereto undertakes not to disclose the Confidential Information to any
third party without the prior written approval of the other Parties hereto and
to ensure that any third party to which the Confidential Information is
disclosed shall execute an agreement and undertaking on the same terms as
contained herein.
10.2 IMPACT OF BREACH OF CONFIDENTIALITY. The Parties hereto acknowledge and
agree that the Confidential Information is important to the respective
businesses of each of the Parties and that, in the event of disclosure of the
Confidential Information, except as authorized hereunder, the damage to each of
the Parties hereto, or to either of them, may be irreparable. For the purposes
of the foregoing sections the Parties recognize and hereby agree that a breach
by any of the Parties of any of the covenants therein contained would result in
irreparable harm and significant damage to each of the other Parties that would
not be adequately compensated for by monetary award. Accordingly, the Parties
agree that in the event of any such breach, in addition to being entitled as a
matter of right to apply to a court of competent equitable jurisdiction for
relief by way of restraining order, injunction, decree or otherwise as may be
appropriate to ensure compliance with the provisions hereof, any such Party will
also be liable to the other Parties, as liquidated damages, for an amount equal
to the amount received and earned by such Party as a result of and with respect
to any such breach. The Parties also acknowledge and agree that if any of the
aforesaid restrictions, activities, obligations or periods are considered by a
court of competent jurisdiction as being unreasonable, the Parties agree that
said court shall have authority to limit such restrictions, activities or
periods as the court deems proper in the circumstances. In addition, the Parties
further acknowledge and agree that all restrictions or obligations in this
Agreement are necessary and fundamental to the protection of the respective
businesses of each of the Parties and are reasonable and valid, and all defenses
to the strict enforcement thereof by either of the Parties are hereby waived by
the other Parties.
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ARTICLE 11
FORCE MAJEURE
11.1 EVENTS. If any Party hereto is at any time 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.
11.2 NOTICE. A Party shall, within three calendar days, give notice to the other
Parties of each event of force majeure under section "11.1" hereinabove and,
upon cessation of such event, shall furnish the other Parties 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.
ARTICLE 12
ARBITRATION
12.1 MATTERS FOR ARBITRATION. The Parties hereto agree that all questions or
matters in dispute with respect to this Agreement shall be submitted to
arbitration pursuant to the terms hereof.
12.2 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 two calendar days' prior written notice of its intention to do so to the
other Parties together with particulars of the matter in dispute. On the
expiration of such two calendar days the Party who gave such notice may proceed
to refer the dispute to arbitration as provided in section "12.3" hereinbelow.
12.3 APPOINTMENTS. The Party desiring arbitration shall appoint one arbitrator,
and shall notify the other Parties of such appointment, and the other Parties
shall, within two calendar days after receiving such notice, appoint an
arbitrator, and the two arbitrators so named, before proceeding to act, shall,
within two calendar days of the appointment of the last appointed arbitrator,
unanimously agree on the appointment of a third arbitrator, to act with them and
be chairperson of the arbitration herein provided for. If the other Parties
shall fail to appoint an arbitrator within two calendar days after receiving
notice of the appointment of the first arbitrator, or if the two arbitrators
appointed by the Parties shall be unable to agree on the appointment of the
chairperson, the chairperson shall be appointed under the provisions of 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 chairperson, or in the case where only one arbitrator is
appointed, the single arbitrator, shall fix a time and place in Vancouver,
British Columbia, for the purpose of hearing the evidence and representations of
the Parties, and such arbitrator shall preside over the arbitration and
determine all questions of procedure not provided for under such 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.
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12.4 AWARD. The Parties hereto 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.
ARTICLE 13
DEFAULT AND TERMINATION
18.1 DEFAULT. The Parties hereto agree that if any Party hereto is in default
with respect to any of the provisions of this Agreement (herein called the
"Defaulting Party"), the non-defaulting Parties (herein called, collectively,
the "Non-Defaulting Party") shall give notice to the Defaulting Party
designating such default, and within two calendar days after its receipt of such
notice, the Defaulting Party shall either:
(a) cure such default, or commence proceedings to cure such default
and prosecute the same to completion without undue delay; or
(b) give the Non-Defaulting Party notice that it denies that such
default has occurred and that it is submitting the question to
arbitration as herein provided.
13.2 ARBITRATION. If arbitration is sought a Party shall not be deemed in
default until the matter shall have been determined finally by appropriate
arbitration under the provisions of Article "12" hereinabove.
13.3 CURING THE DEFAULT. If:
(a) the default is not so cured or the Defaulting Party does not
commence or diligently proceed to cure the default; or
(b) arbitration is not so sought; or
(c) the Defaulting Party is found in arbitration proceedings to be in
default, and fails to cure it within two calendar days after the
rendering of the arbitration award,
the Non-Defaulting Party may, by written notice given to the Defaulting Party at
any time while the default continues, terminate the interest of the Defaulting
Party in and to this Agreement.
13.4 TERMINATION. In addition to the foregoing it is hereby acknowledged and
agreed by the Parties hereto that this Agreement will be immediately terminated
in the event that:
(a) the Option is terminated in accordance with section "2.4"
hereinabove;
(b) either of the Parties hereto has either not satisfied or waived
each of their respective conditions precedent prior to the
Subject Removal Date in accordance with the provisions of Article
"5" hereinabove;
(c) the conditions specified in section "5.1" hereinabove have not
been satisfied by May 30, 1999;
(d) either of the Parties hereto has failed to deliver, or caused to
be delivered, any of their respective materials required to be
delivered in accordance with Articles "5" and "6" hereinabove
prior to each of the Subject Removal Date and the Closing Date in
accordance with the provisions of Articles "5" and "6"
hereinabove;
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(e) either of the Parties hereto has not provided a satisfactory
report on its respective due diligence as contemplated in
accordance with Articles "5" and "6" hereinabove;
(f) the Closing Date has not occurred by 5:00 p.m. (Vancouver time)
on June 10, 1999; or
(g) by agreement in writing by each of the Parties hereto;
and in such event this Agreement will be terminated and be of no further force
and effect other than the obligations under each of section "2.7" and Articles
"9" and "10" hereinabove.
ARTICLE 14
GENERAL PROVISIONS
14.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement to date
between the Parties hereto and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, between the
Parties hereto with respect to the subject matter of this Agreement.
14.2 ENUREMENT. This Agreement will enure to the benefit of and will be binding
upon the Parties hereto and their respective heirs, executors, administrators
and assigns.
14.3 SCHEDULE. The Schedule to this Agreement is hereby incorporated by
reference into this Agreement in its entirety.
14.4 TIME OF THE ESSENCE. Time will be of the essence of this Agreement.
14.5 REPRESENTATION AND COSTS. It is hereby acknowledged by each of the Parties
hereto that, as between the Parties hereto, Devlin Jensen, Barristers and
Solicitors, acts solely for the Optionee, and that the Optionor has been advised
by each of Devlin Jensen and the Optionee to obtain independent legal advice
with respect to the Optionor's respective review and execution of this
Agreement. In addition, it is hereby further acknowledged and agreed by the
Parties hereto that each Party to this Agreement will bear and pay its own
costs, legal and otherwise, in connection with its respective preparation,
review and execution of this Agreement and, in particular, that the costs
involved in the preparation of this Agreement, and all documentation necessarily
incidental thereto, by Devlin Jensen shall be at the cost of the Optionee.
14.6 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 and the courts prevailing in
the Province of British Columbia.
14.7 FURTHER ASSURANCES. The Parties hereto hereby, jointly and severally,
covenant and agree to forthwith, upon request, execute and deliver, or cause to
be executed and delivered, such further and other deeds, documents, assurances
and instructions as may be required by the Parties hereto or their respective
counsel in order to carry out the true nature and intent of this Agreement.
14.8 CURRENCY. Unless otherwise stipulated, all payments required to be made
pursuant to the provisions of this Agreement and all money amount references
contained herein are in lawful currency of the United States of America.
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14.9 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 any of the Parties
hereto is a party, that ruling shall not impair the operation of, or have any
other effect upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the Parties and continue to
be given full force and agreement as of the date upon which the ruling becomes
final).
14.10 CAPTIONS. The captions, section numbers and Article numbers appearing in
this Agreement 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.
14.11 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 Post Office in North America addressed to
the Party entitled to receive the same, or delivered to such Party, at the
address for such Party specified above. 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 calendar 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. Either Party may at any
time and from time to time notify the other Parties in writing of a change of
address and the new address to which notice shall be given to it thereafter
until further change.
14.12 COUNTERPARTS. This Agreement may be signed by the Parties hereto in as
many counterparts as may be necessary and, if required, by facsimile, each of
which so signed being deemed to be an original, and such counterparts together
shall constitute one and the same instrument and notwithstanding the date of
execution will be deemed to bear the Execution Date as set forth on the front
page of this Agreement.
14.13 NO PARTNERSHIP OR AGENCY. The Parties hereto have not created a
partnership and nothing contained in this Agreement shall in any manner
whatsoever constitute any Party the partner, agent or legal representative of
any other Party, nor create any fiduciary relationship between them for any
purpose whatsoever. No Party shall have any authority to act for, or to assume
any obligations or responsibility on behalf of, any other party except as may
be, from time to time, agreed upon in writing between the Parties or as
otherwise expressly provided.
14.14 CONSENTS AND WAIVERS. No consent or waiver expressed or implied by either
Party hereto in respect of any breach or default by any other Party in the
performance by such other of its obligations hereunder shall:
(a) be valid unless it is in writing and stated to be a consent or
waiver pursuant to this section;
(b) be relied upon as a consent to or waiver of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver
pursuant to this section in any other or subsequent instance.
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IN WITNESS WHEREOF each of the Parties hereto have hereunto set
their respective hands and seals in the presence of their duly authorized
signatories effective as of the Execution Date as set forth in the front page of
this Agreement.
The CORPORATE SEAL of )
MINERA CORTEZ RESOURCES LTD., )
the Optionor herein, was hereunto affixed )
in the presence of: ) (C/S)
)
__________________________________________ )
Authorized Signatory )
The CORPORATE SEAL of )
AZCO MINING INC., )
the Optionee herein, was hereunto affixed )
in the presence of: ) (C/S)
)
__________________________________________ )
Authorized Signatory )
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