EXHIBIT 10.1
PROPERTY OPTION AGREEMENT
THIS AGREEMENT made effective as of November 26, 2010 (the "Effective Date").
BETWEEN:
FIRST AMERICAN SILVER CORP., with an office at 10900 N. E. 4th Street,
Suite 2300,
Bellevue, Washington 98004
(the "Optionee")
OF THE FIRST PART
AND:
ALL AMERICAN RESOURCES LLC, with an address at 5695 Lausanne Drive,
Reno, Nevada 89511
(the "Optionor")
OF THE SECOND PART
WHEREAS:
A. Pursuant to the terms hereof, the Optionee has the exclusive option to
acquire an undivided 100% right, title and interest in and to certain mining
claims, located in Elko County, Nevada (the "Property") to consist of patented
and unpatented mining claims totalling approximately 440 acres currently located
and filed in the name of the Optionor with the United States Bureau of Land
Management (the "BLM"), as more particularly described in Schedule A hereto,
subject only to the Royalty, on the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of $1.00
now paid by the Optionee to the Optionor (the receipt and sufficiency of which
is hereby acknowledged), the parties agree as follows:
1. DEFINITIONS. For the purposes of this Agreement the following words and
phrases shall have the following meanings, namely:
(a) "Commencement of Commercial Production" means:
(i) if a mill is located on the Property, the last day of a period of 40
consecutive days in which, for not less than 30 days, the mill
processed ore from the Property at 60% of its rated concentrating
capacity; or
(ii) if a mill is not located on the Property, the last day of a period of
30 consecutive days during which ore has been shipped from the
Property on a reasonably regular basis for the purpose of earning
revenues,
but any period of time during which ore or concentrate is shipped from the
Property for testing purposes, or during which milling operations are undertaken
as initial tune-up, shall not be taken into account in determining the date of
Commencement of Commercial Production;
(b) "Option" means the option to acquire an undivided 100% right, title and
interest in and to the Property as provided in this Agreement;
(c) "Option Period" means the period from the date of this Agreement to and
including the date of exercise or termination of the Option;
(d) "Property" means the mining claims located in Elko County, Nevada as more
particularly described in Schedule A, including any replacement or
successor claims, and all mineral or mining leases and other mining
interests derived from any such claims. The Property shall include all
unpatented mining claims located by Optionor or Optionee with the area of
interest described in Section 18. Any reference to any mining claim
comprising the Property includes any mineral or mining leases or other
interests by or into which such mining claim may have been replaced or
converted;
(e) "Property Rights" means all licenses, permits, easements, rights-of-way,
certificates and other approvals obtained by either of the parties either
before or after the date of this Agreement and necessary for the
exploration of the Property, or for the purpose of placing the Property
into production or continuing production therefrom;
(f) "Royalty" means the mineral production royalty equal to two percent (2%) of
the net smelter returns, as defined in Schedule B, payable to Optionor as
prescribed in Section 9(a).
(g) "Shares" means fully paid and non-assessable common shares in the capital
of the Optionee, issued pursuant to exemptions from registration and
prospectus requirements contained in the United States Securities Act of
1933 and the rules and regulations promulgated thereunder, which Shares
shall contain such restrictive legends regarding applicable hold periods as
required by such securities laws.
(h) For the purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(i) "this Agreement" means this Property Option Agreement and all attached
Schedules;
(ii) any reference in this Agreement to a designated "Section", "Schedule",
"paragraph" or other subdivision refers to the designated section,
schedule, paragraph or other subdivision of this Agreement;
(iii)the words "herein" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Section
or other subdivision of this Agreement;
(iv) any reference to a statute includes and, unless otherwise specified
herein, is a reference to such statute and to the regulations made
pursuant thereto, with all amendments made thereto and in force from
time to time, and to any statute or regulations that may be passed
which has the effect of supplementing or superseding such statute or
such regulation;
(v) any reference to "party" or "parties" means the Optionor, the Optionee
or both, as the context requires; (vi) the headings in this Agreement
are for convenience of reference only and do not affect the
interpretation of this Agreement; and (vii) all references to currency
refer to United States dollars.
(i) The following are the Schedules to this Agreement, and are incorporated
into this Agreement by reference:
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Schedule A: Property-Legal Description and Location
Schedule B: Definition of Net Smelter Returns
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONOR.
(a) The Optionor represents and warrants to and covenants with the Optionee,
with the knowledge that the Optionee relies upon same in entering into this
Agreement, that:
(i) no proceedings are pending for, and it is unaware of any basis for the
institution of any proceedings leading to, its dissolution or winding
up or being placed into bankruptcy;
(ii) it has all requisite power and capacity, and has duly obtained all
requisite authorizations and performed all requisite acts, to enter
into and perform its obligations hereunder, it has duly executed and
delivered this Agreement and such constitutes a legal, valid and
binding obligation of it enforceable against it in accordance with the
Agreement's terms, and the entering into of this Agreement and the
performance of its obligations hereunder does not and will not result
in a breach of, default under or conflict with any of the terms and
provisions of any of its constituting documents, any resolutions of
its partners, any indenture, agreement or other instrument to which it
is a party or by which it is bound or the Property may be subject, or
any statute, order, judgment or other law or ruling of any competent
authority;
(iii)subject to the paramount title of the United States, it is legally
entitled to hold the Property and the Property Rights and will remain
so entitled until and always to the extent such is required for the
due transfer to the Optionee of its requisite interest in and to the
Property pursuant to and upon the exercise of the Option;
(iv) it is, and at the time of each transfer to the Optionee of an interest
in and to the Property pursuant to and upon the exercise of the Option
it will be, the beneficial owner of all right, title and interest in
and to such transferred interest, free and clear of all liens,
charges, claims, liabilities and adverse interests of any nature or
kind, and no taxes or rentals are or will be due in respect of the
Property;
(v) the mining claims comprising the Property have been, to Optionor's
best knowledge and belief after due inquiry, duly and validly located,
granted, entered into and recorded, as the case may be, pursuant to
the laws of the jurisdiction in which the Property is situated and are
in each case in good standing with respect to all filings, federal
annual mining claims maintenance fees and notices of intent to hold
recordings and other obligations and conditions required for
maintenance of the Property for the period to and including August 31,
2011, except the payment of the Nevada mining claim fees payable
pursuant to NRS 517.187 in the amount of $85 per claim for a total of
$1,540 which is due and payable on or before June 1, 2011;
(vi) there are neither any adverse claims or challenges against, or to the
ownership or title to, any of the mining claims comprising the
Property or to the validity or enforceability of any of the mineral
agreements in respect thereof, nor to the knowledge of the Optionor
after due inquiry is there any basis therefor, and there are no
outstanding agreements, options or other rights and interests to
acquire or purchase the Property or any portion thereof or any
interest therein, and no person has any royalty or other interest
whatsoever in the production from any of the mining claims comprising
the Property or otherwise; or Optionor makes no representations or
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warranties concerning the discovery of valuable minerals within the
boundaries of the mining claims which comprise the Property.
(b) The representations and warranties contained in this section are provided
for the exclusive benefit of the Optionee, and a breach of any one or more
thereof may be waived by the Optionee in whole or in part at any time
without prejudice to its rights in respect of any other breach of the same
or any other representation or warranty, and the representations and
warranties contained in this section shall survive the execution and
performance of this Agreement and of any transfers, assignments, deeds or
further documents or acts of the parties respecting the Property.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE.
(a) The Optionee represents and warrants to and covenants with the Optionor,
with the knowledge that the Optionor relies upon same in entering into this
Agreement, that:
(i) it has been duly incorporated, amalgamated or continued and validly
exists as a corporation in good standing with respect to the filing of
annual reports under the laws of its jurisdiction of incorporation,
amalgamation or continuation;
(ii) no proceedings are pending for, and it is unaware of any basis for the
institution of any proceedings leading to, its dissolution or winding
up or being placed into bankruptcy or subject to any other laws
governing the affairs of insolvent corporations;
(iii)it has all requisite corporate power and capacity, and has duly
obtained all requisite corporate authorizations and performed all
requisite corporate acts, to enter into and perform its obligations
hereunder, it has duly executed and delivered this Agreement and such
constitutes a legal, valid and binding obligation of it enforceable
against it in accordance with the Agreement's terms, and the entering
into of this Agreement and the performance of its obligations
hereunder does not and will not result in a breach of, default under
or conflict with any of the terms and provisions of any of its
constituting documents, any resolutions of its shareholders or
directors, any indenture, agreement or other instrument to which it is
a party or by which it is bound or the Property may be subject, or any
statute, order, judgment or other law or ruling of any competent
authority applicable to it; and
(iv) it is lawfully authorized to hold mining claims and real property
under the laws of the jurisdiction in which the Property is situate.
(b) The representations and warranties contained in this section are provided
for the exclusive benefit of the Optionor, and a breach of any one or more
thereof may be waived by the Optionor in whole or in part at any time
without prejudice to its rights in respect of any other breach of the same
or any other representation or warranty, and the representations and
warranties contained in this section shall survive the execution hereof.
4. GRANT AND EXERCISE OF OPTION.
(a) The Optionor hereby grants to the Optionee the sole and exclusive right and
option to acquire up to an undivided 100% right, title and interest in and
to the Property, free and clear of all charges, encumbrances, claims,
liabilities and adverse interests of any nature or kind, except for the
Royalty.
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(b) The Option shall be in good standing and exercisable by the Optionee in
regard to the Property by paying the following amounts on or before the
dates specified in the following schedule for the Property:
(i) paying the Optionor $10,000 within three (3) business days of the date
of this Agreement, issuing to the Optionor 100,000 Shares in the
capital stock of the Optionee;
(ii) on or before the second anniversary of the execution of this
Agreement, issuing to the Optionor 25,000 Shares in the capital stock
of the Optionee;
(iii)on or before the third anniversary of the execution of this
Agreement, paying to the Optionor $10,000 and issuing to the Optionor
25,000 Shares in the capital stock of the Optionee;
(iv) on or before the third anniversary of the execution of this Agreement,
paying to the Optionor $10,000 and issuing to the Optionor 25,000
Shares in the capital stock of the Optionee;
(v) on or before the fourth anniversary of the execution of this
Agreement, paying to the Optionor $10,000 and issuing to the Optionor
25,000 Shares in the capital stock of the Optionee;
(vi) on or before the fifth anniversary of the execution of this Agreement,
paying to the Optionor $10,000 and issuing to the Optionor 25,000
Shares in the capital stock of the Optionee;
(vii)on or before the sixth anniversary of the execution of this
Agreement, paying to the Optionor $20,000 and issuing to the Optionor
25,000 Shares in the capital stock of the Optionee;
(viii) on or before the seventh anniversary of the execution of this
Agreement, paying to the Optionor $30,000 and issuing to the Optionor
25,000 Shares in the capital stock of the Optionee;
(ix) on or before the eighth anniversary of the execution of this
Agreement, paying to the Optionor $40,000 and issuing to the Optionor
25,000 Shares in the capital stock of the Optionee;
(x) on or before the ninth anniversary of the execution of this Agreement,
paying to the Optionor $50,000 and issuing to the Optionor 25,000
Shares in the capital stock of the Optionee;
(xi) on or before the tenth anniversary of the execution of this Agreement,
in addition to the payments described in (i) to (x) above, paying to
the Optionor $1,000,000, in which case the Optionor shall retain a two
percent (2%) Royalty OR, paying to the Optionor $2,000,000, in which
case the Optionor shall retain a one percent (1%) Royalty; and
(xii)paying all Property maintenance fees and performing all property
maintenance obligations as they become due.
(c) The Optionor acknowledges and agrees that the Shares will be issued in
accordance with all applicable securities laws and will be subject to hold
periods and restrictions on resale in accordance with applicable securities
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laws and it is the Optionor's responsibility to determine what those hold
periods and restrictions are before selling or otherwise transferring any
Shares.
5. TRANSFER OF PROPERTY.
(a) On Optionee's exercise of the Option and payment of all of the cash and
share payments prescribed in Section 4, the Optionor shall deliver to the
Optionee a duly executed deed with reservation of the Royalty transferring
to the Optionee all of Optionor's right, title and interest in and to the
Property, except for and subject to the Reserved Royalty. The deed shall
contain such covenants, conditions and terms as are customarily included in
deeds of unpatented mining claims with reservations of mineral production
royalties.
(b) The Optionee shall file the deed with the Bureau of Land Management and
shall record the deed in the Office of the County Recorder at the
Optionee's sole cost in order to place Optionor's transfer of title to
Optionee of record.
6. RIGHT OF ENTRY. Throughout the Option Period, the Optionee and its directors,
officers, employees, servants, agents and independent contractors, shall have
the sole and exclusive right in respect of the Property to:
(a) enter thereon;
(b) have exclusive and quiet possession thereof;
(c) do such prospecting, exploration, development and other mining work thereon
and thereunder as the Optionee in its sole discretion may determine
advisable;
(d) bring upon and erect upon the Property such buildings, plant, machinery and
equipment as the Optionee may deem advisable; and
(e) remove therefrom and dispose of reasonable quantities of ores, minerals and
metals for the purposes of obtaining assays or making other tests.
7. OBLIGATIONS OF THE OPTIONEE DURING OPTION PERIOD. During the Option Period,
the Optionee shall:
(a) maintain in good standing the mining claims which comprise the Property by
the doing and filing of assessment work or the making of payments in lieu
thereof, by payment of the federal annual mining claim maintenance fees,
Nevada mining claim fees and all other fees, taxes and rentals required for
maintenance of the Property, and the performance of all other actions which
may be necessary in that regard and in order to keep such mining claims
free and clear of all liens and other charges arising from the Optionee's
activities thereon except those at the time contested in good faith by the
Optionee; the Optionee shall pay such amounts and perform such obligations
not less than sixty (60) days in advance of the applicable regulatory or
statutory deadline and shall deliver to the Optionor evidence of Optionee's
performance of such obligations not less than thirty (30) days before the
applicable regulatory or statutory deadline;
(b) duly record all exploration work carried out on the Property by the
Optionee as assessment work;
(c) following commencement of exploration activities, provide the Optionor
quarterly reports on all exploration and drilling work carried out on the
Property and regularly transfer exploration data;
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(d) permit the partners, employees and designated consultants of the Optionor,
at their own risk and expense, access to the Property at all reasonable
times, and the Optionor agrees to indemnify the Optionee against and to
save it harmless from all costs, claims, liabilities and expenses that the
Optionee may incur or suffer as a result of any injury (including injury
causing death) to any partner, employee or designated consultant of the
Optionor while on the Property;
(e) do all work on the Property in a good and workmanlike fashion and in
accordance with all applicable laws, regulations, orders and ordinances of
any governmental authority;
(f) defend, indemnify and save the Optionor harmless in respect of any and all
costs, claims, liabilities and expenses arising out of the Optionee's
activities on the Property, but the Optionee shall incur no obligation
hereunder in respect of any such costs, claims. liabilities and expenses
arising or damages suffered after termination of the Option if upon
termination of the Option any workings on or improvements to the Property
made by the Optionee are left in a safe condition and in full compliance
with requirements of all environmental laws and regulations;
(g) permit the Optionor, at its own expense, reasonable access to the results
of the work done on the Property during the last completed calendar year;
(h) deliver to the Optionor, forthwith upon receipt thereof, copies of all
reports, maps, assay results and other technical data compiled by or
prepared at the direction of the Optionee with respect to the Property; and
(i) maintain an all risk casualty life and property insurance policy with
coverage in an amount not less than $1,000,000 which identifies the
Optionor as an additional or named insured and deliver to the Optionor a
copy of the certificate of the insurance policy.
The Optionor acknowledges and agrees that all technical and other information
concerning the Property provided by the Optionee to it, directly or indirectly,
shall be treated as confidential information, and it shall not copy, transmit or
otherwise disclose, disseminate or use such information, including but not
limited to use in violation of insider trading and other provisions of
applicable securities laws, to any person other than the Optionor's professional
advisors and persons with whom Optionor may negotiate the sale of Optionor's
interest in the Property or under this Agreement, provided that such persons
with whom the Optionor negotiates execute and deliver an agreement to maintain
confidentiality of such information consistent with the provisions of this
Agreement.
8. TERMINATION OF OPTION.
(a) In regards to any particular Property, the Option shall terminate:
(i) subject to paragraph 16 hereof, upon the Optionee failing to make any
payment or issuance of Shares which must be made or issued in exercise
of the Option;
(ii) subject to paragraph 16 hereof, upon the Optionee failing to remedy a
default as provided therein; or
(iii)at any other time, by the Optionee giving a minimum of sixty (60) days
notice of such termination to the Optionor. In the event that the
Optionee provides such notice less than sixty (60) days before the
applicable regulatory or statutory deadline for payment of any amount
or performance of any obligation for mining claim maintenance and
mining claim fees, file and record proof of such payments and perform
all such obligations not less than sixty (60) days before the
applicable regulatory or statutory deadline.
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(b) If the Option is terminated otherwise than upon the exercise thereof, the
Optionee shall:
(i) leave in good standing, for a period of at least 12 months from the
termination of the Option Period, those mining claims comprising the
Property, to the extent allowable by the laws of the jurisdiction in
which the Property is situate;
(ii) deliver or make available at no cost to the Optionor, within 90 days
of such termination, all drill core, cuttings. And pulps, copies of
all reports, maps, assay results and other relevant technical data
compiled by, prepared at the direction of, or in the possession of the
Optionee with respect to the Property and not theretofore furnished or
made available to the Optionor;
(iii)reclaim the Property in accordance with the requirements of all
applicable environmental laws and regulations, but only to the extent
that such requirements result from the Optionee's activities on the
Property hereunder.
(c) If the Option is terminated otherwise than upon the exercise thereof, the
Optionee shall have the right, within a period of 180 days following the
end of the Option Period, to remove from the Property all buildings, plant,
equipment, machinery, tools, appliances and supplies which have been
brought upon the Property by or on behalf of the Optionee, and any such
property not removed within such 180 day period shall thereafter become the
property of the Optionor.
9. ROYALTY.
(a) Upon the Commencement of Commercial Production, the Optionee shall pay to
the Optionor the Royalty.
(b) Installments of the Royalty payable shall be paid by the Optionee to the
Optionor immediately upon the receipt by the Optionee of the payment from
the smelter, refinery or other place of treatment of the proceeds of sale
of the minerals, ore, concentrates or other product from the Property.
(c) Within 120 days after the end of each fiscal year, commencing with the year
in which Commencement of Commercial Production occurs, the accounts of the
Optionee relating to operations on the Property and the statement of
operations, which shall include the statement of calculation of the Royalty
for the year last completed, shall be audited by the auditors of the
Optionee at its expense. The Optionor shall have 45 days after receipt of
such statements to question the accuracy thereof in writing and, failing
such objection, the statements shall be deemed to be correct and
unimpeachable thereafter.
(d) If such audited financial statements disclose any overpayment of the
Royalty by the Optionee during the fiscal year, the amount of the
overpayment shall be deducted from future installments of Royalty payable.
(e) If such audited financial statements disclose any underpayment of the
Royalty by the Optionee during the year, the amount thereof shall be paid
to the Optionor forthwith after determination thereof.
(f) The Optionee agrees to maintain for each mining operation on the Property,
up-to-date and complete records relating to the production and sale of
minerals, ore, bullion and other product from the Property, including
accounts, records, statements and returns relating to treatment and
smelting arrangements of such product, and the Optionor or its agents shall
have the right at all reasonable times, including for a period of 12 months
following the expiration or termination of this Agreement, to inspect such
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records, statements and returns and make copies thereof at its own expense
for the purpose of verifying the amount of the Royalty payments to be made
by the Optionee to the Optionor pursuant hereto. The Optionor shall have
the right to have such accounts audited by independent auditors at its own
expense once each fiscal year.
10. POWER TO CHARGE PROPERTY. The Optionor shall not grant or permit to exist
any liens, charges or mortgages (collectively referred to as an "encumbrance")
upon the property or any portion thereof. At any time after the Optionee has
exercised the Option, in whole or in part, the Optionee may grant encumbrances
upon the Property or any portion thereof, upon any mill or other fixed assets
located thereon, and upon any or all of the tangible personal property located
on or used in connection with the Property, to secure financing for the
development of the Property, always provided that, unless otherwise agreed to by
the Optionor, it shall be a term of each encumbrance that the encumbrancee or
other person acquiring title to the Property upon enforcement of the encumbrance
shall hold the same subject to the Royalty as if the encumbrancee or such other
person had executed this Agreement.
11. TRANSFERS. During the Option Period, the Optionee may transfer or otherwise
dispose of all or any portion of its interest in and to the Property under this
Agreement only with the Optionor's prior written consent which shall not be
unreasonably delayed or withheld and provided that any purchaser, transferee or
recipient of any such interest shall have first delivered to the Optionor a
written agreement to be bound by the terms of this Agreement. In its
consideration of the Optionee's request for consent to any such transfer, the
Optionor may consider the proposed transferee's financial and technical ability
to perform the Optionee's obligations under this Agreement and the proposed
transferee's administrative, legal and operating experience and history in
respect of other properties controlled or owned by the proposed transferee.
12. FORCE MAJEURE.
(a) If the Optionee is at any time either during the Option Period or
thereafter prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, lock-outs, labour shortages, power
shortages, fuel shortages, fires, wars, acts of God, governmental
regulations restricting normal operations, shipping delays or any other
reason or reasons, other than lack of funds, beyond the control of the
Optionee, the time limited for the performance by the Optionee of its
obligations hereunder shall be extended by a period of time equal in length
to the period of each such prevention or delay, but nothing herein shall
discharge the Optionee from its obligations hereunder to maintain the
Property in good standing;
(b) The Optionee shall give prompt notice to the Optionor of each event of
force majeure and upon cessation of such event shall furnish to the
Optionor with notice to that effect together with particulars of the number
of days by which the obligations of the Optionee hereunder have been
extended by virtue of such event of force majeure and all preceding events
of force majeure.
(c) After the Commencement of Commercial Production, the Optionee shall work,
mine and operate the Property during such time or times as the Optionee in
its sole judgment considers such operations to be profitable. The Optionee
may suspend or curtail operations, both before and after Commencement of
Commercial Production, during periods when the products derived from the
Property cannot be profitably sold at prevailing prices or if an
unreasonable inventory thereof, in the Optionee's sole judgment, has
accumulated or would otherwise accumulate.
13. CONFIDENTIAL INFORMATION. No information furnished by the Optionee to the
Optionor hereunder in respect of the activities carried out on the Property by
the Optionee, or related to the sale of minerals, ore, bullion or other product
derived from the Property, shall be published or disclosed by the Optionor
without the prior written consent of the Optionee, but such consent in respect
of the reporting of factual data shall not be unreasonably withheld, and shall
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not be withheld in respect of information required to be publicly disclosed
pursuant to applicable securities or corporation laws, regulations or policies.
14. ARBITRATION.
(a) All questions or matters in dispute under this Agreement shall be submitted
to arbitration pursuant to the terms hereof.
(b) 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 days' prior 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 days, the party who gave such notice may proceed to refer the
dispute to arbitration as provided in paragraph (c).
(c) The party desiring arbitration shall appoint one arbitrator, and shall
notify the other party of such appointment, and the other party shall,
within 15 days after receiving such notice, either consent to the
appointment of such arbitrator which shall then carry out the arbitration
or appoint an arbitrator, and the two arbitrators so named, before
proceeding to act, shall, within 30 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
15 days after receiving notice of the appointment of the first arbitrator,
the first arbitrator shall be the only arbitrator. If the two arbitrators
appointed by the parties shall be unable to agree on the appointment of the
chairman, the chairman shall be appointed under the provisions of the
Chapter 37 of the Nevada Revised Statutes. Except as specifically otherwise
provided in this section, the arbitration herein provided for shall be
conducted in accordance with such Act. The chairman, or in the case where
only one arbitrator is appointed, the single arbitrator, shall fix a time
and place in Reno, Nevada, 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 under such 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.
(d) 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.
15. DEFAULT. If at any time during the Option Period, the Optionee is in default
of any material provision in this Agreement, the Optionor may terminate this
Agreement, but only if:
(a) it shall have first given to the Optionee a notice of default containing
particulars of the obligation which the Optionee has not performed, or the
warranty breached; and
(b) the Optionee has not, within 30 days following delivery of such notice of
default, cured such default or commenced proceedings to cure such default
by appropriate payment or performance, the Optionee hereby agreeing that
should it so commence to cure any default it will prosecute the same to
completion without undue delay.
Should the Optionee fail to comply with the provision of subparagraph (b), the
Optionor may thereafter terminate this Agreement by giving notice thereof to the
Optionee, always provided that the default in question has not been cured or
substantially cured at the time of the Optionee giving such notice of
termination.
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16. NOTICES. Each notice, demand or other communication required or permitted to
be given under this Agreement shall be in writing and shall be delivered or
telecopied 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 telecopier (with electronic
confirmed receipt), shall be deemed conclusively to be the next business day.
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.
17. GENERAL.
(a) This Agreement shall supersede and replace any other agreement or
arrangement, whether oral or written, heretofore existing between the
parties in respect of the subject matter of this Agreement.
(b) 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 be deemed or construed to be a consent to or a
waiver of any other breach or default.
(c) The parties shall promptly execute or cause to be executed all documents,
deeds, conveyances and other instruments of further assurance and do such
further and other acts which may be reasonably necessary or advisable to
carry out fully the intent of this Agreement or to record wherever
appropriate the respective interest from time to time of the parties in the
Property.
(d) This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
(e) This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada. (f) Time shall be of the essence in this
Agreement. (g) Wherever the neuter and singular is used in this Agreement
it shall be deemed to include the plural, masculine and feminine, as the
case may be.
18. AREA OF MUTUAL INTEREST.
(a) The parties hereby agree that each and every mining claim (including
internal fractions) or interest therein which they may locate or otherwise
acquire during the currency of this Agreement and which lies in whole or in
part within one mile from the outside perimeter of the Property, or which
is contiguous to such claims which are otherwise within this area of mutual
interest, shall be located the Optionor's name and all title to such
additional claims or interests shall be held subject to the terms of this
Agreement.
(b) Paragraph (a) shall cease to operate if and when the Optionee loses its
right to exercise the Option in full.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
SIGNED AND DELIVERED BY FIRST AMERICAN SILVER CORP.
Per: /s/ Robert Suda
--------------------------------
Robert Suda
SIGNED AND DELIVERED BY
ALL AMERICAN RESOURCES LLC
Per: /s/ Thomas J. Menning Jr.
--------------------------------
Thomas J. Menning Jr.
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MOUNTAIN CITY
SCHEDULE A
1) APN # OPM-398-01SURVEY #3993 PATENT. 375331 INDEPENDENCE #2 COFFEE POT COPE
MINING DISTRICT
RECORDED ON 01 MAY 29, BOOK #1, PAGE 15685
TOTALING APPROXIMATELY 40 ACRES
2) 22 UNPATENTED CLAIMS, ELKO COUNTY
CLAIM NAME ELKO COUNTY DOC NMC SERIAL
MC 6 568965 947186
MC 8 568966 947187
MC 9 568967 947188
MC 10 568968 947189
MC 11 568969 947190
MC 12 568970 947191
MC 13 568971 947192
MC 14 568972 947193
MC 15 568973 947194
MC 16 568974 947195
MC 18 568975 947196
MC 19 568976 947197
MC 20 568977 947198
MC 25 568978 947199
MC 27 568979 947200
MC 29 568980 947201
MC 31 568981 947202
MC 33 568982 947203
MC 35 568983 947204
MC 37 568984 947205
MC 39 568985 947206
MC 41 568986 947207
TOTALING APPROXIMATELY 400 ACRES
TOTAL COMBINED ACREAGE IS + OR - 440 ACRES
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SCHEDULE B
DEFINITION OF NET SMELTER RETURNS
1. For the purposes of this Agreement, the term "Net Smelter Returns" shall mean
the net proceeds actually paid to the Optionee from the sale by the Optionee of
minerals mined and removed from the Property, after deduction of the following:
(a) smelting costs, treatment charges and penalties including, but not
being limited to, metal losses, penalties for impurities and charges
for refining, selling and handling by the smelter, refinery or other
purchaser; and
(b) costs of handling, transporting and insuring concentrates and dore
metal from the Property to a smelter, refinery or other place of
treatment.
2. Each of the Optionor and the Optionee shall pay its respective share of the
Nevada net proceeds of mines taxes and any other taxes assessed against the
revenues realized from the production of minerals from the Property and each of
the Optionor and Optionee shall pay its own federal and state income taxes.
3. In the event the Optionee commingles minerals from the Property with minerals
from other properties, the Optionee shall establish procedures, in accordance
with sound mining and metallurgical techniques, for determining the proportional
amount of the total recoverable metal content in the commingled minerals
attributable to the input from each of the properties by calculating the same on
a metallurgical basis, in accordance with sampling schedules and mining
efficiency experience, so that production royalties applicable to minerals
produced from the Property may reasonably be determined.
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