OPTION AGREEMENT
THIS AGREEMENT is dated for reference the 24th day of January, 2000.
BETWEEN:
537192 B.C. LTD.
a British Columbia company with an address at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(the "Optionor")
OF THE FIRST PART
AND:
ENCORE VENTURES, INC.
a Nevada corporation with its registered address at
Suite 1200, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
("Encore")
OF SECOND PART
WHEREAS:
A. The Optionor is the owner of an undivided 100% right, title
and interest in and to mineral claims described in this
Agreement;
B. Encore wishes to acquire the option to acquire a 90%
interest in the Optionor's property on the terms and subject
to the conditions contained in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the premises and the mutual covenants and agreements hereinafter
contained, the parties hereto agree as follows:
1. DEFINITIONS
1.1 In this Agreement, the following terms will have the meaning
set forth below:
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(A) "Exploration and Development" means any and all
activities comprising or undertaken in connection with
the exploration and development of the Property, the
construction of a mine and mining facilities on or in
proximity to the Property and placing the Property into
commercial production;
(B) "Property" means and includes:
(i) the mining claims in the ▇▇▇▇▇▇ Lake region of the
Yukon Territories listed in Schedule A to this
Agreement; and
(ii) all rights and appurtenances pertaining to the
mining claims listed in Schedule A, including all
water and water rights, rights of way, and
easements, both recorded and unrecorded, to which
the Optionor is entitled;
(C) "Property Expenditures" means all reasonable and
necessary monies expended on or in connection with
Exploration and Development as determined in accordance
with generally accepted accounting principles
including, without limiting the generality of the
foregoing:
(i) the cost of entering upon, surveying, prospecting
and drilling on the Property;
(ii) the cost of any geophysical, geochemical and
geological reports or surveys relating to the
Property;
(iii) all filing and other fees and charges necessary or
advisable to keep the Property in good standing
with any regulatory authorities having
jurisdiction;
(iv) all rentals, royalties, taxes (exclusive of all
income taxes and mining taxes based on income and
which are or may be assessed against any of the
parties hereto) and any assessments whatsoever,
whether the same constitute charges on the
Property or arise as a result of the operation
thereon;
(v) the cost, including rent and finance charges, of
all buildings, machinery, tools, appliances and
equipment and related capital items that may be
erected, installed and used from time to time in
connection with Exploration and Development;
(vi) the cost of construction and maintenance of camps
required for Exploration and Development;
(vii) the cost of transporting persons, supplies,
machinery and equipment in connection with
Exploration and Development;
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(viii) all wages and salaries of persons engaged in
Exploration and Development and any assessments or
levies made under the authority of any regulatory
body having jurisdiction with respect to such
persons or supplying food, lodging and other
reasonable needs for such persons;
(ix) all costs of consulting and other engineering
services including report preparation;
(x) the cost of compliance with all statutes, orders
and regulations respecting environmental
reclamation, restoration and other like work
required as a result of conducting Exploration and
Development; and
(xi) all costs of searching for, digging, working,
sampling, transporting, mining and procuring
diamonds, other minerals, ores, and metals from
and out of the Property;
2. OPTION
2.1 The Optionor hereby grants to Encore the exclusive right and
option to acquire an undivided 90% right, title and interest in
and to the Property (the "Option") for total consideration
consisting of cash payments to the Optionor totalling $25,000 US
and the incurrence of Property Expenditures totalling $200,000 US
to be made as follows:
(A) upon execution of this Agreement, the payment to the
Optionor of the sum of $2,500 US, which amount will be
refundable pending delivery of the Geological Report in
a form acceptable to Encore;
(B) upon delivery of the Geological Report in a form
acceptable to Encore, the payment to the Optionor of
the sum of $7,500 US;
(C) on the earlier of the date which is five business days
after the closing of a private placement by Encore
raising gross proceeds of not less than $28,000 and
June 30, 2000, the payment to the Optionor of the sum
of $15,000 US;
(D) by December 31, 2000, the incurrence of Property
Expenditures in the amount of $25,000 US;
(E) by December 31, 2001, the incurrence of Property
Expenditures in the further amount of $175,000 US for
total aggregate Property Expenditures of $200,000 by
December 31, 2001, provided that any Property
Expenditures incurred prior to December 31, 2000 which
are in excess of $25,000 will be applied to the further
required amount of $175,000.
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The Optionor will prepare a geological report on the Property
(the "Geological Report") and will deliver the Geological Report
to Encore by not later than February 15, 2000. If the Geological
Report is acceptable to Encore, then Encore will be required to
make the payment required by Paragraph 2.1(B) in order to
maintain the Option. If the Geological Report is not acceptable
to Encore, then Encore will give notice of termination of this
Agreement to the Optionor and the Optionor will refund to Encore
the amount paid on account of the Option pursuant to Paragraph
2.1(A).
2.2 Upon making the cash payments and Property Expenditures as
specified in Paragraph 2.1, Encore shall have acquired an
undivided 90% right, title and interest in and to the Property.
2.3 This Agreement is an option only and the doing of any act or
the making of any payment by Encore shall not obligate Encore to
do any further acts or make any further payments.
3. TRANSFER OF TITLE
3.1 Upon execution of this Agreement, Encore shall be entitled
to record this Agreement against title to the Property.
3.2 Upon making the cash payments and Property Expenditures as
specified in Paragraph 2.1, the Optionor shall deliver to Encore
a duly executed ▇▇▇▇ of sale or quit claim deed and such other
executed documents of transfer as required, in the opinion of
Encore's lawyers, for the transfer of an undivided 90% interest
in the Property to Encore.
4. JOINT VENTURE
4.1 Upon Encore acquiring an interest in the Property pursuant
to paragraph 2.1, the Optionor and Encore agree to join and
participate in a single purpose joint venture ( the "Joint
Venture") for the purpose of further exploring and developing
and, if economically and politically feasible, constructing and
operating a mine on the Property. The Joint Venture shall be
governed by an agreement which shall be in the form of joint
venture agreement attached as Schedule B hereto.
5. RIGHT OF ENTRY
5.1 During the currency of this Agreement, Encore, its servants,
agents and workmen and any persons duly authorised by Encore,
shall have the right of access to and from and to enter upon and
take possession of and prospect, explore and develop the Property
in such manner as Encore in its sole discretion may deem
advisable for the purpose of incurring Property Expenditures as
contemplated by Section 2, and shall have the right to remove and
ship therefrom ores, minerals, metals, or other products
recovered in any manner therefrom.
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6. COVENANTS OF ENCORE
6.1 Encore covenants and agrees that:
(A) during the term of this Agreement, Encore shall keep
the Property clear of all liens, encumbrances and other
charges and shall keep the Optionor indemnified in
respect thereof;
(B) Encore shall carry on all operations on the Property in
a good and workmanlike manner and in compliance with
all applicable governmental regulations and
restrictions including but not limited to the posting
of any reclamation bonds as may be required by any
governmental regulations or regulatory authorities;
(C) during the term of the option herein, Encore shall pay
or cause to be paid any rates, taxes, duties,
royalties, workers' compensation or other assessments
or fees levied with respect to its operations thereon
and in particular Encore shall pay the yearly claim
maintenance payments necessary to maintain the claims
in good standing;
(D) Encore shall maintain books of account in respect of
its expenditures and operations on the Property and,
upon reasonable notice, shall make such books available
for inspection by representatives of the Optionor;
(E) Encore shall allow any duly authorised agent or
representative of the Optionor to inspect the Property
at reasonable times and intervals and upon reasonable
notice given to Encore, provided however, that it is
agreed and understood that any such agent or
representative shall be at his own risk in respect of,
and Encore shall not be liable for, any injury incurred
while on the Property, howsoever caused;
(F) Encore shall allow the Optionor access at reasonable
times to all maps, reports, sample results and other
technical data prepared or obtained by Encore in
connection with its operations on the Property;
(G) Encore shall indemnify and save the Optionor harmless
of and from any and all costs, claims, loss and damages
whatsoever incidental to or arising out of any work or
operations carried out by or on behalf of Encore on the
Property, including any liability of an environmental
nature.
7. REPRESENTATIONS AND WARRANTIES
7.1 The Optionor hereby represents and warrants that:
(A) the Property is in good standing with all regulatory
authorities having
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jurisdictions and all required claim
maintenance payments have been made;
(B) it has not done anything whereby the mineral claims
comprising the Property may be in any way encumbered;
(C) it has full corporate power and authority to enter into
this Agreement and the entering into of this Agreement
does not conflict with any applicable laws or with its
charter documents or any contract or other commitment
to which it is party; and
(D) the execution of this Agreement and the performance of
its terms have been duly authorised by all necessary
corporate actions including the resolution of its Board
of Directors.
7.2 Encore hereby represents and warrants that:
(A) it has full corporate power and authority to enter into
this Agreement and the entering into of this Agreement
does not conflict with any applicable laws or with its
charter documents or any contract or other commitment
to which it is party; and
(B) the execution of this Agreement and the performance of
its terms have been duly authorised by all necessary
corporate actions including the resolution of its Board
of Directors.
8. ASSIGNMENT
8.1 With the consent of the other party, which consent shall not
be unreasonably withheld, Encore and the Optionor has the right
to assign all or any part of its interest in this Agreement and
or in the Property, subject to the terms and conditions of this
Agreement. It shall be a condition precedent to any such
assignment that the assignee of the interest being transferred
agrees to be bound by the terms of this Agreement, insofar as
they are applicable.
9. CONFIDENTIALITY OF INFORMATION
9.1 Each of Encore and the Optionor shall treat all data,
reports, records and other information of any nature whatsoever
relating to this Agreement and the Property as confidential,
except where such information must be disclosed for public
disclosure requirements of a public company.
10. TERMINATION
10.1 Until such time as Encore has acquired an undivided 90%
interest in the Property pursuant to Section 2, this Agreement
shall terminate upon any of the
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following events:
(A) upon the failure of Encore to make a payment or incur
Property Expenditures required by and within the time
limits prescribed by Paragraph 2.1;
(B) in the event that Encore, not being at the time in
default under any provision of this Agreement, gives 30
day's written notice to the Optionor of the termination
of this Agreement;
(C) in the event that Encore shall fail to comply with any
of its obligations hereunder, other than the
obligations contained in Paragraph 2.1, and subject to
Paragraph 11.1, and within 30 days of receipt by
Encore of written notice from the Optionor of such
default, Encore has not:
(i) cured such default, or commenced proceedings to
cure such default and prosecuted same to
completion without undue delay; or
(ii) given the Optionor notice that it denies that such
default has occurred.
(D) delivery of notice of termination by Encore pursuant to
Paragraph 2.1 in the event the Geological Report is not
acceptable;
(E) the inability of Encore to complete the private
placement referred to in Paragraph 2.1(c).
In the event that Encore gives notice that it denies that a
default has occurred, Encore shall not be deemed in default until
the matter shall have been determined finally through such means
of dispute resolution as such matter has been subjected to by
either party.
10.2 Upon termination of this Agreement under Paragraph 10.1,
Encore shall:
(A) transfer any interest in title to the Property, in good
standing to the Optionor free and clear of all liens,
charges, and encumbrances;
(B) turn over to the Optionor copies of all maps, reports,
sample results, contracts and other data and
documentation in the possession of Encore or, to the
extent within Encore's control, in the possession of
its agents, employees or independent contractors, in
connection with its operations on the Property; and
(C) ensure that the Property is in a safe condition and
complies with all environmental and safety standards
imposed by any duly authorised regulatory authority.
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10.3 Upon the termination of this Agreement under Paragraph 10.1,
Encore shall cease to be liable to the Optionor in debt, damages
or otherwise save for the performance of those of its obligations
which theretofore should have been performed, including those
obligations in Paragraph 10.2.
10.4 Upon termination of this Agreement, Encore shall vacate the
Property within a reasonable time after such termination, but
shall have the right of access to the Property for a period of
six months thereafter for the purpose of removing its chattels,
machinery, equipment and fixtures.
11. FORCE MAJEURE
11.1 The time for performance of any act or making any payment or
any expenditure required under this Agreement shall be extended
by the period of any delay or inability to perform due to fire,
strikes, labour disturbances, riots, civil commotion, wars, acts
of God, any present or future law or governmental regulation, any
shortages of labour, equipment or materials, or any other cause
not reasonably within the control of the party in default, other
than lack of finances.
12. REGULATORY APPROVAL
12.1 If this Agreement is subject to the prior approval of any
securities regulatory bodies, then the parties shall use their
best efforts to obtain such regulatory approvals.
13. NOTICES
13.1 Any notice, election, consent or other writing required or
permitted to be given hereunder shall be deemed to be
sufficiently given if delivered or mailed postage prepaid or if
given by telegram, telex or telecopier, addressed as follows:
In the case of the Optionor: 537192 B.C. LTD.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of Encore : Encore Ventures, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and any such notice given as aforesaid shall be deemed to have
been given to the
9
parties hereto if delivered, when delivered, or
if mailed, on the third business day following the date of
mailing, or, if telegraphed, telexed or telecopied, on the same
day as the telegraphing, telexing or telecopying thereof PROVIDED
HOWEVER that during the period of any postal interruption in
Canada any notice given hereunder by mail shall be deemed to have
been given only as of the date of actual delivery of the same.
Any party may from time to time by notice in writing change its
address for the purposes of this Paragraph 13.1.
14. GENERAL TERMS AND CONDITIONS
14.1 The parties hereto hereby covenant and agree that they will
execute such further agreements, conveyances and assurances as
may be requisite, or which counsel for the parties may deem
necessary to effectually carry out the intent of this Agreement.
14.2 This Agreement shall constitute the entire agreement between
the parties with respect to the Property. No representations or
inducements have been made save as herein set forth. No changes,
alterations or modifications of this Agreement shall be binding
upon either party until and unless a memorandum in writing to
such effect shall have been signed by all parties hereto. This
Agreement shall supersede all previous written, oral or implied
understandings between the parties with respect to the matters
covered hereby.
14.3 Time shall be of the essence of this Agreement.
14.4 The titles to the sections in this Agreement shall not be
deemed to form part of this Agreement but shall be regarded as
having been used for convenience of reference only.
14.5 Unless otherwise noted, all currency references contained in
this Agreement shall be deemed to be references to United States
funds.
14.6 Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision shall be prohibited by or be
invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
14.7 The Schedules to this Agreement shall be construed with and
as an integral part of this Agreement to the same extent as if
they were set forth verbatim herein.
14.8 Defined terms contained in this Agreement shall have the
same meanings where used in the Schedules.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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14.9 This Agreement shall be governed by and interpreted in
accordance with the laws of British Columbia and the laws of
Canada applicable therein.
14.10 This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the day and year first above written.
537192 B.C. LTD.
by its authorised signatory:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
______________________________
Signature of Authorised Signatory
▇▇▇▇▇▇▇ ▇▇▇▇
______________________________
Name of Authorised Signatory
President
______________________________
Position of Authorised Signatory
ENCORE VENTURES, INC.
by its authorised signatory:
/s/ ▇▇▇▇▇▇▇ ▇▇▇
______________________________
Signature of Authorised Signatory
▇▇▇▇▇▇▇ ▇▇▇
______________________________
Name of Authorised Signatory
President
______________________________
Position of Authorised Signatory
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SCHEDULE "A"
PROPERTY DESCRIPTION
NTS 105-F-7/10
61 degrees 31' North 132 degrees 50' ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
List of Claims
Claim Name | Claim Number
----------------------------
A1 Claim YB92564
A2 Claim YB92565
A3 Claim YB92566
A4 Claim YB92567
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SCHEDULE "B"
JOINT VENTURE AGREEMENT
EXPLORATION JOINT VENTURE AGREEMENT
THIS AGREEMENT made as of the * day of *, 20*
BETWEEN:
537192 B.C. LTD.
a British Columbia company with an address at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(the "Optionor")
OF THE FIRST PART
AND:
ENCORE VENTURES, INC.
a Nevada corporation with its registered address at
Suite 1200, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
("Encore")
OF SECOND PART
WHEREAS:
A. Encore owns a 90% and the 537192 B.C. Ltd. owns a 10%
undivided right, title and interest in and to the Property;
B. The parties wish to create a joint venture to carry out
the continued exploration of the Property on the terms and subject
to the conditions hereinafter set forth;
C. The parties have agreed that, if following the completion
of such exploration a Feasibility Report is prepared which
recommends placing the Property into commercial production, they
will negotiate and settle a further joint venture agreement for the
development and placing of the Property into commercial production;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises, and of the mutual covenants and agreements herein
contained, the parties hereto have agreed and do hereby agree as
follows:
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1. DEFINITIONS
1.1 In this Agreement, including the Recitals and Schedules
hereto the following words and expressions shall have the following
meanings:
(a) "Affiliate" shall have the same meaning as under the
Company Act (British Columbia) as at the date hereof;
(b) "Agreement" means this Joint Venture Agreement as amended
from time to time;
(c) "Costs" means all items of outlay and expense whatsoever,
both direct and indirect incurred by or on behalf of the
parties, in connection with the Property, the exploration
and development thereof and expenses in respect of the
Feasibility Report;
(d) "Feasibility Report" means a detailed written report of
the results of a comprehensive study on the economic
feasibility of placing the Property or a portion thereof
into commercial production and shall include a reasonable
assessment of the mineral ore reserves and their
amenability to metallurgical treatment, a description of
the work, equipment and supplies required to bring the
Property or a portion thereof into commercial production
and the estimated cost thereof, a description of the
mining methods to be employed and a financial appraisal
of the proposed operations supported by an explanation of
the data used therein;
(e) "Interest" means the undivided beneficial percentage
interest from time to time of a party in the Joint
Venture, the Property, and Mineral Products, as set out
hereunder;
(f) "Joint Venture" means the joint venture created pursuant
to this Agreement;
(g) "Management Committee" means the committee of
representatives of the parties to this Agreement
constituted in accordance with the provisions of article
5 to manage or supervise the management of the business
and affairs of the Joint Venture;
(h) "Mineral Products" means the end products derived from
operating the Property as a mine;
(i) "Net Profits" shall mean net profits calculated in
accordance with Schedule "B" hereto;
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(j) "Operator" means the operator appointed pursuant to
article 6;
(k) "Other Tenements" means all surface rights of and to any
lands within or outside the Property including surface
held in fee or under lease, licence, easement, right of
way or other rights of any kind (and all renewals,
extensions and amendments thereof or substitutions
therefor) acquired by or on behalf of the parties with
respect to the Property;
(l) "Program" means a plan, including budgets, for the
Project or any part thereof as approved by the Management
Committee pursuant to this Agreement;
(m) "Project" means the exploration and development of the
Property and preparation and delivery of a Feasibility
Report;
(n) "Property" means those certain mining claims and related
rights and interests set out and more particularly
described in Schedule "A" hereto and Other Tenements and
shall include any renewal thereof and any form of
substitute or successor title thereto; and
(o) "Royalty" shall mean a royalty on the Net Profits
calculated and paid in accordance with Schedule "B"
hereto.
2. REPRESENTATIONS AND WARRANTIES
2.1 Encore represents to 537192 B.C. Ltd. that:
(a) it is the legal and beneficial owner of a 90% Interest
free and clear of all liens, charges and encumbrances;
and
(b) save and except as set out herein, there is no adverse
claim or challenge against or to the ownership of or
title to Encore's Interest or any portion thereof, nor is
there any basis therefor, and there are no outstanding
agreements or options to acquire or purchase Encore's
Interest or any portion thereof.
2.2 537192 B.C. Ltd. represents to Encore that:
(a) it is the legal and beneficial owner of a 10% Interest
free and clear of all liens, charges and encumbrances;
and
(b) save and except as set out herein, there is no adverse
claim or challenge against or to the ownership of or
title to 537192 B.C. Ltd.'s Interest or any portion
thereof, nor is there any basis therefor, and there are
no outstanding agreements or options to acquire or
purchase 537192 B.C. Ltd.'s Interest or any portion
thereof.
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2.3 Each of the parties represents to the other that:
(a) it is a company duly incorporated, organized and validly
subsisting under the laws of its incorporating
jurisdiction;
(b) it has full power and authority to carry on its business
and enter into this Agreement and any agreement or
instrument referred to or contemplated by this Agreement
and to carry out and perform all of its obligations
hereunder;
(c) it has duly obtained all corporate authorizations for the
execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated,
and the execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in any
breach of any covenants or agreements contained in, or
constitute a default under, or result in the creation of
any encumbrance, lien or charge under the provisions of
its constating documents or any indenture, agreement or
other instrument whatsoever to which it is a party or by
which it is bound or to which it may be subject and will
not contravene any applicable laws.
2.4 The representations and warranties hereinbefore set out
are conditions on which the parties have relied in entering into
this Agreement, are to be construed as both conditions and
warranties and shall, regardless of any investigation which may
have been made by or on behalf of any party as to the accuracy of
such representations and warranties, survive the closing of the
transactions contemplated hereby and each of the parties will
indemnify and save the other harmless from all loss, damage, costs,
actions and suits arising out of or in connection with any breach
of any representation or warranty contained in this Agreement and
each party shall be entitled, in addition to any other remedy to
which it may be entitled, to set off any such loss, damage or costs
suffered by it as a result of any such breach against any payment
required to be made by it to the other party hereunder.
3. PURPOSE AND CREATION OF THE JOINT VENTURE
3.1 The parties agree each with the other to use their best
efforts to explore and develop the Property with the goal of
eventually putting the Property into commercial production should a
Feasibility Report recommending commercial production be obtained
and a decision to commence commercial production be made, which
Feasibility Report and decision have not, at the date of this
Agreement, been obtained or made and for this
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purpose hereby agree to associate and participate in a single
purpose joint venture to carry out all such acts which are necessary
or appropriate, directly or indirectly, to carry out the Project.
3.2 The parties have not created a partnership and nothing
contained in this Agreement shall in any manner whatsoever
constitute a party the partner, agent or legal representative of
any other party or create any fiduciary relationship between them
for any purpose whatsoever. No party shall have any authority to
act for or to assume any obligations or responsibility on behalf of
any other party except as may be, from time to time, agreed upon in
writing between the parties or as otherwise expressly provided.
3.3 The rights and obligations of each party shall be in
every case several and not joint or joint and several.
3.4 Beneficial ownership of the Property shall remain in each
party in proportion to its respective Interest and any legal title
to the Property held by any party shall be subject to this
Agreement. All property held, acquired or contributed by or on
behalf of the parties under or pursuant to this Agreement shall be
beneficially owned by the parties as tenants in common in
proportion to their respective Interests.
3.5 Each party shall make available its Interest exclusively
for the purposes of the Project and, in particular, each party
agrees to grant a mortgage, charge, lien or other encumbrance on,
or any security interest in, its Interest to and in favour of any
lender to facilitate financing of the Project or any portion
thereof.
3.6 The rights and obligations of the parties created under
this Agreement shall be strictly limited to the Project and shall
not be extended by implication or otherwise, except with the
unanimous written consent of the parties.
3.7 Except as may be otherwise expressly provided in this
Agreement, nothing herein shall restrict in any way the freedom of
any party, except with respect to its Interest, to conduct as it
sees fit any business or activity whatsoever, including the
development or application of any process, and the exploration for,
development, mining, extraction, production, handling, processing
or any treatment, transportation or marketing of any ore, mineral
or other product for any other purpose, without any accountability
to any other party.
3.8 Each party shall do all things and execute all documents
necessary in order to maintain the Property and the Project in good
standing provided that all Costs need only be met by each party in
proportion to its Interest.
3.9 Except as may be otherwise expressly specified in this
Agreement, each party, in proportion to its Interest, shall
indemnify and hold harmless each other party and
6
each director,
officer, employee, agent and representative of each other party,
from and against any claim of or liability to any third person
asserted on the ground that action taken under this Agreement has
resulted in or will result in any loss or damage to such third
person to the extent, but only to the extent,that such claim or
liability is paid by such other party in the amount in excess of
that amount payable by reason of such other party's Interest, but
the foregoing shall not prejudice any claim of any party against
the Operator.
3.10 Each party covenants and agrees with the other:
(a) to perform or cause to be performed its obligations and
commitments under this Agreement and, without limiting
the generality of the foregoing, to pay Costs in
proportion to its Interest except as may be otherwise
provided in article 4 hereof;
(b) not to engage either alone or in association with others
in any activity in respect of the Property or the Project
except as provided or authorized by this Agreement.
4. DILUTION
4.1 Upon formation of the Joint Venture, Encore shall be
deemed to have incurred Costs of $225,000 and 537192 B.C. Ltd. to
have incurred Costs of $25,000.
4.2 The respective Interests of the parties shall be subject
to variation from time to time in the event:
(a) of failure by a party to pay its proportionate share of
Costs;
(b) subject to section 8.6 hereof, of the election by a party
not to participate in a Program; or
(c) subject to section 8.6 hereof, of the election by a party
to pay less than its proportionate share of Costs in
respect of a Program adopted by the Management Committee.
4.3 Upon the happening of any of the events set forth in
subsection 4.2 hereof, each party's Interest shall be varied to
equal the product obtained by multiplying 100% by a fraction of
which the numerator shall be the amount of Costs paid by such party
and of which the denominator shall be the total amount of Costs
paid by all parties. For the purposes of this section, the amount
of Costs paid by a party shall include the amount of Costs deemed
to have been paid by that party as set forth in section 4.1.
7
4.4 In the event that a party's Interest is reduced to 5% or
less by the operation of section 4.3 hereof, such party shall
forfeit its Interest to the other party and shall receive as
consideration therefor a Royalty equal to 2% of Net Profits payable
within 60 days after the end of each calendar quarter. If, as a
result of such forfeiture, one party has an Interest equal to 100%
the Joint Venture shall terminate.
5. MANAGEMENT COMMITTEE
5.1 A Management Committee, consisting of one representative
of each party, and one or more alternate representatives, shall be
constituted and appointed forthwith after the formation of the
Joint Venture. The Management Committee shall manage, or supervise
the management of, the business and affairs of the Joint Venture
and shall exercise all such powers and do all such acts as the
Joint Venture may exercise and do. The Management Committee shall
meet within 15 days of its constitution and may otherwise meet at
such places as it thinks fit for the dispatch of business, adjourn
and otherwise regulate its meetings and proceedings as the members
thereof deem fit. The Chairman of all meetings shall be a
representative of the Operator. Matters decided at any meeting of
the Management Committee shall be decided by a simple majority of
votes with each party's representatives being entitled to cast that
number of votes which is equal to that party's Interest, and, in
the case of an equality of votes, the dispute shall be referred to
arbitration pursuant to article 20. Unless agreed to in writing by
the parties hereto, all meetings of the Management Committee shall
be held in Vancouver, British Columbia. Any meetings may, if both
parties so consent, be held by conference telephone.
5.2 A quorum for any meeting of the Management Committee
shall consist of a representative or representatives of a party or
parties whose Interests aggregate equal to or in excess of 95%. No
business other than the election of a chairman, if any, and the
adjournment or termination of the meeting shall be dealt with if a
quorum is not present at the commencement of the meeting but the
quorum need not be present throughout the meeting. A meeting at
which a quorum is not present shall be adjourned to the same time
and place one week later at which adjourned meeting a quorum shall
be one representative of a party.
5.3 A meeting of the Management Committee at which a quorum
is present shall be competent to exercise all or any of the
authorities, powers and discretion bestowed upon the Management
Committee in this Agreement.
5.4 No questions submitted to the Management Committee need
be seconded and the chairman, if any, of the meeting shall be
entitled to submit the questions.
5.5 The decision on any matter evidenced by the consent in
writing of the representatives of all parties shall be as valid as
if it had been decided at a duly called and held meeting of the
Management Committee. Each written consent may be signed in
8
counterparts each consented to in writing by one or more
representatives which together shall be deemed to constitute one
consent.
5.6 At the time of any decision by the Management Committee
to adopt a Program, the parties shall, subject to the provisions of
article 8 hereof, pay their proportionate share of the estimated
Costs of such Program by depositing the same into the interest
bearing bank account opened and maintained pursuant to section 5.7
hereof.
5.7 The Operator shall open and maintain an interest bearing
bank account with a Canadian Chartered bank in the name of the
Joint Venture and shall use the funds on deposit therein for the
purposes of the Joint Venture. The Operator shall appoint signing
officers on the said account as shall be required and shall advise
the parties of the particulars of the said account.
5.8 Each of the parties hereby agree that any interest earned
on any sums deposited in the bank account opened and maintained
pursuant to section 5.7 hereof shall be shared in proportion to
their respective Interests.
5.9 If the Operator fails to do so, any party (the "Paying
Party") may pay any reasonable Costs due to maintain the Property
in good standing and the other party shall, in proportion to its
Interest and within 15 days of being given notice of such payment,
reimburse the Paying Party for such payment, failing such
reimbursement the party not paying shall forfeit its Interest to
the Paying Party and this Agreement shall terminate.
5.10 At any time during the currency of this Agreement the
Management Committee may cause a Feasibility Report to be prepared
by a substantial and well recognized Canadian engineering firm in
such form as the Management Committee may require. The Management
Committee shall, forthwith upon receipt of a Feasibility Report,
provide each of the parties with a copy thereof. Upon request of
any party and at reasonable intervals and times the parties shall
meet in order to discuss the Feasibility Report.
6. OPERATOR
6.1 The initial Operator shall be ▇▇▇▇▇▇ B.C. Ltd., which
shall continue as operator until changed pursuant to section 8.2 or
by a decision of the Management Committee with parties representing
Interests of 75% or more voting in favour. If the Operator has
failed to perform in a manner that is consistent with good mineral
exploration and development practice or is in default of its duties
and responsibilities under this Agreement, and the Management
Committee or the other party has given to the Operator written
notice setting forth particulars of the Operator's default and the
Operator has not within 30 days of such notice commenced to remedy
the default and thereafter to proceed
9
continuously and diligently to complete all required remedial action
the other party shall become the Operator.
6.2 The Operator may at any time on 60 days' notice to the
Management Committee resign as Operator, in which event the
Management Committee shall select another party or person to be
Operator upon the 30th day after receipt of the Operator's notice
of resignation or such sooner date as the Management Committee may
establish and give notice of to the resigning Operator. The
resigning Operator shall thereupon be released and discharged from
all its duties and obligations as Operator on the earlier of those
dates save only as to those duties and obligations that it
theretofore should have performed.
6.3 Upon the Operator making a voluntary or involuntary
assignment into bankruptcy or taking advantage of any legislation
for the winding-up or liquidation of the affairs of insolvent or
bankrupt companies the Operator shall automatically cease to be the
Operator and the other party or its nominee appointed as Operator.
6.4 The new Operator shall assume all of the rights, duties,
obligations and status of the Operator as provided in this
Agreement, other than the previous Operator's Interest, if any,
without obligation to retain or hire any of the employees of the
former Operator or to indemnify the former Operator for any costs
or expenses which the previous Operator will incur as a result of
the termination of employment of any of its employees resulting
from this change of Operator, and shall continue to act as Operator
until its replacement or resignation.
6.5 The Operator shall be paid by the Joint Venture, as
compensation for general overhead expenses which the Operator may
incur, an amount equal to 10% of all Costs in each year but only 5%
of Costs paid by the Operator under any contract involving payments
by it in excess of $100,000 in one year.
7. POWERS, DUTIES AND OBLIGATIONS OF OPERATOR
7.1 Subject to the control and direction of the Management
Committee, the Operator shall have full right, power and authority
to do everything necessary or desirable to carry out a Program and
the Project and to determine the manner of exploration and
development of the Property and, without limiting the generality of
the foregoing, the right, power and authority to:
(a) regulate access to the Property subject only to the right
of representatives of the parties to have access to the
Property at all reasonable times for the purpose of
inspecting work being done thereon but at their own risk
and expense;
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(b) employ and engage such employees, agents and independent
contractors as it may consider necessary or advisable to
carry out its duties and obligations hereunder and in
this connection to delegate any of its powers and rights
to perform its duties and obligations hereunder, but the
Operator shall not enter into contractual relationships
with a party except on terms which are commercially
competitive;
(c) execute all documents, deeds and instruments, do or cause
to be done all such acts and things and give all such
assurances as may be necessary to maintain good and valid
title to the Property and each party hereby irrevocably
constitutes the Operator its true and lawful attorney to
give effect to the foregoing and hereby agrees to
indemnify and save the Operator harmless from any and all
costs, loss or damage sustained or incurred without gross
negligence or bad faith by the Operator directly or
indirectly as a result of its exercise of its powers
pursuant to this subsection;
(d) conduct such title examination and cure such title
defects as may be advisable in the reasonable judgment of
the Operator.
7.2 The Operator shall have the following duties and
obligations during the term hereof:
(a) to diligently manage, direct and control all exploration
and development operations in and under the Property in a
prudent and workmanlike manner and in compliance with all
applicable laws, rules, orders and regulations;
(b) to prepare and deliver to each of the parties during the
periods of active field work, quarterly progress reports
of the work in progress, on or before the day which is 45
days following each calendar quarter with respect to work
done in such quarter and on or before March 31st of every
year comprehensive annual reports covering the activities
hereunder and the results obtained during the 12 month
period ending on December 31 immediately preceding;
(c) to prepare and deliver to each of the parties copies of
all assays, maps and drill logs immediately upon their
preparation or receipt;
(d) subject to the terms and conditions of this Agreement, to
keep the Property in good standing, free and clear of all
liens, charges and encumbrances of every character
arising from operations (except for those which are in
effect on the date of this Agreement or are created
pursuant to this Agreement, liens for taxes not yet due,
other inchoate liens and liens contested in good faith by
the Operator) and to proceed with all diligence to
contest or
11
discharge any lien that is filed by reason of
the Operator's failure to perform its obligations
hereunder;
(e) to maintain true and correct books, accounts and records
of operations hereunder separate and apart from any other
books, accounts and records maintained by the Operator;
(f) to permit one representative of the parties, appointed in
writing, at all reasonable times and at their expense to
inspect, audit and copy the Operator's accounts and
records relating to the Project for any fiscal year of
the Operator within nine months following the end of such
fiscal year;
(g) to obtain and maintain and cause any contractor engaged
hereunder to obtain and maintain during any period in
which active work is carried out hereunder such insurance
coverage as the Management Committee deems advisable;
(h) to permit the parties or their representatives, appointed
in writing, at all reasonable times, at their own expense
and risk, reasonable access to the Property and all data
derived from carrying out a Program;
(i) to open and maintain on behalf of the Joint Venture such
bank account or bank accounts as the Management Committee
may direct with a Canadian chartered bank;
(j) to prosecute and defend, but not to initiate without the
consent of the Management Committee, all litigation or
administrative proceedings arising out of the Property,
or Project;
(k) to transact, undertake and perform all transactions,
contracts, employments, purchases, operations,
negotiations with third parties and any other matter or
thing undertaken by or on behalf of the Joint Venture
hereunder in the Operator's name and to promptly pay all
expenditures incurred in connection therewith when due;
and
(l) to maintain in good standing those mineral claims
comprised in the Property by the doing and filing of all
assessment work or the making of payments in lieu thereof
and by the payment of all taxes and other like charges
and payments.
7.3 Subject to any specific provisions of this Agreement,
the Operator, in carrying out its duties and obligations hereunder,
shall at all times be subject to the direction and control of the
Management Committee and shall perform its duties hereunder in
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accordance with the instructions and directions as from time to
time communicated to it by the Management Committee and shall make
all reports to the Management Committee except where otherwise
specifically provided herein.
7.4 The Operator shall commence and diligently complete the
Project and without limiting the generality of the foregoing, may
retain an independent consulting geologist acceptable to all
parties to prepare a report in respect of the Project, the results
thereof, the conclusions derived therefrom and the recommendation
as to whether or not further work should be conducted on the
Property.
8. PROGRAMS
8.1 Costs shall only be incurred under and pursuant to
Programs prepared by the Operator, approved by the Management
Committee and delivered to the parties as provided in this article.
Any Feasibility Report shall be prepared pursuant to a separate
Program.
8.2 The Operator shall prepare and submit to the parties a
Program within 180 days of the completion of the previous Program.
If the Operator does not prepare a Program within the time
limited, then the other party shall have the right to prepare a
Program for submission to the other party at which time the party
submitting the Program shall become the Operator.
8.3 Within 30 days of the receipt by the parties of a
Program, each party shall give written notice to the Operator
stating whether or not they elect to contribute their proportionate
share of Costs of such Program or requesting the Operator to revise
the Program provided that each party may only make such requests
once in respect of each Program. Subject to subsection 8.6,
failure by either of the parties to give notice pursuant to this
subsection within such 30 day period shall be deemed an election by
that party not to contribute to such Program.
8.4 If a party elects or is deemed to have elected not to
contribute its proportionate share of the Costs of a Program, the
other party may give notice in writing to the Operator stating that
it will contribute all expenditures under or pursuant to such
Program and the Operator will proceed with such Program and
thereafter the Interests of the parties shall be adjusted in
accordance with article 4. The Operator will not proceed with any
Program which is not fully subscribed.
8.5 If the parties elect to contribute their proportionate
share of the Costs of a Program, the Operator will then proceed
with the Program.
8.6 If either party elects or is deemed to have elected not
to contribute to a Program its Interest will not be subject to
adjustment thereunder if, within 60 days of such
13
election or deemed election, it elects to pay to the contributing
party 150% of what would otherwise have been its contribution to
the Costs of such Program, but any amount so paid in excess of what
would otherwise have been its contribution to such Program shall be
deemed not to be a contribution to Costs by the party making it.
8.7 An election by a party to contribute to the Costs of a
Program shall make that party liable to pay its proportionate share
of the Costs actually incurred under or pursuant to the Program
including Program Overruns, as hereinafter defined, of up to but
not exceeding 10%.
8.8 After having elected to contribute its proportionate
share of the Costs of a Program which is proceeded with, a party
shall, within 15 days after being requested in writing to do so by
the Operator, pay such portion of its share of Costs as the
Operator may require but the Operator shall not require payment of
any funds in advance if the party provides the Operator with
reasonable assurance and evidence that it has secured financing by
way of the issuance of "flow-through" shares sufficient to pay its
proportionate share of the Costs of a Program and such financing
requires that party to incur the Costs before funds are advanced to
the party. At any other time the Operator shall not require
payment of funds more than one month in advance.
8.9 If it appears that Costs will exceed by greater than 10%
those estimated under a Program the Operator shall immediately give
written notice to the party or parties contributing to that Program
outlining the nature and extent of the additional costs and
expenses ("Program Overruns"). If Program Overruns are approved by
the party or parties contributing to that Program, then within 15
days after the receipt of a written request from the Operator, the
party or parties contributing to that Program shall provide the
Operator with their respective shares of such Program Overruns. If
Program Overruns are not approved by the party or parties
contributing to that Program, the Operator shall have the right to
curtail or abandon the portion of such Program relating to the
Program Overruns.
8.10 If either party at any time fails to pay its
proportionate share of Costs in accordance with subsections 8.8 or
8.9, the Operator may give written notice to that party demanding
payment, and if the party has not paid such amount within 15 days
of the receipt of such notice, that party shall:
(a) be deemed to be in default under subsection 8.8 or 8.9 as
applicable; and
(b) forfeit its Interest to the other party and shall receive
as consideration therefore a Royalty equal to 2% of Net
Profits payable within 60 days after the end of each
calendar quarter. If, as a result of such forfeiture,
one party has an Interest equal to 100% the Joint Venture
shall terminate.
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9. INFORMATION AND DATA
9.1 At all times during the subsistence of this Agreement the
duly authorized representatives of each party shall have access to
the Property and the Project at its and their sole risk and expense
and at reasonable intervals and times, and shall further have
access at all reasonable times to all technical records and other
factual engineering data and information relating to the Property
and the Project in the possession of the Management Committee or
the Operator. In exercising the right of access to the Property or
the Project the representatives of a party shall abide by the rules
and regulations laid down by the Management Committee and by the
Operator relating to matters of safety and efficiency. If any
representative of a party is not a director, senior officer or
employee of a party, the party shall so advise the Operator so that
the Operator may require the representative, before giving him
access to the Property or the Project or to data or information
relating thereto, to sign an undertaking in favour of the Joint
Venture, in form and substance satisfactory to the Operator, to
maintain confidentiality to the same extent as each party is
required to do under section 9.2 hereof.
9.2 All records, reports, accounts and other documents
referred to herein with respect to the Property and the Project and
all information and data concerning or derived from the Property
and the Project shall be kept confidential and each party shall
take or cause to be taken such reasonable precautions as may be
necessary to prevent the disclosure thereof to any person other
than each party, the Operator, an Affiliate, their respective
legal, accounting and financial or other professional advisors, and
any financial institution or other person having made, making or
negotiating loans to one or more of the foregoing or any trustee
for any such person, or as may be required by securities or
corporate laws and regulations or by the policies of any securities
commission or stock exchange, or in connection with the filing of
an offering memorandum, rights offering circular, prospectus or
statement of material facts by a party, an Affiliate or the
Operator or to a prospective assignee as permitted hereunder, or as
may be required in the performance of obligations under this
Agreement without prior consent of all parties, which consent shall
not be unreasonably withheld.
10. PARTITION
10.1 No party shall, during the term of this Agreement,
exercise any right to apply for any partition of the Property or
for sale thereof in lieu of partition.
11. TAXATION
11.1 Each party on whose behalf any Costs have been incurred
shall be entitled to claim all tax benefits, write-offs and
deductions with respect thereto.
15
12. RIGHT OF FIRST REFUSAL
12.1 Save and except as provided in section 3.5 and article 4
hereof, neither party shall transfer, convey, assign, mortgage or
grant an option in respect of or grant a right to purchase or in
any manner transfer or alienate all or any portion of its Interest
or rights under this Agreement otherwise than in accordance with
this article.
12.2 Nothing in this article shall prevent:
(a) a sale by a party of all of its Interest or an assignment
of all its rights under this Agreement to an Affiliate
provided that such Affiliate first complies with the
provisions of section 12.10 and agrees with the other
party in writing to retransfer such Interest to the
originally assigning party before ceasing to be an
Affiliate of such party;
(b) a variation pursuant to section 4.3; or
(c) a disposition pursuant to an amalgamation or corporate
reorganization which will have the effect in law of the
amalgamated or surviving company possessing all the
property, rights and interests and being subject to all
the debts, liabilities and obligations of each
amalgamating or predecessor company.
12.3 Should a party (the "transferring party") intend to
dispose of all or any portion of its Interest or rights under this
Agreement it shall first give notice in writing to the other
parties (the "other parties") of such intention together with the
terms and conditions on which the transferring party intends to
dispose of its Interest or a portion thereof or rights under this
Agreement.
12.4 If a party (the "transferring party") receives any offer
to dispose of all or any portion of its Interest or rights under
this Agreement which it intends to accept, the transferring party
shall not accept the same unless and until it has first offered to
sell such Interest or rights to the other parties (the "other
parties") on the same terms and conditions as in the offer received
and the same has not been accepted by the other parties in
accordance with section 12.6.
12.5 Any communication of an intention to sell pursuant to
section 12.3 and 12.4 (the "Offer") shall be in writing delivered
in accordance with article 14 and shall:
(a) set out in reasonable detail all of the terms and
conditions of any intended sale;
(b) if it is made pursuant to section 12.3, include a
photocopy of the Offer; and
16
(c) if it is made pursuant to section 12.4, clearly identify
the offering party and include such information as is
known by the transferring party about such offering
party;
and such communication will be deemed to constitute an Offer by the
transferring party to the other parties to sell the transferring
party's Interest or its rights (or a portion thereof as the case
may be) under this Agreement to the other parties on the terms and
conditions set out in such Offer. For greater certainty it is
agreed and understood that any Offer hereunder shall deal only with
the disposition of the Interest or rights of the transferring party
hereunder and not with any other interest, right or property of the
transferring party and such disposition shall be made solely for a
monetary consideration.
12.6 Any Offer made as contemplated in section 12.5 shall be
open for acceptance by the other parties for a period of 60 days
from the date of receipt of the Offer by the other parties.
12.7 If the other parties accept the Offer within the period
provided for in section 12.6, such acceptance shall constitute a
binding agreement of purchase and sale between the transferring
party and the other parties, in proportion to their Interests, for
the Interest or its rights (or a portion thereof as the case may
be) under this Agreement on the terms and conditions set out in
such Offer.
12.8 If the other parties do not accept the Offer within the
period provided for in section 12.6, the transferring party may
complete a sale and purchase of its Interest or a portion thereof
on terms and conditions no less favorable to the transferring party
than those set out in the Offer and, in the case of an Offer under
section 12.4, only to the party making the original offer to the
transferring party and in any event such sale and purchase shall be
completed within nine months from the expiration of the right of
the other parties to accept such Offer or the transferring party
must again comply with the provisions of this article.
12.9 If the other parties do accept the Offer within the
period provided for in section 12.6 but fail to close the
transaction contemplated thereby within 90 days following receipt
of such Offer, the transferring party may complete a sale and
purchase of its Interest or a portion thereof on any terms and
conditions but in any event such sale and purchase shall be
completed within nine months from the expiration of the right of
the other parties to accept such Offer or the transferring party
must again comply with the provisions of this article.
12.10 While any Offer is outstanding no other Offer may be made
until the first mentioned Offer is disposed of and any sale
resulting therefrom completed or abandoned in accordance with the
provisions of this article.
17
12.11 Before the completion of any sale by the transferring
party of its Interest or rights or any portion thereof under this
Agreement, the purchasing party shall enter into an agreement with
the parties agreeing not to sell except on the same terms and
conditions as set out in this Agreement.
13. FORCE MAJEURE
13.1 No party will be liable for its failure to perform any of
its obligations under this Agreement due to a cause beyond its
reasonable control (except those caused by its own lack of funds)
including, but not limited to acts of God, fire, flood, explosion,
strikes, lockouts or other industrial disturbances, laws, rules and
regulations or orders of any duly constituted governmental
authority or non-availability of materials or transportation (each
an "Intervening Event").
13.2 All time limits imposed by this Agreement will be
extended by a period equivalent to the period of delay resulting
from an Intervening Event.
13.3 A party relying on the provisions of section 13.1 will
take all reasonable steps to eliminate any Intervening Event and,
if possible, will perform its obligations under this Agreement as
far as practical, but nothing herein will require such party to
settle or adjust any labour dispute or to question or to test the
validity of any law, rule, regulation or order of any duly
constituted governmental authority or to complete its obligations
under this Agreement if an Intervening Event renders completion
impossible.
14. NOTICE
14.1 Any notice, direction, cheque or other instrument
required or permitted to be given under this Agreement shall be in
writing and may be given by delivery or by sending by telecopier,
in each case addressed to the intended recipient at the address of
the respective party set out on the front page hereof.
14.2 Any notice, direction, cheque or other instrument
aforesaid will, if delivered, be deemed to have been given and
received on the day it was delivered, and, if sent by telecopier,
be deemed to have been given or received on the day it was so sent.
14.3 Any party may at any time give to the other notice in
writing of any change of address of the party giving such notice
and from and after the giving of such notice the address or
addresses therein specified will be deemed to be the address of
such party for the purposes of giving notice hereunder.
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15. WAIVER
15.1 If any provision of this Agreement shall fail to be
strictly enforced or any party shall consent to any action by any
other party or shall waive any provision as set out herein, such
action by such party shall not be construed as a waiver thereof
other than at the specific time that such waiver or failure to
enforce takes place and shall at no time be construed as a consent,
waiver or excuse for any failure to perform and act in accordance
with this Agreement at any past or future occasion.
16. FURTHER ASSURANCES
16.1 Each of the parties hereto shall from time to time and at
all times do all such further acts and execute and deliver all
further deeds and documents as shall be reasonably required in
order to fully perform and carry out the terms of this Agreement.
For greater certainty this section shall not be construed as
imposing any obligation on any party to provide guarantees.
17. USE OF NAME
17.1 No party shall, except when required by this Agreement or
by any law, by-law, ordinance, rule, order or regulation, use,
suffer or permit to be used, directly or indirectly, the name of
any other party for any purpose related to the Property or the
Project.
18. ENTIRE AGREEMENT
18.1 This Agreement embodies the entire agreement and
understanding among the parties hereto and supersedes all prior
agreements and undertakings, whether oral or written, relative to
the subject matter hereof.
19. AMENDMENT
19.1 This Agreement may not be changed orally but only by an
agreement in writing, executed by the party or parties against
which enforcement, waiver, change, modification or discharge is
sought.
20. ARBITRATION
20.1 If any question, difference or dispute shall arise
between the parties or any of them in respect of any matter arising
under this Agreement or in relation to the construction hereof the
same shall be determined by the award of three arbitrators to be
named as follows:
19
(a) the party or parties sharing one side of this dispute
shall name an arbitrator and give notice thereof to the
party or parties sharing the other side of the dispute;
(b) the party or parties sharing the other side of the
dispute shall, within 14 days of receipt of the notice,
name an arbitrator; and
(c) the two arbitrators so named shall, within 15 days of the
naming of the latter of them, select a third arbitrator.
The decision of the majority of these arbitrators shall
be made within 30 days after the selection of the latter of them.
The expense of the arbitration shall be borne by the parties to the
dispute as determined by the arbitrators. If the parties on either
side of the dispute fail to name their arbitrator within the time
limited or proceed with the arbitration, the arbitrator named may
decide the question. The arbitration shall be conducted in
accordance with the provisions of the Commercial Arbitration Act
(British Columbia) and the decision of the arbitrator or a majority
of the arbitrators, as the case may be, shall be conclusive and
binding upon all the parties.
21. RIGHT TO AUDIT
21.1 Any party acquiring a Royalty pursuant to this Agreement
shall have the right to audit at its expense the books and records
in respect of such Royalty of the Operator or the other party, if
it is not the Operator in respect of such Royalty.
22. TIME
22.1 Unless earlier terminated by agreement of all parties or
as a result of one party acquiring a 100% Interest, the Joint
Venture and this Agreement shall remain in full force and effect
for so long as any part of the Property or Project is held in
accordance with this Agreement. Termination of the Agreement shall
not, however, relieve any party from any obligations theretofore
accrued but unsatisfied.
23. RULE AGAINST PERPETUITIES
23.1 If any right, power or interest of any party in any
Property under this Agreement would violate the rule against
perpetuities, then such right, power or interest shall terminate at
the expiration of 20 years after the death of the last survivor of
all the lineal descendants of her Majesty, Queen ▇▇▇▇▇▇▇▇▇ ▇▇ of
the United Kingdom, living on the date of this Agreement.
20
24. DOCUMENT RETENTION ON TERMINATION
24.1 Prior to the distribution of the Property or the Project
or the net revenues received on the disposal thereof on termination
of this Agreement, the Management Committee shall meet and may
approve a procedure for the retention, maintenance and disposal of
documents maintained by the Management Committee (the "Documents")
and shall appoint such party as may consent thereto to ensure that
all proper steps are taken to implement and maintain that
procedure. If a quorum is not present at the meeting or if the
Management Committee fails to approve a procedure as aforesaid, the
Operator, if a party, otherwise the party holding the largest
Interest as at the day immediately preceding the date the
Management Committee was called to meet, shall retain, maintain and
dispose of the Documents according to such procedure, in compliance
with all applicable laws, as it deems fit. The party entrusted
with the retention, and expenses incidental thereto, shall be
entitled to receive payment of those costs and expenses prior to
any distribution being made of the Property and Project or the net
revenues received on the disposal thereof.
25. ENUREMENT
25.1 This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective successors and
permitted assigns.
26. GOVERNING LAW
26.1 This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of British Columbia.
27. SEVERABILITY
27.1 If any one or more of the provisions contained herein
should be invalid, illegal or unenforceable in any respect in any
jurisdiction, the validity, legality and enforceability of such
provision shall not in any way be affected or impaired thereby in
any other jurisdiction and the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
28. NUMBER AND GENDER
28.1 Words used herein importing the singular number only
shall include the plural, and vice versa, and words importing the
masculine gender shall include the feminine and neuter genders, and
vice versa, and words importing persons shall include firms and
corporations.
21
29. HEADINGS
29.1 The division of this Agreement into articles and sections
and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of this
Agreement.
30. TIME OF THE ESSENCE
30.1 Time shall be of the essence in the performance of this
Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
as of the day, month and year first above written.
537192 B.C. LTD.
by its authorised signatory:
_________________________________
Signature of Authorised Signatory
_________________________________
Name of Authorised Signatory
_________________________________
Position of Authorised Signatory
ENCORE VENTURES, INC.
by its authorised signatory:
_________________________________
Signature of Authorised Signatory
_________________________________
Name of Authorised Signatory
_________________________________
Position of Authorised Signatory
SCHEDULE "A"
------------
to that certain Joint Venture Agreement between * and * made as of
the * day of *, 20*
THE PROPERTY
------------
NTS 105-F-7/10
61 degrees 31' North 132 degrees 50' ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
List of Claims
--------------------------------
Claim Name | Claim Number
--------------------------------
A1 Claim | YB92564
A2 Claim | YB92565
A3 Claim | YB92566
A4 Claim | YB92567
--------------------------------
SCHEDULE "B"
To that agreement dated as of the * day of *, 20* between * and *.
1. "Net Profits" means the aggregate of:
(a) all revenues from the sale or other disposition of ores,
metals or minerals mined or extracted from the Property
or any portion thereof and any concentrates produced
therefrom;
(b) all revenues from the operation, sale or other
disposition of any Facilities the cost of which is
included in the definition of "Operating Expenses",
"Capital Expenses" or "Exploration Expenses"; and
(c) Working Capital deducted in the calculation of Net
Profits for the prior period,
less (without duplication) Working Capital, Operating Expenses,
Capital Expenses and Exploration Expenses.
2. "Working Capital" means the amount reasonably necessary
to provide for the operation of the mining operation on the
Property and for the operation and maintenance of the Facilities
for a period of six months.
3. "Operating Expenses" means all costs, expenses,
obligations, liabilities and charges of whatsoever nature or kind
incurred or chargeable directly or indirectly in connection with
commercial production from the Property and in connection with the
maintenance and operation of the Facilities, all in accordance with
generally accepted accounting principles, consistently applied,
including, without limiting the generality of the foregoing, all
amounts payable in connection with mining, handling, processing,
refining, transporting and marketing of ore, concentrates, metals,
minerals and other products produced from the Property, all amounts
payable for the operation and maintenance of the Facilities
including the replacement of items which by their nature require
periodic replacement, all taxes (other than income taxes),
royalties and other imposts and all amounts payable or chargeable
in respect of reasonable overhead and administrative services.
4. "Capital Expenses" means all expenses, obligations and
liabilities of whatsoever kind (being of a capital nature in
accordance with generally accepted accounting principles) incurred
or chargeable, directly or indirectly, with respect to the
development, acquisition, redevelopment, modernization and
expansion of the Property
2
and the Facilities, including, without limiting the generality of
the foregoing, interest thereon from the time so incurred or
chargeable at a rate per annum from time to time equal to the "prime
rate" of the Royal Bank of Canada plus 2% per annum, but does not
include Operating Expenses nor Exploration Expenses.
5. "Exploration Expenses" means all costs, expenses,
obligations, liabilities and charges of whatsoever nature or kind
incurred or chargeable, directly or indirectly, in connection with
the exploration and development of the Property all determined in
accordance with generally accepted accounting principles including,
without limiting the generality of the foregoing, all costs
reasonably attributable, in accordance with generally accepted
accounting principles, to the design,planning, testing, financing,
administration, marketing, engineering, legal, accounting,
transportation and other incidental functions associated with the
exploration and mining operation contemplated by this Agreement and
with the Facilities, but does not include Operating Expenses nor
Capital Expenses.
6. "Facilities" means all plant, equipment, structures,
roads, rail lines, storage and transport facilities, housing and
service structures, real property or interest therein, whether on
the Property or not, acquired or constructed exclusively for the
mining operation on the Property contemplated by this Agreement.
7. Installments of the Royalty payable shall be paid by the
Operator as follows:
(a) within 45 days after the end of each of the first three
calendar quarters in each fiscal year and within 60 days
of the end of the last calendar quarter in each year, the
Operator shall pay to the royalty holder an amount equal
to 25% of the estimated Royalty, if any, for the fiscal
year, adjusted if necessary after the first quarter of
any fiscal year to reflect any change during the fiscal
year in estimated Royalty; and
(b) within 120 days after the end of the calendar year, the
balance, if any, of Royalty payable in respect of the
fiscal year last completed.
Should the Operator not pay the royalty holder the
installment of the Royalty payable within the time specified then
such unpaid installment of Royalty shall bear interest equal to the
"prime rate" of the Royal Bank of Canada plus 2% per annum
calculated from the last day of the calendar quarter in which the
liability for the payment of the installment of Royalty arose.
3
8. The Operator shall, within 45 days after the end of each
calendar quarter, furnish to the royalty holder quarterly unaudited
statements respecting operations on the Property, together with a
statement showing the calculation of Royalty for the calendar
quarter last completed.
9. Within 120 days after the end of each calendar year, the
accounts of the Operator relating to operations on the Property and
the statement of operations, which shall include the statement of
calculation of Royalty for the year last completed, shall be
audited by the auditors of the Operator, at its expense. The
royalty holder shall have 45 days after receipt of such statements
to question the accuracy thereof in writing and, failing such
objection, the statements shall be deemed to be correct and
unimpeachable thereafter.
10. If the audited financial statements furnished pursuant to
paragraph 9 disclose any overpayment of Royalty by the Operator
during the year, the amount of the overpayment shall be deducted
from future installments of Royalty payable hereunder.
11. If the audited financial statements furnished pursuant to
paragraph 9 disclose any underpayment of Royalty by the Operator
during the year, the amount thereof shall be paid to the royalty
holder forthwith after determination thereof.
12. The Operator agrees to maintain, for each mining
operation on the Property, up-to-date and complete records relating
to the production and sale of minerals, ore, bullion and other
product from the Property, including accounts, records, statements
and returns relating to treatment and smelting arrangements of such
product, and the royalty holder or its agents shall have the right
at all reasonable times, including for a period of 12 months
following the expiration or termination of this Agreement, to
inspect such records, statements and returns and make copies
thereof at its own expense for the purpose of verifying the amount
of Royalty payments to be made by the Operator to the royalty
holder pursuant hereto. The royalty holder shall have the right,
at its own expense, to have such accounts audited by independent
auditors once each year.
